Scalping vs. Day Trading vs. Swing Trading vs. Position Trading Chinese Assets

The title is quite a mouthful and the bottom line is this: the more popular China started becoming as an investment destination and the more market participants started paying attention to Chinese assets, the more the average investor became interested in various strategies pertaining to making money by investing in all things China. Some of them viable, others… not so much.

In a previous article which we invite you to read by clicking HERE before moving on with this article, we have put various types of investors in Chinese assets under the microscope, with the article in question also containing information about scalpers, day traders, swing traders and position traders. As a general rule, please understand that “trading frequency” is the operative term when comparing these four trading strategies.

In a nutshell:

1. A scalper is someone who buys and sells very (very!) frequently by leveraging equipment as well as human brainpower (with some of the world’s best mathematicians being on scalping teams), in an effort to beat other market participants by even a fraction of a fraction of a second
2. A day trader is someone who… well, for the most part trades each day. Far less frequently than a scalper but still, very often (perhaps once per day, maybe a couple of times per day)
3. A swing trader is someone who, as you might have guessed by now, trades less frequently than a day trader, with such traders not feeling the need to be in the market each day. On the contrary, they feel perfectly content waiting for meaningfully asymmetrical opportunities, even if that only means trading once per week or month
4. Finally, as pretty much everyone reading this article has probably guessed, a position trader is someone who… yes, trades even less than a swing trader. If he or she considers that a truly juicy opportunity only presented itself once over the past 365 days, then that will be the only trade the market participant in question takes on

To put it differently and in let’s say more mathematical terms when comparing based on trading frequencies: scalping < day trading < swing trading < position trading.

Moving on to the million dollar question(s):

Should you scalp?

Should you day trade?

Should you swing trade?

Should you position trade?

Right off the bat, we want to make it clear that the answer is “no” to all of the previously mentioned questions if you cannot answer an additional one: what, if anything, is your edge?

To put it differently, you need to ask yourself what exactly it is that makes you special as a market participant because, make no mistake: most traders (the overwhelming majority) lose money. By all means, do not take our word for it, feel free to research the matter yourself, even looking at a few banners promoting various brokers should prove to be enough, as they are compelled by the FTC and other institutions to disclose (with percentages) the fact that most of the traders on their platform actually lose money.

As such, again, what exactly makes you believe you can win?

In our case, the ChinaFund.com team has advantages such as the following going for it:

1. The fact that Andrei Polgar is an economist who, aside from publishing best-selling books and creating a robust YouTube education platform over at One Minute Economics, has made a name for himself as a “hands-on intellectual” who actually puts his money where his mouth is, especially when it comes to exotic assets
2. The fact that Graham Haynes puts “on the ground” brick and mortar experience measured in decades when it comes to China on the table, as someone who has been running factories in China since… well, since before it was “cool” to run factories in China
3. The fact that James MacRae, a multi-jurisdiction accounting expert, is more than eager to put robust economico-mathematical models on the table
4. The fact that our team members, as the previous three items make clear, have skills that complement one another and as such, we are anything but a one-trick pony

… the list could go on and on.

If the list isn’t as compelling in your case, perhaps it would be wise to limit yourself to buying and holding or, at the risk of sounding self-serving, working with a team of experts such as the ChinaFund.com one. While we do not offer managed trading services, at least not at this point in time, we are more than happy to assist you when it comes to putting together a proverbial battle plan and are only a message away (you can get in touch through the Contact section of ChinaFund.com).

Furthermore, a good rule of thumb is also this: the less experienced you are and/or the less compelling your edge is, the more sense it makes to take a step back. Remember: nobody is forcing you to take on a trade, nobody is forcing you to achieve a certain trading frequency goal and in some cases, being passive is actually the smarter and more sustainable approach.

For someone who isn’t all that familiar with this jurisdiction, position trading provides enough wiggle room for it to be a better option than swing trading, which itself is a better option than the more trading frequency-oriented day trading, which… finally, is itself a more straightforward approach than the computing and brain power-intensive scalping.

At the end of the day, despite how complicated the title of this post might have made everything seem, it is ultimately a matter of common sense and especially being honest with yourself when it comes to your edge or… as far as most market participants are concerned, lack thereof.