It is already well-known that cryptocurrencies are highly volatile. According to Statista, there are over 6,000 cryptocurrencies as of 2021, which is a great number of digital coins compared to 2013 statistics. With this many, it can be challenging for one to choose the best coin to invest in.
As many as the cryptocurrencies are available today, there are thousands of traders using the most popular trading methods worldwide in multiple cryptocurrency markets. A big part of this entire population of crypto traders can be swing traders. This kind of trader tries to catch short to medium term price movement within a given range. In contrast to day traders, Swing traders hold positions for several days or weeks — generally no more than one month — and frequently use one-hour, four-hour, and daily charts to determine the top and bottom of a range.
Swing trading appears to be a suitable match for cryptocurrency’s inherent volatility based on its name alone. In this guide, we will briefly look into what swing trading is and discuss some tips that we hope will help you execute this trading strategy.
Table of Contents
What is Swing Trading in Cryptocurrency?
Swing trading is the process of purchasing and selling cryptocurrency after the price has moved a particular amount on the charts. This strategy is an excellent option for individuals who do not want to spend hours watching their transactions.
The advantages of this form of trading include more effective use of capital and better profits, while the disadvantages include higher commissions and more volatility.
What are the tips to get started with this strategy?
Make a detailed plan.
Many activities benefit from having a clear knowledge of your objectives. Most effective traders organise their transactions and strategies using a plan. This strategy might include the pricing they wish to enter or the rates that take away earnings.
Look for the best cryptocurrency to trade.
The best cryptocurrencies for swing trading are those with the most significant market capitalisation. Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), for example, are frequently the most actively traded currencies on cryptocurrency exchanges and marketplaces.
Swing traders watch these currencies swinging significantly high or low in busy marketplaces. They profit from these volatile cryptocurrencies by investing for a few days or weeks on one side of the transaction and then switching to the other when the price swings in the other direction.
Make a crypto watch list.
In addition to the big three mentioned above, other cryptocurrencies have a strong fundamental trigger and the potential to be profitable. Some swing traders have a dry-erase board with a classified list of opportunities, entry prices, target prices, and stop-loss prices near their trading stations.
Bitcoin should be kept in mind.
For swing trading, there are a variety of crypto assets to consider. Bitcoin is not the only cryptocurrency. It is, nevertheless, critical to monitor its trends since it is the world’s largest and most popular cryptocurrency in the crypto world. As a result, this cryptocurrency frequently influences the movement of other assets. You will be able to make better judgments if you are aware of Bitcoin’s activities.
Reduce overnight risk.
The cryptocurrency markets never sleep. As a result, think about making smaller overnight trades. This situation can also use stop-losses. Using a stop loss for overnight trades might help you reduce risk and protect your money while you are away.
Golden Rule: Only invest what you can afford to lose.
When it comes to swing trading crypto, there is no way to avoid the danger of losing money. Trading is a form of investment. As a result, there are certain dangers. Only trade with money you can afford to lose, as this is the golden rule. Make sure you do not put your rent on the line in the crypto market.
Locate a trustworthy and safe cryptocurrency exchange.
Pick a safe and trustworthy online exchange or marketplace after carefully selecting which coin to utilise. It is good to look at its security features, user count, trading volume, transaction fees or other costs, and other important details.
Now that you have these tips, you can try them out and start swing trading! You can start trading with well-known cryptocurrencies like Bitcoin, Ethereum, Ripple, Tezos, and many more anytime and anywhere on this trading platform. It is also worth noting that the crypto market is highly volatile. Everything you have read in this article boils down to conducting a comprehensive research. This basic step will help you minimise the risk in crypto trading. Practise due diligence!
