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crypto swing trading guide

Although they are a relatively new asset class, cryptocurrencies have proven to be very volatile. But this can be good news for swing traders. Swing trading is a strategy that involves traders holding a position within a medium time frame. Swing traders try to capture momentum swing. To be successful in cryptocurrency trading, you will need an effective trading strategy. What is it? A trading strategy is simply a plan that you will follow. BETTING TIPS NHL 16

However, as a relatively new market, learning which trading strategies and indicators they should implement can be challenging. As the report outlines, swing trading incorporates techniques found in day and position trading, which allows it to be used by both part and full-time traders. By providing a breakdown of the four most popular strategies for crypto swing style trading, the guide can help readers find one that suits their personal preferences.

These include strategies based on ranges and pattern indicators, as well as more complex techniques such as Moving Average and Bollinger Bands to allow for more aggressive or conservative traders. The rules include managing time effectively, watching for converging indicators, and learning to handle trading pressure.

This applies even on weekends. Technical Analysis Crypto swing traders typically aim to analyze price action and candlestick chart patterns using support and resistance levels, Relative Strength Index RSI , Bollinger Bands, Fibonacci Retracement, Volume, Stochastic oscillator, and moving averages.

Swing trading cryptos on MT4 charts Technical tools help investors identify bullish and bearish zones within the chart where they can buy and sell. Traders will therefore aim to identify two types of opportunity: trends and breakouts. Trends are long-term market movements characterized by short-term oscillations. Breakouts mark the beginning of a new trend. Moving averages are one of the most popular tools used in swing trading.

If a crossover is identified, this can indicate a bullish or bearish momentum. You can also use moving averages as your support and resistance levels. Risk Tools A golden rule with any swing trading crypto strategy is not to risk more than you can afford to lose. These ensure that any losses do not entirely wipe out your account and that you take profit at a reasonable level.

The idea here is to keep your losses small and manageable so that over time, they will be outnumbered by your crypto gains. Other useful tools include risk management features, profit calculators, and live streams from official news platforms. Some brokers also provide simulators or demo accounts that can be used to practice swing trading strategies on crypto products.

This strategy is usually only possible without leverage, yet significant fluctuations can still provide gains. Here are a few ways to protect your long-term investments: Hot Wallets Hot wallets, such as MetaMask, are digital wallets that remain online. These software wallets enable speedy crypto trading by immediately connecting to exchanges.

However, because the wallet is continually linked to the internet, this easier access creates a greater danger of hackers. Cold wallets Cold wallets are a more secure means of storing cryptocurrency on a hardware device that may be unplugged from the internet, such as a hard disk drive.

Because they are entirely offline and can only be attacked when plugged in, they are more protected than hot wallets. However, because these are physical wallets, you must be mindful not to neglect the drive, or you will lose the crypto you have stored permanently.

Security While investing in digital currencies, keeping your accounts and assets safeguarded is important. Risk management alerts and two-factor authentication 2FA should be included in software systems to provide easy risk assessment and account login validation. Furthermore, decentralized finance DeFi is exactly that: decentralized. This implies that no government has the ability to trace, regulate, or ban cryptocurrency purchases unless you use regulated derivatives brokers.

Having said that, authorities are gradually catching up and imposing laws and limits. Swing Trading Crypto Tips Demo Account A demo account will let you access the crypto markets in real-time and practice trading systems and techniques. Most brokers offer a free demo account that will include virtual funds, so you never risk your capital when testing a swing trading strategy.

If the price of BTC surges, the price of other cryptocurrencies can sometimes drop. This is due to people exiting the altcoin market to ride the Bitcoin wave. With that said, if the price of BTC suddenly falls, the value of the crypto markets usually follows suit. However, swing traders normally accumulate swap fees. Daily interest rate charges are levied on overnight positions. Some brokers may also charge high commissions or other account-related fees, so check these before signing up.

Depending on your jurisdiction, you may also be subject to crypto trading taxes. Education Swing trading crypto can often attract novices looking to ease themselves into medium to long-term trading. With that said, you will still need access to good educational resources and additional tools that can help you develop your knowledge. This might include a crypto training course, a community forum, or even an online swing trading book.

Some of the best platforms even run dedicated investing academies. Analysis Effective swing trading crypto strategies are built on technical tools as well as fundamental analysis. A good understanding of daily candlestick charts and basic indicators will set you off to a good start.

Still, it is important to keep on top of fundamental events and financial reports that can cause swings in the market. Identify the Appropriate Token The cryptocurrency market is growing at a rapid pace. There are now around 10, tokens available. Of course, some cryptocurrencies are more unpredictable than others. These frequently traded tokens are available on numerous exchanges and marketplaces.

News Announcements, events, and news are all elements to keep an eye on since they can impact the value of cryptocurrencies. Look out for what popular cryptocurrency traders, celebrities, corporations, and limited companies have to say. Also watch for tokens to be accepted as legitimate payment by businesses, cities, or nations. Bitcoin was accepted for city fees in Zug — Switzerland, and as a legal tender in El Salvador.

Pros Of Swing Trading Crypto Swing trading can be an excellent strategy to master and is ultimately not as demanding as other crypto investing strategies. In addition, there are other benefits: Longer term strategy— Compared to other forms of investing, there is no need to spend hours monitoring positions because trades can last days or weeks.

Lower intensity— Many traders consider swing trading cryptos less stressful than day trading because of the longer timescales and lower frequency of investments. Trade part-time— Because of the above, it is possible to trade around your lifestyle and maintain a full-time job.

Volatility— Due to the nature of swing trading cryptos such as Bitcoin, volatility is key. The cryptocurrency market is highly volatile, which can be lead to substantial profits. Cons Of Swing Trading Crypto Unsurprisingly, swing trading cryptocurrencies can also present challenges both for the inexperienced and the professional investor: Overnight risk— Swing trading can lead to large losses because you are holding positions for longer than day traders.

You also need to take into account any overnight swap fees. Price gaps— Some investors may experience price gaps when holding positions overnight or over the weekend. This can happen when developments and reports occur during the after-hours market. Market timing— Timing market swings can be tricky, even for the experienced investor, especially in the notoriously volatile cryptocurrency space. Final Word On Swing Trading Crypto The allure of swing trading in the crypto market is primarily thanks to its comparatively lower level of time commitment and stress versus other forms of investing.

With that said, new investors should take time to learn how to swing trade cryptocurrency assets and practice with a demo account before committing cash.

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Swing trading pros and cons In the context of swing trading, stop losses are relatively tight — especially when weighed against a buy-and-hold strategy. This allows swing traders to choose a larger initial position or add leverage, as there is no plan to hold if the trade fails. Swing traders can profit from both price increases during a bullish run and price decreases during a downward move. Moreover, swing trading is designed to be less stressful than day trading, as it does not require monitoring the charts all day.

Also, because swing traders place their orders less frequently, their overall trading costs are less expensive when compared to other trading strategies. It is difficult for swing traders to grasp a market that never closes, as the price often breaks through planned trading ranges and causes the original technical pattern to become invalidated.

Cryptocurrency swing-trading strategies and tips Swing traders are more likely to use countertrend strategies in order to capture large gains from price reversals at the edge of a trading range. As such, identifying support and resistance levels is one of the keys to success.

Successful traders usually look for opportunities on the four-hour and daily charts, and then use minute and one-hour charts to find an accurate entry. The range-bound trading strategy is primarily that of opening a long position at the support level and short at the resistance level.

This gave traders several opportunities to enter a position at around 5. Similarly, a trader might attempt to maximize their gains by opening a short position at the top of the range 5. Often, a breakout of a resistance level leads to increased buying interest. So, traders who happened to miss a breakout opportunity might choose to wait for a pullback and place limit orders in the hopes of buying near the previous resistance level. Source: OKX Swing trading is also suitable for uncertain price movements where an underlying asset price moves within a channel.

Swing traders expect to buy near the bottom of a channel and sell near the top of a channel. With this channel-focused trading strategy, swing traders generally trade in the same direction as the trend. When the price bounces off the bottom line of the channel, that may represent a good opportunity to open a long position.

Conversely, traders would look for opportunities to short at the top of a descending channel. Source: OKX In a range-bound market, waiting for a fakeout — i. This is especially true when there is a divergence between the price and popular technical indicators, such as the Relative Strength Index.

For example, a bullish divergence occurs when the price makes a lower low and the indicator makes a higher low. The opposite is true for bearish divergences. It means that everything that occurs in the market is accounted for in the price. Therefore the price is the result of the demand and supply dynamics in the market, and these dynamics are also end-products of the biases and sentiments that market players show in response to the fundamentals of the asset.

So narrowing it down to cryptos, we can safely say that price activity on any crypto coin is a function of all the factors that have dictated the sentiment of market players, who have therefore decided to act, thereby causing a demand push on the market, or creating a supply reaction as well. Prices move in trends because when the majority of market players have taken on sentiment, they will act out that sentiment in a form of herd action by either buying or selling.

Buying will create a demand, which leads to more buying and this pushes prices upwards. At this time, prices will be in an uptrend. Take the Tron scenario mentioned above as an example. This Tron news forced a buying sentiment in the market, created a demand for Tron, and this led to a lot of buying which has driven the TRX coin into an uptrend.

Similarly, when there is less demand for an asset, those who owned it will decide to dump it in the market, creating an oversupply and therefore a fall in prices. This will send the affected asset into a downtrend, as we have seen for Bitcoin in the last year. History repeats itself because traders will react to a particular situation in the same way that they reacted to the same situation in times gone by. Therefore, if we see a pattern where there are progressively lower highs, converging on horizontal support i.

History repeats itself because human beings are emotional beings who will reproduce the same reactions to an event or a situation as they did in the past. What It Takes to Succeed in Cryptocurrency Swing Trading In order to achieve some measure of success when swing trading bitcoin and altcoins, you have to ensure that the following factors are sorted out. You must have a good trading strategy. You must have good risk management in place. You must have good trading psychology You must be able to document your progress by keeping a trade journal.

How to develop a crypto swing trading strategy What are the possible strategies you can use for crypto swing trading? Your strategy should include a checklist of questions you must answer before you take on a trade. According to this checklist below, traders must find out the following: Overall market direction.

Key points from the monthly, weekly and daily charts. Trends that are playing out up, down or sideways trend? Where the important support and resistance areas are. Presence of any chart patterns, trendlines and channels. If there are chart patterns, are they continuation or reversal patterns?

Fibonacci levels and retracement points. Volume patterns. Elliot wave patterns on the chart, if any. Is price overbought or oversold? What do the momentum indicators say? Any market correlations at play. When you have determined where you think the market will go, you must then determine the following: If you will buy or sell the market. Your trade size. Your risk i. Your profit target i. Take Profit. Your entry point The type of order you will use to achieve your entry market or pending order.

Risk Management Risk management is a strategy that ensures that if you sustain a string of losses, you will still have enough capital to stage a comeback. Risk management also attempts to nullify the effect of losses on your account by adopting a good risk-reward ratio for setting up trades.

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