Compared to traditional markets like stocks or FOREX, crypto markets are open 24/7. Trading cryptocurrency is easy, quick, and accessible, unlike traditional markets. So while the crypto space is fresh, dynamic, and profitable, you have to deal with the risks when you decide to hop into the crypto investing and trading arena.
As new cryptocurrencies, technologies, and trading platforms enter the industry; the crypto space has become exciting yet risky. So, for example, suppose you want to trade or invest in cryptocurrency. In that case, you must do your research because you’ll need to consider that it’s way different from traditional markets that you know of, and it’s a highly speculative and volatile industry.
There are numerous cryptocurrency trading strategies like day trading, and one in particular on the hot seat is the swing trading strategy. It’s an underdog, the less popular type, but has tons of potential if you know how to navigate it right!
What is a Swing Trading Strategy?
With the many trading strategies you can tap with cryptocurrency, a swing trading strategy should be first on your list. While it’s not getting more accolades than its famous counterpart, day trading, swing trading strategy can give you the versatility you need. For example, you can use different asset types on varied markets to swing-trade that the trader can hold onto for days or weeks.
Swing trading strategy comes into play when looking for that price swing. Once you find that, you have to exit the trade with the profits before the trends go downwards. The goal is to make that graceful exit and bleed as little as possible. Once you know when the negative pressure would come in, you have to make your move and exit before the market snatches away your gains.
While you don’t diminish the risks associated with swing trading, it’s less stressful than day trading, especially if you don’t have much time to spare to monitor the charts. It’s not as time-consuming compared to other crypto trading strategies. However, depending on your preferences, you can also switch to lower time-frames so that you can open and close trades on the same day.
So, when you get to compare notes with trend and day trading, swing trading gives you more flexibility and benefits and has its limitation depending on the selected asset types.
Considering cryptocurrencies’ speculative and unpredictable nature, it pays to be battle-ready and arm yourself with the right toolkit and knowledge when you swing-trade crypto assets.
Benefits of Swing-Trading
Swing trading fits traders with busy lifestyles because this strategy doesn’t require so much of your time, unlike day trading that would need more time and focus. If you hate being glued to the computer to check the numbers for hours every day constantly, then it’s time to shift to swing trading.
In fact, with swing trading, you would only need to invest a few hours each day, which means you would have more time for other tasks, especially if you juggle managing a home and a career or business. More so, swing trading isn’t as work-intensive as intraday trading or different strategies. You also don’t need much effort when you swing trade because you mainly rely on technical analysis to determine how you can manage your assets.
If you’re in for a quick buck, then swing trading is the way to go! Swing trading provides excellent profit for the short term. This is a great option, especially for building a consistent income every month from trading alone.
Upper Hand Over Market Volatility
If you’re hesitant to try swing trading because of the market risks, then it’s a relief that swing trading gives you more control over market volatility. It’s also effortless to check on assets using Fundamental Analysis and Technical Analysis to make better decisions.
One of the top advantages of swing trading is that you get to diversify when managing assets and raking in profit. Yes, you can manage multiple assets or focus on a single asset. However, you must understand the complexities of the market and the interactions that investments have with one another. When you do, you will grasp the bigger picture and make more robust and better decisions.
Swing Trading Types
When you decide to swing it when you swing-trade, you must be ready to lose to gain. In simple language, traders must be more intelligent than the market trends and should not invest anything they’re not prepared to lose. Here are the types of swing trading strategies that you can implement right away:
Stuck in a Box Swing Trading
With Stuck in a Box, you’re in between or stuck right in the middle of support and resistance. So you identify a range market and then wait it out until the price goes down or below support. So you wait for a close price rejection and then shoot for the next candle open when that happens.
You can then set the Stop-Loss at the range below the current rejection candle and put a Profit Target at the resistance point.
With SHORT trades, the strategy is done in the opposite direction.
Catch the Wave Swing Trading
With the Catch the Wave Swing Trading strategy, your focus should be on the swings or catching parts in a trending market. So, your job now is to see the next big wave. With this strategy in place, you must enter trades right after the pullback ends and when you sense that the current trends will continue.
The only limitation with this type is that it may not be compatible with all market trends. So, it would be best to determine the definite directional direction as soon as trends are in correction and cue in when the Price Action reversal happens.
So, you have to wait for a bounce with a bullish trend. When you see that, that’s your cue to initiate a long trade. Next, set the Stop-Loss right below the Price Action pattern, then the first profit target right at the current high swing.
Moreover, you can also just let loose and open the trade to boost profit. Only do this when the trade charts are suitable or geared towards the primary trend. This way, you will have higher potential. You can also place additional above to maximize profit on the continuation of trends or even with higher swings.
How to Identify the Swing
So, here’s a critical question – how do we identify the swing? That’s easy. First off, it’s essential to understand that every price ends either in a swing high or low. There are also higher highs, higher lows, lower highs, and lower lows.
The Swing Analysis is instrumental when checking and identifying market trends and their progress. Understanding swing analysis also helps you determine changes in trends real quick. For example, using Price Action patterns, swing analysis, and the support and resistance will help you profit more in trading.
You have to buy when there is a strong demand and sell when there is a strong supply level. You will see these trends in the form of swinging lows and highs.
Get Smart with the Fundamentals!
Many strategies are based on buying at solid levels of demand and using strong levels of supply to sell. These strong levels are often swinging lows and highs. So it’s crucial to pinpoint these zones so you can combine strategy with knowledge.
Understanding the fundamentals of swing trading helps you to be in control of your trading strategies. Meanwhile, you have to be smart in choosing a trading platform, diversify your investment portfolio, and dig deep into analytics so you can manage crypto assets with ease and meet that winning mark.