How to Swing Trade Crypto

Swing trading is a trading strategy made for beginners. It’s a simple and convenient way to start investing in crypto without any more risk than necessary. When done smartly, swing trading crypto can navigate around bad price movements or market swings, even if they aren’t in your favour. With the best swing trading strategies, you can hopefully yield stronger returns while minimizing losses.

Are you new to swing trading? Although the concept may initially seem complex, it is easy for beginners to learn and master this crypto trading strategy. Let’s learn everything about how to swing trade crypto.

What is swing trading?

A crypto swing trading strategy is when an investor holds an open position for more than a day. This position can last for a few days or even weeks. The timeframe given is never usually longer than 30 days.

Crypto swing trading is for the person who works a full-time job, is busy, and doesn’t have time to monitor the markets frequently throughout the day. It’s also for a beginner investor or anyone who might be overwhelmed looking at so many different cryptocurrencies and not knowing how to create opportunities from what’s there.

Day trading vs swing trading

Day traders focus on short-term price movements, sometimes down to the minute. They execute multiple trades a day. A swing trader, by comparison, may execute one or two trades a day, if even. Swing trading crypto fits between day trading and long-term trading, where investors hold a position for months or years.

Swing trading for Beginners

The first starting point with crypto swing trading is researching what cryptocurrency you wish to invest in. It may require fundamental and technical analysis and using indicators to determine where the best profit lies. Some crypto coins are best for short-term investing, while others are optimal for long-term, multi-year positions. For swing trading, look at coins trending upwards by the time frame you want to hold an open position. Try two days, a week, or something similar.

Crypto research falls into two categories – fundamental and technical. For beginners, these terms are important.

• Fundamental analysis refers to broad information about an asset, i.e. recent developments, press releases, the community behind the coin, and who’s behind the coin.
• Technical analysis looks at market indicators, previous trading chart performance, price points, and other numbered data. Both are valuable in deciding what crypto to swing trade on.

Crypto Trading Charts

As you’re not making fast trades, a crypto swing trader will typically look at 1-hour daily price charts. They may also use 24-hour charts to check long-term market trends, all to maximize their opportunity and execute an open position at the right time. Pay less attention to short-term minute-by-minute price movements and more to hourly or daily performance.

If you don’t read your charts accurately, don’t do your analyses, pick the wrong cryptocurrency, or encounter the wrong set of circumstances, swing trading crypto might not work out for you. The longer you hold a position, the more susceptible you are to market gaps and unexpected price adjustments.

If you hold onto your position longer or know when to cut out early, you can minimize your losses or avoid them altogether. In this way, swing trading crypto is a convenient way to counteract the risks and volatility of buying and selling crypto.

Best Swing Trading Strategy

The three best swing trading strategies are: “Breakout and Retest”, “Trend Trading”, and “Reversal Strategy”. Let’s learn about each strategy and their characteristics.

Swing Trading Strategy #1: Breakout and Retest

Here is a simple swing trade crypto strategy you can use for your first swing trade. The ‘breakout and retest’ is when a trade is executed once the price is above or below a certain level. Traders typically see a breakout occur but then wait for a retest, i.e. waiting for the price to reverse back to the resistance.

This swing trading strategy helps establish a trend but prevents investors from executing at the wrong time. Using moving averages and Bollinger bands as support tools to better use the ‘breakout and retest’ method.

Swing Trading Strategy #2: Breakout and Retest

Trend trading is the second strategy you can use to help you with swing trading crypto. With trend trading, you’re jumping on an ongoing trend. This might be a crypto asset heading up or down. What you’re doing is taking advantage of it by riding it.

This swing trading strategy involves using moving averages, trendlines, and similar tools to identify trends. From there, it’s about predicting how long a trend may last and determining where you are in the course of a trend (i.e. start, middle, or towards the end). It’s important to remember that every trend eventually comes to an end.

Swing Trading Strategy #3: Reversal Strategy

A reversal is when there is a change in price momentum. An experienced trader will know when to anticipate a change in the market trend. When that happens, they jump on it. For example, let’s say Ethereum is on an upward trend, but signs arise that it’s starting to reverse.

To swing trade crypto, enter a short position to sell when the price breaks a key support level. Some helpful indicators that can help to determine when to execute a reversal include the Relative Strength Index, Moving Average Convergence Divergence, and Average Directional Index.