When choosing a trading strategy in the cryptocurrency market, a trader should proceed from his trading experience, personal qualities of character, the size of the deposit and the availability of free time to complete transactions. The more strategies a trader is familiar with, the richer his experience, and the more profitable situations he is able to see in the market.
Today we will talk about one of the styles of cryptocurrency trading – swing trading. The method is quite convenient, it opens up wide opportunities for making a profit, but it is not suitable for all traders.
The concept of swing trading
This style of trading is based on the use of price changes, however, like all trading strategies, but its peculiarity is that the position is held open for some time (usually from several hours to 2-3 days). The main goal of swing trading is to get the most profit from a small number of trades. A trader who has chosen this trading style strives to keep a trade open as long as the instrument moves confidently in one (positive or negative) direction.
As soon as there are signs of an impending price reversal, it is time to close the deal. In order to make transactions in this way, you need a lot of experience and professionalism, and most importantly – great endurance. Swing trading trades depend on the market cycle, and in order to capitalize on its movement, a trader must have excellent analytical skills, be flexible, and react quickly to any change in the market situation.
The most important in swing trading
The implementation of this strategy in practice has a number of features:
- The volume of transactions. Large leverage is not used. An open position must be able to withstand occasional and short-term trend corrections.
- Entry points – the moment of a trend reversal and the emergence of a new trend. Strong news is usually the reason for the reversal. You need to be able to select news from the general stream that can form a long-term powerful trend. The position should be opened with absolute confidence in the reversal, and if the range of movement against the trend is greater than the usual value of the correction.
- The duration of the transaction. The transaction remains open while profits are generated. It is recommended not to close profitable trades, but to fix profits through take profit.
- Closing deals. The reason for exiting a trade can be either news, which, in the trader’s opinion, will change the trend in the opposite direction, or the beginning of a reversal.
To enter a trade, it is recommended to choose a medium-term trend in its initial stage. With a correct entry, the position immediately begins to grow towards profit.
What is good swing trading
The advantage of swing trading is that an open position within 2-5 days makes it possible to exit the trade when sufficient profit is made and “stay away” without reacting to jumps in the dynamics of the instrument’s value. You can make a profit regardless of the direction of the market movement and make money in any situation.
Typically, the profit that this style of trading brings is greater than that of scalping and other intraday strategies. But a trader gets all these advantages only if he knows how to choose the “right” trends and correctly interprets events in the market.
Who is suitable for swing trading
This trading style can be highly profitable in the cryptocurrency market, but not all traders are able to use it effectively.
Who is it for:
- For the patient, cold-blooded and reserved crypto traders.
- For those who seek to make money on the quality of transactions, not on their quantity.
- For those who have the ability to place large stop orders.
Who is not suitable for:
- For traders who trade in an active and fast paced style.
- For those who lack patience and want to get results quickly from deals.
- For those who are nervous, overly emotional, and easily lose control of themselves when the market goes in the wrong direction.
- Those who do not have the opportunity to spend several hours every day analyzing the market situation.
- Since positions can be opened for several days, more funds are required to start trading compared to intraday trading.
Swing trading is not suitable for inexperienced beginners. First, you need to undergo training in crypto trading, get basic knowledge, learn to identify trends, calculate and control risks.
But if a trader is willing to spend time learning all the intricacies of swing trading and learning how to manage his emotions, then this trading style will bring him good income.