Beginner's Guide To Swing Trading Crypto

In Trading Strategies

Trend trading and day trading could easily be the most popular trading strategies out there. Across the world, in different markets, thousands of traders are involved in both. However, something that does not quite get the reputation it should is swing trading.

The fundamental trading strategy can potentially generate a lot of profit and works with a multitude of asset types. Cryptocurrencies are the kind of assets you can swing-trade.

In this guide, Liquid has explained the basics of swing trading in the context of the crypto ecosystem. We hope this helps you get the required jump-start in the domain.

What Is Swing Trading?

In the traditional sense, swing trading is a speculative trading strategy used by traders in different markets and various assets. The trader will hold the tradeable asset for anywhere between a few days to up to a few weeks.

That is different from day trading, where the assets are held for not more than a day, and trend trading, where a trader could have the assets for weeks, months, or years based on the market trends. 

Because of the place swing trading occupies on the spectrum, it poses quite a few benefits and drawbacks. Understanding these benefits/limitations is important regardless of the asset you choose for swing trading. Considering how volatile and unpredictable crypto assets are, you should be extra diligent while planning to swing-trade a cryptocurrency or another investment.

Advantages of Swing Trading

Some of the reasons why traders prefer swing trading to intraday trading and trend trading are:

  • Unlike intraday trading, swing trading does not require constant attention from the trader. While an average day trader may spend several hours per day in front of the desk, going through numbers, the swing-trader does not have to do that. Provided that the trader has done sufficient research before investing in the asset, swing trading requires a few hours of work every week.
  • The amount of effort required for swing trading is also comparatively lower than day-trading. In most cases, traders will depend on Technical Analysis, using historical data and price charts to determine asset-management actions. That is a more comfortable option and does not require a massive amount of work from the trader.
  • Swing trading any asset proposes better short-term profit potential. That is, when focusing on a well-curated set of assets, swing trading can generate a good amount of profit within a relatively smaller time-period. That is why swing trading is preferred by those who want to develop a monthly income from trading.
  • Compared to intraday trading and long-term trading, swing trading provides better control over the market risks. We should also consider that swing trading wants you to check only fewer stocks instead of a couple of hundreds. As a result, the trader can use Technical Analysis and Fundamental Analysis to focus on the investments and make the right decisions.

Disadvantages of Swing Trading

These are some areas where swing trading requires a little more attention or discretion from the trader.

  • Because of the extended holding period, assets involved in swing trading are subject to other market risks. For instance, the trade positions may drastically change overnight or during a weekend. That does not happen in intraday trading since the trader does not keep the asset overnight.
  • Another limitation of swing trading is that it sometimes fails to notice the more prominent market trends. Since swing trading’s core idea is to hold the asset for a couple of weeks and get the maximum profit, the strategy does not consider potential long-term gains.
  • While swing trading does not require as much time as day-trading, the trader needs to have a deeper understanding of the market. They would also need sufficient experience with Technical Analysis and Fundamental Analysis. 

Now that we have seen the pros and cons of swing trading, shall we check out the different aspects of swing trading crypto assets?

Swing Trading Crypto

Swing trading tries to capture value differences in a medium-sized period and generate a profit out of it. When we bring this idea to the context of crypto assets, however, there are a few issues. The problems occur mostly because of the volatile nature of the crypto market as a whole. Bitcoin, the most popular crypto asset, is the best example of this. 

For years, traders have tried to predict the Bitcoin asset’s growth patterns and generate some profit. However, almost every time, an unprecedented factor affects the price of BTC, causing the value to change drastically. Sure, there are stablecoins. However, the core idea remains more or less the same.

Therefore, you should pay attention to a few factors before Swing Trading crypto.

  • Comprehensive Focus: In the world of crypto, you cannot focus on a single asset and gain profit. You may, after all, trade a single asset, but you should have a comprehensive understanding of the market at any time. Only then will you understand how the asset you have invested in interacts with other investments, including Bitcoin.
  • Higher Risk: When you plan to swing trading crypto, you should be ready to lose what you invested. In other words, traders are often advised not to invest more than they can afford to lose.

Summing Up

If you understand these aspects, you can think about the best ways to swing trade crypto. Make sure you choose a trading platform that offers on-time support and documentation to help you get started with swing trading other crypto trading strategies. You should also see if the platform allows you to choose between a decent variety of crypto assets from the market. 

After all, diversifying your crypto portfolio is an effective way to keep things under control. But, then again, you need to spend more time on analytics. We hope we could help you learn the comprehensive concept of swing trading in the cryptocurrency context.

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All guest authors’ opinions are their own. Liquid does not endorse or adopt any such opinions, and we cannot guarantee any claims made in content written by guest authors.

This content is not financial advice and it is not a recommendation to buy or sell any cryptocurrency or engage in any trading or other activities. You must not rely on this content for any financial decisions. Acquiring, trading, and otherwise transacting with cryptocurrency involves significant risks. We strongly advise our readers to conduct their own independent research before engaging in any such activities.

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