TLDR
Swing trading in cryptocurrency involves holding onto assets for several days to weeks, hoping to profit from short-term price swings. Crypto swing trading offers a medium-term focus for traders, providing a stable and consistent return on investment with the potential for high returns
While the best strategies are always trend following, breakout trading, contrarian trading, and mean reversion. These indicators can help traders make informed decisions: moving averages, RSI, Bollinger bands, Fibonacci retracement, and volume indicators.
The steps you must undertake include educating yourself about the market, choosing a reputable exchange, selecting a cryptocurrency, setting up a trading plan, utilizing technical analysis, keeping track of trades, and maintaining patience and discipline.
Are you interested in getting started with swing trading in the cryptocurrency market?
Swing trading is a strategy that involves holding a position for a few days or weeks to profit from short-term price movements. This beginner’s guide will explore the ins and outs of the swing trade and trading in crypto, including tips on identifying trends, indicators, and the pros and cons. Whether you are new to the swing trade, trading cryptos, or just looking to expand your investment portfolio, this guide will provide the knowledge and tools you need to swing trade crypto in 2024 successfully.
What is Swing trading?
Swing trading is a strategy that captures price moves in short to medium time frames. The idea behind swing trading is to catch market “swings” that play out over a few days to several weeks.
Swing trading strategies work because trend trading is best in trending markets. If there’s a strong trend on a higher time frame, swing and trend trading opportunities can be plentiful, and swing traders can take advantage of more significant price swings.
In contrast, swing trading can be more difficult in a consolidating market. After all, if the market is going sideways, it’s harder to capture significant price changes.
Characteristics of swing trading
An essential characteristic of swing trading is that it involves technical analysis. Technical analysis studies past market data, such as price and volume, to identify patterns and predict future price movements.
Many swing traders use technical indicators to help identify trends and make trading decisions. We have provided below a list of the most valuable indicators.
Swing trading in crypto can also have some unique characteristics due to the volatility of the crypto market. For example, crypto markets are open 24/7, so swing crypto trading traders must be prepared to act quickly on opportunities outside traditional trading hours.
Terminology swing traders should know
Regarding crypto swing trading, traders must be familiar with certain terminology to navigate the market successfully. Here are some critical terms that crypto swing traders should know:
Altcoin
Any crypto coins or cryptocurrency that is other than Bitcoin. Some examples of crypto coins or altcoins include Ethereum, Litecoin, Ripple, and Solana.
Altcoin
Bull market
A market in an uptrend characterized by rising prices.
Bull Market
Buying long
Purchasing a cryptocurrency with the expectation that its price will increase.
Bying Long
Buying short
Buying a cryptocurrency with the expectation that its price will go lower.
Buying short
Bear market
A market in a downtrend characterized by falling prices.
Bear market
Exchanges
A marketplace where people can buy and sell assets. Several cryptocurrency exchanges are set up today, which is constantly increasing.
Exchange
Fiat
Fiat refers to government-issued currencies, such as the U.S. dollar, the euro, and the renminbi.
Fiat currency
HODL
Crypto traders and investors use a term to indicate that they are holding on to their assets for the long term, regardless of short-term price fluctuations.
HODL
Volatility
The standard deviation of returns measures the degree of variation of a trading price series over time.
Volatility
Volume
The number of shares that are traded during a period. The period could be daily, weekly, monthly, or the current volume during the trading day.
Volume
Liquidity
The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price.
Liquidity
Market Cap
The total value of all of the coins of a particular cryptocurrency is calculated by multiplying the number of coins in circulation by the current price per coin.
Market cap
How to start crypto swing trading?
1. Start by educating yourself about the market
Before you start trading, it’s essential to understand how the market works. It would be best if you learned about the different types of cryptocurrencies and the technology behind them. Additionally, you should be familiar with basic trading terminology and concepts, like the ones we’ve mentioned above, such as support and resistance levels, trend lines, and moving averages.
2. Choose a cryptocurrency exchange.
To trade cryptocurrencies, you must use a reputable exchange. Some popular options include Binance, Coinbase, and Kraken. Research each exchange’s fees, security measures, and supported currencies before deciding. Pro Tip: Binance is the best crypto exchange for swing trading and the most common spot market since they have significant trading volumes and low fees. Kucoin is the best crypto exchange for swing trading altcoins since they have low fees and many spot markets. Gate.io is the best rare altcoin exchange since they have the most listed cryptocurrencies in spot markets but not the lowest fees.
More details
Binance is a great combination of low fees, deep liquidity and multiple cryptocurrencies and trading pairs. We have tested every aspect of it and it STILL holds its reign as the top exchange in the world. In our view, it is the perfect crypto exchange for both newbies and advanced traders alike.
-
Biggest exchange in the world.
-
Industry's lowest trading fees.
-
Advance trading options like leverage trading.
-
600+ crypto options, 150+ for the US.
-
Lucrative on-site staking options.
-
Hiccups in account verification.
-
Less regulated than some competitors.
-
The corporate structure is not transparently.
More details
Kucoin stands out among other crypto exchanges due to its impressive span of 1100 markets and 600 digital currencies. This, coupled with a user-friendly interface and secure investment environment, has made Kucoin an increasingly popular choice. However, US customers can not use the trading platform.
-
Ability to earn interest on crypto.
-
Low fees.
-
Good customer service.
-
Volume discounts on fees.
-
Features like margin and futures trading.
-
Not licensed in the U.S.
-
Lack of investment programs.
-
Low trading volume.
More details
Gate.io is a top centralized crypto exchange with decentralized features. Supporting 1400+ cryptocurrencies worldwide, its 0.2% trading fee appeals to experienced traders. Gate.io has a utility token (GT) that can get massive discounts as high as 75% on trading fees.
-
Wide range of cryptocurrencies.
-
Advanced trading tools.
-
Mobile app available.
-
Low trading fees.
-
Complex interface.
-
High deposit fees.
3. Choose your cryptocurrency
Bitcoin (BTC) is often considered the most profitable cryptocurrency in swing trading. However, using Ethereum (ETH) and other smaller altcoins in a swing trading strategy is also possible. Still, it’s essential to remember that the risk level is typically higher with smaller altcoins.
4. Set up a trading plan.
Before you start trading, it’s essential to have a plan in place. This should include your risk management strategy and your entry and exit points. This will help you to stay focused and disciplined during your trades.
Pro Tip: Start swing trading with a small amount of money and consider it lost.
5. Use technical analysis
The technical analysis evaluates securities by analyzing market activity-generated statistics such as past prices and volume. This tool can be valuable for identifying your trades’ potential entry and exit points. Some popular technical indicators include moving averages, relative strength index (RSI), and Bollinger Bands. Pro Tip: Check these Candlestick Patterns and their explanation provided in this guide by Crypto.com
6. Keep track of your trades.
One of the most important things you can do as a swing trader is to keep a detailed record of your trades. This will help you to identify your strengths and weaknesses, as well as to improve your trading strategy over time.
7. Be patient and disciplined.
Swing trading requires patience and discipline. Sticking to your trading plan and not getting emotional even if you experience losses is essential. Remember that the market is unpredictable and that losses are a normal part of trading.
Advantages and Disadvantages of Swing Trading
Advantages
Medium-term focus on cryptocurrency swing trading: Crypto swing trading allows traders to take advantage of medium-term price movements rather than short-term fluctuations, providing a more stable and consistent return on investment.
Potential for high returns: The crypto market is known for its volatility, which can quickly create opportunities for significant price changes. Swing traders can capitalize on these movements by buying low and selling high, potentially earning substantial profits.
Technical Analysis: Swing traders often use technical analysis to identify trends and make trading decisions. This analysis method involves studying past market data, such as price and volume, to predict future price swings. Technical indicators, such as moving averages and relative strength index (RSI), can help identify trends and make trading decisions.
Flexibility: Swing trading allows traders to hold positions for a few days or weeks, providing more flexibility than day trading or long-term holding. This will enable traders to adapt to changing market conditions and seize opportunities.
Risk Management: Swing trading also allows for better risk management than other forms of trading. Traders can set stop-losses to limit potential losses and adjust their strategies.
Availability of tools and indicators: A wide range of tools and indicators are available for crypto swing traders; this can be useful for identifying trends and making trading decisions. (Fibonacci retracement tool, for example)
Disadvantages of Crypto Swing Trading:
On the other hand, a disadvantage is high volatility: The crypto market is known for its high volatility, making it challenging to predict price movements and leading to significant losses if trades are not appropriately managed.
The crypto market is still largely unregulated. This can make it risky for traders as there is a lack of oversight and protection for investors.
Also, there is a lack of historical data and market analysis for the crypto market, making it difficult for traders to make informed decisions.
The crypto market is vulnerable to hacking and scams. Traders should know this risk and take necessary precautions to protect their investments.
Swing trading indicators
Swing trading is a popular strategy for trading cryptocurrencies, as it allows traders to hold positions for days or weeks to profit from medium-term price movements.
However, the volatility of the crypto market can make it challenging to navigate. Fortunately, several indicators can be used to help traders make informed decisions when swinging trading cryptocurrencies.
- Moving Averages: One of the most popular trend indicators, moving averages, shows the average price of an asset over a certain period. This can be useful for identifying the market’s direction and smoothing out price volatility. Simple moving averages (SMA) and exponential moving averages (EMA) are the most commonly used moving averages.
- Relative Strength Index (RSI): The RSI is a momentum indicator that compares an asset’s recent gains to its recent losses. It can identify overbought or oversold levels and help traders identify potential reversals.
- Bollinger Bands: These are a set of bands that are plotted two standard deviations away from a moving average. They can be used to identify overbought or oversold levels and potential breakouts.
- Fibonacci Retracement: This technical analysis tool uses horizontal lines to indicate support and resistance levels at the key Fibonacci levels before the price continues its original move.
- Volume Indicators: These indicators show how many traders buy or sell an asset. This information can help identify trends and confirm the validity of price swings.
It’s worth mentioning that these indicators can be combined to get a more comprehensive view of the market. Additionally, traders should always research and use proper risk management when trading cryptocurrencies.
Day Trading vs. Swing Trading
Regarding crypto trading strategy, there are two main strategies traders can use to trade cryptocurrency: day trading and swing trading.
Both strategies have advantages and disadvantages, and traders should carefully consider their preferences and risk tolerance for financial markets before deciding which approach to use.
Swing trading
Swing trading, on the other hand, is a strategy that involves holding positions for days or weeks. Starting swing trading aims to profit from medium-term price changes rather than short-term fluctuations.
Swing traders often use technical and fundamental analysis to make decisions and may hold positions for several days or weeks. They usually use lower leverage and make fewer trades per period. Swing and trading style requires patience and discipline to stick to a trading plan.
Cryptocurrency markets are highly volatile and can change rapidly, so keeping current on market conditions and adjusting your trading strategy accordingly is essential. Both day trading and swing trading cryptocurrency can often be profitable but require different skills and techniques.
Day one trading style is more challenging because it requires quick decisions and reacting to rapidly changing market conditions. Swing trading, however, requires identifying market trends and making medium-term predictions about market movements.
Day Trading
This strategy involves buying and selling cryptocurrencies within the same trading day. Day traders typically use technical analysis to decide to buy, sell, and execute trades that aim to profit from short-term price swings.
They are day traders who often use high leverage and make multiple daily trades. Day trading requires a high level of discipline and the ability to make quick decisions in a fast-paced market. It also requires the ability to handle stress and manage risk effectively.
Swing Trading crypto strategies
The volatility of the crypto market can make it challenging to navigate for swing traders.
- Trend following: This strategy involves identifying and following the market’s direction. Traders use trend indicators such as moving averages to identify the primary trend and make trades accordingly. For example, if the market is in an uptrend, traders will buy and hold long positions; if the market is in a downtrend, traders will sell in short positions.
- Breakout trading: This swing trading crypto strategy involves identifying critical support and resistance levels and trading when the price breaks through these levels. Traders use indicators such as Bollinger Bands and Fibonacci Retracement to identify these levels. When the price breaks through a critical level, traders will enter a trade toward the breakout.
- Contrarian trading: This strategy involves taking positions opposite the current market sentiment. Traders use indicators such as the RSI to identify overbought or oversold levels and trade in the opposite direction. For example, if the market is overbought, traders will sell or short positions.
- Mean reversion: This strategy involves taking positions based on the assumption that prices will eventually revert to their historical average. Traders use moving averages to identify the historical average and enter trades when the price deviates significantly from this average.
It’s important to mention that these trading strategies can be combined to get a more comprehensive view of the stock market now.
Additionally, traders should always research and use proper risk management when trading cryptocurrencies.
Is crypto swing trading profitable?
As with any trading, trading crypto and swing trading also includes risk, and traders should always be aware of their risk tolerance and be prepared to lose money potentially.
Another essential factor to consider is the cost associated with trading cryptocurrency. Crypto exchanges charge fees on trades, and traders should be aware of these costs and factor them into their trading strategies.
In conclusion, crypto swing trading can be profitable for experienced day traders willing to take on the risks.
Traders should always do their research, stay informed about market conditions, and use technical analysis and risk management strategies to make informed trading decisions.
Swing trading in the crypto market can be very profitable, with many traders even choosing to make it a full-time career. The crypto market is known for its volatility, which opens a wide range of opportunities for swing trading crypto that swing traders often aim to take advantage of with different strategies. More active swing traders can earn steady and consistent profits by exploiting these opportunities.
Final thoughts
In summary, swing trading in cryptocurrency can be a great way for trend traders to profit from short-term price movements in crypto coins.
By understanding key concepts of crypto investing strategies, such as identifying trends, using technical indicators, and managing risk, you can increase your chances of success as a crypto swing trader. Remember always to do your research and never invest more in trade crypto than you can afford to lose.
Ready to start your journey in crypto swing trading? First, sign up for a reputable cryptocurrency exchange and begin your education on the market. Don’t forget to watch our upcoming guide on setting up a crypto trading bot and plan for success.
Happy trading!
1. Start by educating yourself about the market.
2. Choose a cryptocurrency exchange.
3. Choose your cryptocurrency.
4. Set up a trading plan.
5. Use technical analysis.
6. Keep track of your trades.
7. Be patient and disciplined.
Shawn Munir
Shawn Munir is the CEO of Coinweb.com and spearheads all the collaborative partnerships for the platform. He bought his first Bitcoin in 2017 and never looked back. He is also an investor in 200+ Web3 startups and is considered an expert in the field. Before building Coinweb with his co-founders, he co-founded Presail, a management platform designed for companies and investors to manage their investments in Web 3. In addition to his entrepreneurial endeavors, Shawn serves on the United Nations...
