There are several strategies when it comes to trading cryptos or even other assets and stocks. One of these is Swing Trading Crypto, a medium-term investing approach that effectively mixes the benefits of daily trading and short-term crypto trading.

In this sense, swing traders tend to balance their knowledge of both approaches to create a joint strategy that picks the best of both worlds. This way, they are capable of investing in short by understanding the daily and weekly fluctuations of cryptocurrencies’ value.

In the subsequent lines, we break down swing strategy to provide you with a clear overview of its methodology and how it can benefit at most.

Swing trading is a common way of trading multiple types of assets and cryptocurrencies that uses the data, balance, and swift between bears and bulls when trading.

Unlike HODLing or day trading, swing trading positions tend to last more than a day but less than a couple of weeks. This situation classifies crypto swing trading as short-term crypto trading, which can guarantee high profits in a short period.

Swing trading cryptocurrency strategies allow you to leverage medium and short-term fluctuations of cryptocurrencies’ prices. These fluctuations can happen on a daily or weekly basis. In this sense, swing trading in crypto can deliver good profit if fluctuations make the price of the cryptocurrency grow enough in a short period. Other benefits are the following:

• It allows you to manage your time better. Since you do not have to spend all the time in front of your computer checking price fluctuations, you can probably use your time to perform new investments or businesses.   

• It allows you to avoid major stress. Day trading and other short-term strategies can mean major stress since you need to monitor values and results continuously. With a swing trading crypto strategy, you can take your time and hope for the best opportunity to sell.   

• It allows you to focus on price and volume. Swing trading is a simple approach to investments. Rather than focusing on deep analysis carried out by experienced traders, you can focus on price and volume to generate a good profit. 

• It allows you to optimize your investing strategy. A crypto portfolio should consider different types of assets and cryptos to diversify the profits and the risks. This way, you can leverage possible losses and better reinvest earnings.

Like any other strategy of the crypto market, the swing trading crypto strategy also has some disadvantages you need to keep in mind. The most relevant drawbacks are the following:

• A swing trader will probably have to deal with after-hours risks. Swing traders probably have to face losses or negative fluctuations after hours. This way, they need to be aware of possible notable changes in crypto values. 

• You need to be continuously watching the trends of values and fluctuations. This point is directly related to the previous one. A swing trading strategy is also a trend-catching strategy, so you need to be aware of everything happening during the duration of the investment. This situation can be a bit frustrating and tiring.

• You can miss long-term strategies. Often, you will be very focused on swing trading, and you will overlook long-term strategies that are equally important. It is not a good idea since long-term investment will allow you to ensure some profit and reduce risks in the long run.

When swing trading crypto, you need to apply a series of strategies and analyze multiple data to invest in crypto wisely. Some common swing trading crypto strategies that senior traders apply are the following.

Technical Analysis

Technical indicators give crypto traders the crucial data to make a logical investment decision. These indicators are mathematical, so traders get a more accurate view of prices and volume. Thanks to this data, they can compare previous prices and check trend trading to forecast future value.

Relative Strength Index (RSI)

This metric defines the strength of trends, their possible changes, and trading possibilities that traders can take advantage of changes in prices. Thanks to RSI, traders know whether crypto has been overbought or oversold.

If this indicator overpasses a specific number, it signals that the crypto has been overbought. Then it’s time to sell. On the other hand, if the indicator falls below a specific number, it’s a signal that the crypto has been oversold. It’s time to buy.

Bollinger Bands (BB)

A Bollinger Band indicates the probable price of crypto in a particular zone of the indicator. In the indicator, the middle band indicates the moving average (a middle path between ups and downs), and the upper and lower bands indicate the standard deviations.

Movements towards upper Bollinger Bands indicate an overbought zone and movements towards lower Bollinger Bands indicate an oversold area.

Exponential Moving Average (EMA)

The Exponential Moving Average indicates the support and resistance levels during a short-term fluctuation. In other words, it calculates the average price of the crypto for a particular period. This indicator also smooths the volatility that commonly confuses seasoned traders.

Triangle Trading Patterns

Triangles indicate patterns that most swing traders use to gauge the possibilities and behavior of the markets. This way, they can predict reductions in the volatility and break trends. These triangles also provide insights into the conditions of the market, allowing traders to create breakout strategies.

These triangles are commonly used when day trading, but they also work for swing trading since they allow traders to adjust positions and manage risks.  

Every good swing trade crypto trader knows that different trading strategies exist to leverage trading trends and get massive profits when selling.  Below, we delve into four of the most relevant and that you should learn to use if you want to be a good crypto trader.

Trend-Catching Strategy

Even though swing traders leave a position when they reach an objective, they sometimes aim at a trend-catching strategy used by trend traders to identify short-term trends. For example, when a pullback touches 50 MA, you can enter if there has previously been a bullish around 50 MA.

Identifying trends will allow you to enter the market with support and leave at resistance. This way, you leverage the crypto volatility.

However, this strategy can mean high transaction costs due to the number of transactions you do in a short period.

Fading Trading Strategy

Fading trading is a strategy that implies buying cryptos when the market is selling and selling when the market is buying. Although it can be a bit counterintuitive, you can capitalize on initial market reversals and profitable corrections due to the volatility of the crypto market.

However, this tactic can be a bit risky since you can lose money if the trend goes against you in reverse. Fundamental analysis is crucial to avoid this situation, which is why the strategy is rather reserved for experienced traders.

Breakout Swing Strategy

A breakout strategy takes place when the price of a particular crypto goes beyond a specific limit. Here, swing traders tend to open long positions to leverage a potential uptrend in the value of the asset. When traders see an expected level of volatility, they need to enter a trade. It corresponds to a crypto swing trading profitable strategy if you know how to leverage momentum.

Breakdown Swing Strategy

This strategy is directly the opposite of the previously mentioned. Here, you open a short position when the price of the crypto goes below the support level. Considering the moving averages and oscillators, you can leverage minimal variation with a great trading volume. If momentum takes off, you can get substantial profits.

To effectively carry out a breakdown swing strategy, your strategy must rely on support and resistance. Besides, you must be very disciplined to enter against a logical position trading.

Swing traders aim at different goals when applying this strategy over others, like HODLing or day trading. Let’s check the main differences between these three methodologies and why swing trading is great for leveraging the asset’s price action and more.

HODLing

HODLing is rather an investment method than a crypto trading strategy. It refers to a holder who acquires a cryptocurrency and keeps it for a long, long time. In other words, you buy a crypto and forget about it, confident that the price movements elevate the value in the future.

Swing trending is much more rewarding since it’s a short-term strategy that provides great profit if you know what you are doing.

HODLing is great for novices who do not have experience with market volatility.

The main characteristics of HODLing trading are the following:

• Traders follow market trends in long positions and periods.

• Most traders just make an initial analysis and then make a minimal effort.

• It requires minimal attention once the trade is working.

• This strategy is pretty simple since it’s just about buy and hold.

• Trades can last on the cryptocurrency market for a few days, weeks, months, or years.

Benefits of HODLing

When understanding swing trading, you notice that it brings some benefits to investments. The same happens with HODling. Some advantages of this long-run trading investment are the following:

• Risk mitigation. It reduces the impact of market fluctuations and short-term positions since it applies a long-term strategy that leverages losses. For this reason, HODLing should be an integral part of any investment portfolio.  

• Compound growth. As in HODLing you invest in an extended period, you can experience a compound growth coming from several assets or cryptos. Several returns on several investments will help you to generate additional returns over time. 

• Emotional resilience. HODLing teaches traders that long-term investments have ups and downs and that they must be resilient about it. This way, they boast a more stable trading mindset, which is great also for swing trading. 

Day Trading

Day trading is the complete opposite of HODLing since it involves performing multiple trades during the day. This way, day traders carry out several trades daily, trying to get the best profit from operations at the end of the day.

In this context, day trading functions as a full-time job and shares many similarities with swing trading strategies, particularly in the speed of transactions. As a result, swing traders can also be day traders, working simultaneously and executing daily transactions that yield multiple benefits.

In summary, the main characteristics of day trading are the following:

• Day traders swiftly enter and exit trades, relying on a few technical analysis indicators.

• Traders only trade during the day. They are completely out of trade at the end of the day.

• It involves active trading in small time frames. 

Benefits of Day Trading

Now, let’s check the primary benefits of practicing day trading, which mostly differ from long-term and swing trading.  

• Great for quick profits. Day trading is about short-term price movements. As such, this type of trading is designed to carry out multiple and frequent trades in a short period and get the most profit possible from quick transactions. In a day trading vs. swing trading scenario, day trading is better to enter cryptocurrency markets and out with huge earnings. 

• Easy access. Many traders, either novice or experienced, enter the market daily from the comfort of their home computers. Most platforms, like Binance, facilitate this process through their websites or applications, allowing you to trade the crypto asset of your preference with just a few clicks.

• No after-hours risks. Day trading, as its name indicates, is entering and outing in a single day. It means traders apply different strategies to buy and sell cryptos on a particular day. The trader should close positions at the end of the day. This way, their investments do not face the danger of falling. 

• Work for yourself. The potential gains of day trading are so good that many traders make this practice a 24/7 job. Bidding for crypto assets is a good way of living if you know what you are doing. It corresponds to day trading and long-term trading as well. A joint strategy may be the best decision to deal with crypto coins. 

The widespread adoption of swing trading in cryptocurrency indicates its potential for high profitability. However, achieving profits through this strategy is neither easy nor quick for most crypto swing traders.

Achieving success requires a deep knowledge of crypto swing trading strategies, methodologies, mechanics, and technical approaches to investing smartly. It also demands a lot of experience in the crypto markets and proficiency in using platforms like Binance or other crypto sites.

A really important part of applying swing trading is to test the strategy. This way, you can alter your investment strategy and even change the approach.

In short, if you’re getting sustainable gains in short-trend trading and cutting losses, then it’s likely that your perspective on swing trading is working. What’s more, if you maintain earnings for a few weeks –which is how long this strategy usually lasts– your strategy is doing well, and you can keep it for several weeks more. However, do not rest on your laurels about your trading style since cryptocurrency trading is very volatile.

Still, the best way of testing your swing trading strategy is to create a demo account, also known as a crypto paper trading account.

Crypto Paper Trading Account

Using a crypto paper trading account is one of the best ways to practice and perfect your trading. Thanks to a paper trading or demo, you can cut losing tons of money when swing trading.

But what is a crypto paper trading account?

It’s a process where you simulate swing trades in market swings to practice crypto investments. Through this simulation, you can learn the crypto market dynamics and how it works to face fluctuations better.

It’s called “Paper Trading” since traders write their predictions on paper, trying to understand the behavior of volatile markets. However, you must consider that this process is done completely through technology.

How to Implement a Crypto Paper Trading Demo?

In the first instance, you need to create an account on a crypto website or platform you’re interested in using. Depending on the platform you will use, crypto paper trading can require a complete version of regular transactions or just simple buy and sell buttons.

Crypto paper trading will provide you with virtual money. This way, you can invest in the crypto of your interest. Your virtual money will take the form of real cryptos that are actually being bought and sold on the platform.

Consequently, the platform will check and measure the results of your position and cryptos, giving you real-time information about rises and falls.

For example, if you buy $100,000 in ETH and the real price of Ethereum drops, the technical analysis tools of the platform will show that you’re losing faux money in ETH.

A good practice when implementing crypto paper trading is to set an amount and time limits. This way, if you invest the same $100,000 from before, you can select to do it in one month of trading. Once this period finishes, you can check the performance of your fake funds. If you get earnings, you can analyze at which points of the period your investments give good results. On the contrary, if you experience losses, you should do the same and check what actions went wrong.

We know trading can be a bit complicated for most regular humans out there. However, over time, learning to trade cryptos and other types of assets becomes easier and easier. The experience has crucial meaning, and implementing a try-and-failure approach is also necessary to be successful in the long run.

In this article, we’ve provided you with a general gaze of swing trading, a particular trading method that corresponds to a short-term strategy with benefits and drawbacks. Whether you trade in the Bitcoin market or any other crypto asset, you should consider the pieces of advice we’ve given you in this post.

Still, to learn much more about the trading and trending market, other types of investments, methodologies, and general info about the tech world, follow our blog. Please subscribe to our newsletter by using your email to be aware of all the news of the site, offers, and much more!