Introduction

Swing trading is a commonly used trading strategy that is very suitable for beginners. Since the timeframe involved is manageable, it is relatively easy to express a view on the market. Swing traders are active in most financial markets such as Forex, stocks, and cryptocurrencies. But is swing trading right for you? Should you start with day trading or swing trading?

This article will cover the essentials you need to know about swing trading cryptocurrencies to help you decide if swing trading is the right choice for you.

What is swing trading?

Swing trading is a trading strategy that involves an effort to capture price movements that occur on short to medium time frames. The idea behind swing trading is to capture the market's "movements" over a period of days to weeks.

Swing trading strategies work best in trending markets. If there is a strong trend on a longer time frame, there may be many swing trading opportunities, and swing traders can take advantage of larger price movements. In contrast, swing trading in a consolidating market can be difficult. After all, if the market is moving sideways, it's difficult to capture large price changes.

How do swing traders make money?

As mentioned previously, swing traders aim to capture price movements that range from days to weeks. Therefore, swing traders hold positions longer than day traders but shorter than buy-and-hold investors.

Swing traders often develop trading ideas after performing technical analysis, but not necessarily to the same extent as day traders. Since fundamental events can last for weeks, swing traders can also perform fundamental analysis within their trading framework.  

But even so, price action, candlestick patterns, support and resistance levels, and technical indicators are all commonly used to identify trading situations. Some of the most commonly used indicators by swing traders include moving averages, relative strength index (RSI), Bollinger Bands, and Fibonacci retracement tools.

Swing traders typically look at charts on medium to long time ranges. why? Because a strong uptrend or downtrend must be confirmed over a longer time frame. But traders may also just look at the day's charts, such as the 1 hour, 4 hour and 12 hour charts, to find specific buy and sell levels. Because these trigger prices may be breakouts or pullbacks that occur on shorter time frames.  

But probably the most important time frame for swing trading is the daily chart. Even so, the trading strategies and investment strategies of different traders can vary greatly. Note that these are not strict rules, just common examples.

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What is the difference between day trading and swing trading?

Day traders aim to take advantage of short-term price swings, while swing traders seek larger moves. In fact, day trading is a more active strategy in which traders constantly monitor the market and do not hold positions longer than a day.

In contrast, swing traders may take a more passive approach. Their goal is to profit from price movements that take longer to occur, so they don't have to monitor their positions as frequently. These swings tend to be larger, so swing traders can make handsome returns from even a few profitable trades.

Day traders almost exclusively use technical analysis. Swing traders typically use a combination of technical analysis and fundamental analysis, generally placing more emphasis on technical analysis. On the other hand, investors may not consider technology at all and invest solely based on fundamentals.

Day trading or swing trading, which one is more suitable for you? Choose a longer or shorter time frame, focus on technicals or fundamentals, which scenario do you fit? Answering these questions can help you find the trading strategy that best suits your personality, trading style, and investment goals.

You can think about your strengths and choose the trading style that can best amplify your strengths. Some people like to open and close positions quickly so they don't have to worry about open positions while they sleep. While some people need more time to consider all possible outcomes and understand the trading plan in detail to make better decisions.

Of course, you can switch between different strategies to see which one produces the best results. You can also conduct simulated trading (that is, trade with virtual funds) first, and then apply the strategy to the actual trading plan.

How to Get Started with Swing Trading Cryptocurrencies

Swing trading is ideal for those new to trading. why? Because swing trading has a longer time frame (still not too long), it allows traders to make decisions calmly and monitor trades easily.

If you are new to trading, you can check out the Comprehensive Guide for Beginners to Cryptocurrency Trading. This guide has everything you need to know about trading, as well as some tips to help you find your own trading style. Once you’re satisfied with what you know, you can try simulated trading on the Binance Futures testnet. This way you can test your swing trading skills without risking real money.

Once you feel you are ready, you can start trading on a cryptocurrency trading platform. Which online trading platform is best for swing trading cryptocurrencies? There are many platforms to choose from, but the Binance ecosystem offers hundreds of market trading pairs, quarterly and perpetual futures contracts, margin trading, leveraged tokens, and more. Many of these products are ideal for swing trading opportunities.

Summary

Swing trading is a commonly used trading strategy in the stock market as well as cryptocurrencies. Swing traders typically hold positions for a few days or weeks, depending on the individual's trading style.

Should you choose swing trading or day trading? The easiest way to find out is to try both and see which one best suits your trading style. Before you start trading, it may also be helpful for you to learn risk management principles, such as learning to use stop losses and proper position sizing methods.