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 make transactions.
The more strategies are familiar to the trader, 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 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 kept open for some time (usually from several hours to 2-3 days).
The main goal of swing trading is to get the greatest profit when making a small number of transactions.
A trader who chooses this style of trading strives to keep the trade open as long as the instrument confidently moves in one (positive or negative) direction.
As soon as there are signs of an upcoming price reversal, it’s time to close the deal. In order to make transactions in this way, you need a lot of experience and professionalism, and most importantly – a huge endurance.
Swing trading transactions depend on the market cycle, and in order to take advantage of its movement, a trader must have excellent analytical abilities, be able to act flexibly, and respond quickly to any change in the market situation.
WHAT IS THE MOST IMPORTANT THING IN SWING TRADING
The implementation of this strategy in practice has a number of features:
- Volume of transactions. Large leverage is not used. An open position must be able to withstand random and short-term trend corrections.
- Entry points are the moment of trend reversal and the emergence of a new trend. Usually the reason for the reversal is strong news. It is necessary to be able to distinguish news from the general flow 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.
- Duration of the transaction. The operation remains open as long as profit is generated. It is recommended not to close profitable trades, but to fix profits through take profit.
- Closing transactions. The reason for withdrawal from the transaction can be either news, which, according to the trader, will change the trend in the opposite direction, or the beginning of the reversal.
To enter the deal, it is recommended to choose a medium-term trend in its initial stage. With the correct entry, the position immediately begins to grow towards profit.
WHAT’S GOOD ABOUT SWING TRADING
The advantage of swing trading is that an open position within 2-5 days makes it possible to withdraw from the transaction when a sufficient profit is made and “stain aside” without reacting to jumps in the dynamics of the instrument value. You can make a profit regardless of the direction of market movement and earn in any situation.
Usually, 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 SWING TRADING SUITABLE FOR?
This style of trading can bring high profits in the cryptocurrency market, but not all traders are able to use it effectively.
Who is it suitable for:
- For patient, cold-blooded and restrained crypto traders.
- For those who strive to make money on the quality of transactions, not on their number.
- For those who have the opportunity to set large stop orders.
Who doesn’t fit:
- Traders who trade in an active and rapid style.
- Those who lack patience and want to quickly get results from deals.
- Those who are nervous are too emotional, and easily lose control of themselves when the market does not go in his direction.
- Those who do not have the opportunity to spend several hours daily analyzing the market situation.
Since positions can be opened for several days, more funds are required to start trading than intraday trading.
Swing trading is not suitable for inexperienced beginners. First, you need to be trained in crypto trading, gain basic knowledge, learn how to identify trends, calculate and control risks. But if a trader is ready to spend time studying all the intricacies of swing trading and learn how to manage his emotions, then this style of trading will bring him a good income.