Swing Trading Crypto: Tips and Mistakes to Avoid

Gianluca Lombardi, 9 min read
Last Updated: 13 April, 2024

swing trading crypto

Hey, let’s talk about swing trading in crypto—it’s actually one of my favourites.

It’s about catching those moments when the market peaks or dips, but without having to be glued to my screen all day like it is the case with crypto scalping or waiting forever like you’re investing long-term.

I’m excited to break down how I approach it. What mistakes I make and the lessons I learned over the year.

Let me share some of the smart moves that have really paid off for me.

We’ll look at what strategies work best, toss in a few straightforward tips, and I’ll point out some typical traps to avoid.

What is Crypto Swing Trading?

If you are new to this concept, let me explain it really quick.

It is one of the 16 crypto trading strategies I share and compare.

Swing trading sits between day trading and long-term investing based on the holding period. Traders typically hold assets anywhere from a few days to a few weeks, capturing gains from intermediate price swings.

  • Scalping – assets traded within minutes or hours
  • Day Trading – assets held intraday
  • Swing Trading – assets held for hours to days
  • Investing – assets held for months to years

As you can see, swing trading sits in the middle between day trading and long-term investing. The holding period and return targets per trade differentiate it from other trading strategies.

Swing trading style applies well to digital assets like Bitcoin and Ethereum because of their volatility.

Using this strategy you will analyze price charts to find opportunities to buy low and sell high over a timeframe of several hours to a a few days, sometimes even a week.

Why Swing Trade Crypto?

There are a few potential advantages of this type of trading vs other trading approaches:

  • Volatility – Bigger moves compared to stocks and forex, creating more swing opportunities.
  • Market inefficiencies – Markets are newer with more inefficiencies to exploit.
  • Trading fees – Fees are generally lower compared to traditional trading fees.
  • 24/7 markets – Cryptocurrency markets run 24/7, allowing swing trades to develop overnight.

The high volatility of crypto makes it better suited for swing trading than other markets. Cryptocurrency frequently stage major rallies and crashes, giving an opportunity to profit from these big swings.

But be careful – the volatility also makes these assets riskier than others. Swing traders need to have robust risk management in place, like wider stops and avoiding overleveraging.

Strategies to Swing Trading in Crypto

crypto swing trader illustration

Many short-term strategies for trading may be applied to swing crypto trading.

Ready for some theory? Well done. Let’s do this.

Trend Trading

Trend trading involves identifying the overall trend direction and trading in alignment with it. This means buying on uptrends and selling on downtrends.

There are a few ways to identify trends:

  • Moving averages – Swing traders use the 50 and 200-day moving averages to define the trend. When the shorter moving average is above the longer moving average, it signals an uptrend.
  • Higher highs & lower lows – Uptrends make higher highs and higher lows. Downtrends make lower lows and lower highs. You must trade in the direction of this momentum.
  • Support & resistance – You identify support and resistance zones that price repeatedly reacts to. Then trade in line with the established support/resistance.

Range Trading

Range trading involves identifying price ranges and trading reversals when support or resistance is reached. This involves buying near support and selling near resistance.

Range trading strategies include:

  • Horizontal channels – Price oscillates between clear support and resistance zones. Traders buy near support and sell near resistance.
  • Bollinger Bands – Bands represent standard deviation ranges. Swing traders sell near the upper band and buy near the lower band.

Range trading works well when volatility contracts and price gets stuck oscillating between ranges.

News/Event Trading

This strategy aims to capture price movements around major news events and product releases. Examples include:

  • New exchange listings
  • Mainnet launches
  • Partnership announcements
  • Major software upgrades

Swing traders take a directional bias ahead of the event and hold through the announcement for the post-event price swing. The key is anticipating whether the news will be perceived as bullish or bearish by the market.

Chart Pattern Trading

Certain chart patterns are thought to signal potential price breakouts or breakdowns. Swing traders use these patterns to identify trading opportunities in the direction of the expected move.

Some of the chart patterns swing traders look for include:

  • Wedges – Rising or falling wedges precede breakouts. Trade in breakout direction.
  • Triangles – Descending and ascending triangles signal breakouts. Trade breakout direction.
  • Head and shoulders – Head and shoulders reversal patterns mark trend changes. Trade the projected move.

Crypto chart patterns form frequently on shorter timeframes. As a trader you will often use the 1-hour to 4-hour charts to identify pattern signals.

Best Crypto to Swing Trade

Many coins can be swing traded, but some share characteristics that make them favorable for this style of trading.

Here are some features of the best cryptocurrency for swing trading:

  • High liquidity – Liquid markets readily fill orders without significant slippage or impacting price. This allows smooth order entries and exits.
  • High volatility – Big price swings create more opportunities.
  • Well-established – Long track records make price patterns more reliable.
  • Available trading tools – Advanced charting with indicators helps traders identify trades. Access to leverage if desired.

Based on these criteria, some of the best crypto to swing trade is:

  • Bitcoin (BTC) trading – The highest liquidity and most established crypto. Swings regularly between ranges.
  • Ethereum (ETH) – Second largest coin with high liquidity. Volatility allows those trades.
  • Litecoin (LTC) – One of the first altcoins with substantial liquidity.
  • Binance Coin (BNB) – Native exchange token with high fluctuations and volume.
  • Cardano (ADA) – Smart contract platform often in an uptrend or range.

Bitcoin tends to be the most liquid and volatile cryptocurrency, making it a top choice. Larger cap altcoins like Ethereum also allow smooth swings to trade. Smaller caps can work but liquidity may suffer during market downturns.

Pros and Cons of Swing Crypto Trading

Swing trading cryptocurrency offers some advantages but also has some distinct risks to consider.

Pros

  • Larger gains – this strategy aims for larger gains per trade than scalping strategies.
  • More flexibility – can be done part-time since trades last over days.
  • Wider stops – Trading over longer periods allows for wider stops vs day trading.

Cons

  • Market risk – Large, unexpected price swings can stop out trade positions.
  • Overnight gaps – Gaps occur when trading 24/7 crypto markets overnight.
  • Uncertainty – Fundamentals can shift over the longer trade timeframe.

The pros and cons will differ depending on the individual trader’s style and risk tolerance. More patient traders may favor swing trading, while action-seekers prefer quicker day trades.

Is Crypto Swing Trading Worth It?

laptop with swing trading graph

Yeah, it can definitely be a goldmine, but also a lot riskier than your typical stock or forex play.

The thing with crypto is, it moves fast and hard. Those big swings? They mean big money, but also big risks. Where big losses are on the table. You need balls.

We’re talking sharp turnarounds and overnight surprises that could throw you off your game.

Here are some tips for managing risk when you swing crypto:

  • Use stop losses on all trades
  • Trail stops to lock in gains
  • Avoid excessive leverage (10-20x max)
  • Maintain a USD hedge
  • Diversify holdings across assets
  • Close partial positions to scale out

The quality of the trading strategy also impacts profitability. An edge in the markets is required for consistent success.

Follow solid risk management rules and develop an edge with your trading strategy. Many traders can successfully swing trade part-time for profits if the proper principles are followed.

Day Trading Vs Swing Trading Comparison

Let’s compare these two most popular crypto trading strategies.

Swing Trading Day Trading
Holding period days to weeks Holding period intraday
Wider stops needed Tighter stops can be used
More market exposure overnight Little exposure overnight
More flexible trading hours Must actively trade session
Potentially larger returns Smaller target gains per trade

Day trading involves closing all positions before the daily session ends.

Swing trading  on the other hand maintains positions overnight to capture larger swings. It also utilizes wider stops due to the longer holding periods.

Day trades exit quickly using tighter stops.

Both strategies aim to profit from short-term price fluctuations. Swing trading targets larger gains per trade with loose stops, while day trades target smaller wins with tighter stops.

Neither approach is necessarily better than the other. It depends on the trader’s style, availability, and risk tolerance. Both strategies can successfully trade crypto markets.

Tips for Swing Traders

Here are some effective tips for swing trading cryptocurrencies:

  • Master chart analysis – Use indicators like moving averages effectively and learn to spot patterns.
  • Manage risk – Use wide stops and position sizing. Avoid excessive leverage.
  • Be patient – Wait for quality setups matching your strategy vs chasing trades.
  • Trade the range – Buy support and sell resistance until price breaks out.
  • Take profits – Scale out winners incrementally on strength.
  • Stick to top coins – Trade large caps with ample liquidity for smooth entries and exits.

Develop your technical and chart analysis skills to identify profitable trades. Strong risk management is key given crypto’s volatility. Patience and discipline will improve your results here.

Common Mistakes Applying Crypto Swing Trading Strategies

It is easy to make mistakes when first starting out with swing trading. Being aware of the most common errors can help traders avoid them.

Some mistakes to avoid:

  • Overtrading – I often realize I force myself into marginal trades. But that only leads to more losing trades and commissions paid. Wait for quality setups.
  • No stops – Not using stops results in large losses when trades go awry. Always use stops.
  • Revenge trading – I used to chase trades after losses to try making it back. Don’t do that – stick to the trading plan.
  • No profit targets – Targets create an exit plan and help lock in gains. Exits shouldn’t be arbitrary.

Swing trading cryptocurrencies requires planning and discipline.

If discipline is not your superpower, then you should probably look for another trading strategy.

Swing Trading Cryptocurrency Full Time?

As a professional trader, I did have swing trading as my main strategy at some point in my career.

Maybe you ask – can swing trading crypto be done full time as a primary source of income?

Possible, yes. But let me highlight the challenges and then you can decide for yourself.

  • High stress – Volatility causes large swings in account balances.
  • Burdensome – Full-time trading in general allows little free time away from markets.
  • No fixed income – Trading income fluctuates compared to salaries.

That said, many day traders do make a living from cryptocurrency as full-time swing traders. Some tips if attempting full-time trading:

  • Have a mentor – Joining an experienced trader can shorten the learning curve.

Careful consideration should be given before attempting to trade cryptocurrency full time. As a trader, you should prove profitable over at least 6-12 months.

Getting Started with Swing Trading Crypto Strategies

Here are some steps to effectively get started swing trading cryptocurrency:

  1. Decide markets – Choose one or several liquid, volatile markets.
  2. Open account – Fund an account at a crypto exchange with trading capabilities.
  3. Develop strategy – Define entry rules, exit rules, and risk parameters.
  4. Refine strategy – Backtest for viability and refine the strategy.
  5. Implement small – Execute strategy with small size to prove profitability.
  6. Analyze results – Review trades to assess performance and look for improvements.
  7. Increase size – Grow position size incrementally as profits become consistent.
  8. Stay disciplined – Stick to the strategy and risk rules without emotion.

Start by focusing on a select few liquid crypto assets. Rely on practice to master this strategy. Prove the strategy profitable over time with small amounts. Only increase position sizes after consistency is demonstrated.

We find these exchanges best suited for swing trading:

Winner
eToro-Icon
Hybrid

ecoinomy average rating:

9.5/10

Assets Traded Stocks, Indices, ETFs, Currencies, Commodities, Cryptoassets
Max Leverage Up to 30:1 (varies by asset)
Trading Fees Spread 1%
Regulations EU, USA, UK, Austalia, Middle East
Cryptocurrencies 79+ BTC-Coin-IconETH-Coin-IconMIOTA-IconBCH-IconRipple-IconDASH-IconADA-Coin-IconEOS-IconLTC-IconNEO-IconXLM-IconZEC-IconEthereum-Classic-IconBNB-Icon
Payment Methods PayPal, Visa, MasterCard, Skrill, Neteller, SEPA, WebMoney
Number of Users 30 Million+

9.7/10 - Safety

9.1/10 - Fees

9.6/10 - Ease of Use

9.3/10 - Customer Service


Start here

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.


Top Exchange

bingx logo
Exchange

ecoinomy rating:

9.1/10


Max Leverage Up to 125:1
Headquarters Singapore
Deposit Fees Crypto, SEPA 0%
Trading Fees 0,02% - 0,1%
Cryptocurrencies 530+ BTC kryptowaluta logoETH logo della criptovalutaBCH logo della criptovalutaRipple криптовалута логоADA криптовалута логоLTC криптовалута логоTezos криптовалута лого
Payment Methods Crypto, SEPA
Number of Users 10+ million

Security

Fees

Ease of Use

Customer Service


Start now

bybit logo
Exchange

ecoinomy rating:

9.0/10


Max Leverage 100:1
Headquarters Dubai
Deposit Fees Card 2%
Trading Fees 0,075%
Cryptocurrencies 470 BTC kryptowaluta logoETH logo della criptovalutaBCH logo della criptovalutaRipple криптовалута логоADA криптовалута логоLTC криптовалута логоTezos криптовалута лого
Payment Methods Crypto, Visa, MasterCard
Number of Users 3.000.000+

Security

Fees

Ease of Use

Customer Service


Start here

bitget logo
Exchange

ecoinomy rating:

8.9/10

Max Leverage 100:1
Deposit Fees Debit card 3-4%
Trading Fees 0.1%
Regulations
Cryptocurrencies 500+ BTC logo CriptovaluteETH Criptovalute logoIOTA logoBCH logoRipple logoDASH logoADA logoEOS logoLTC logoTezos logoNEO logoXLM logoZEC logoETC logoOmise-Go logo
Payment Methods Crypto, Visa, MasterCard, Bank Transfer, SEPA
Number of Users 2.000.000+

Security

Fees

Ease of Use

Customer Service


Go to Bitget

Bottom Line – How to Swing Trading Right as a Beginner

So, swing trading with cryptocurrencies—it’s a wild. Mainly because of how volatile the market is.

You’re basically looking to snag profits from those big price swings that can happen over days or even weeks.

But here’s the deal: the same speed and ups and downs that make crypto exciting also make it riskier than other stuff you could trade.

To stick around in this game, you’ve got to manage your risks smartly, choose the right strategies, and make sure you’re not betting the farm with every trade.

It’s all about discipline and knowing when to make your move.

Check out also these cryptocurrency trading types and strategies:

FAQ for Crypto Swing Traders

What is the typical holding period for swing trading crypto assets?

The holding period for swing trading crypto is usually between a few days to a few weeks. Swing traders aim to capture larger price swings than day trading, while closing positions faster than long-term investing.

What are some strategies used to swing trading?

Common strategies include trend trading, range trading, news/event-based trading, and chart pattern trading. Identifying trends, support/resistance ranges, upcoming news events, and chart patterns can all provide trade setups.

Which cryptocurrency is best for swing trading?

The best cryptocurrency for swing trading have high liquidity, volatility, and trading volume. Top choices include major coins like Bitcoin, Ethereum, Litecoin, Binance Coin, and Cardano.

What are some risks involved in swing trading crypto assets?

Risks include high volatility leading to quick price reversals, large overnight price gaps when trading 24/7 markets, and uncertainty over longer holding periods. Stop losses and prudent position sizing are important.

Can you make a full-time living swing trading Bitcoin?

It is possible but challenging. It requires substantial trading experience, robust risk management, adequate capital, and the discipline to adhere to a defined trading strategy. Most traders attempting full-time trading have years of experience.

What beginner tips help when first starting crypto swing trading?

A: Tips for beginners include mastering chart analysis, managing risk/reward, trading patiently only on high probability setups, and starting small to prove profitability before increasing position size. Joining an experienced trader can accelerate the learning curve.

What common mistakes should swing traders avoid?

A: Common mistakes include overtading, not using stops, revenge trading after losses, ignoring fees/commissions, fighting clear market trends, and having no defined strategy. Patience and discipline following a trading plan are key.

Gianluca Lombardi

Gianluca is the editor-in-chief of this site. A finance graduate, he is an active trader who has tested all trading platforms and knows all their secrets. Technology is his passion; he spends much of his free time in the metaverse. Gianluca loves learning new things, researching, discussing and writing about technology, especially when it comes to cryptocurrency and blockchain technology.