Swing Trading Crypto: Tips and Strategies

Swing trading crypto refers to a short- to medium-term trading strategy where traders attempt to profit from price swings over a period of days to weeks.

In the next lines I will provide an in-depth overview of how I see swing trading cryptocurrency from personal experience, including strategies, tips, and things to watch out for.

In this article you’ll learn:

What is Crypto Swing Trading?

Swing trading is the middle child between day trading and long-term investing, based on how long you keep your assets. You’re looking at holding onto them:

• Day Trading – assets held intraday
• Swing Trading – assets held for days to weeks
• Investing – assets held for months to years

Swing trading style applies well to digital assets like Bitcoin and Ethereum. Using this strategy you will analyze price charts to find opportunities to buy low and sell high over a timeframe of several days to a couple weeks.

Some key characteristics:

• Holding period – days to weeks
• Number of positions – often concentrated in fewer assets vs. day trading
• Risk management – wider stops than day trading due to longer holding times
• Returns -aim for larger returns per trade than scalping, smaller returns than investing

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.

Why Swing Trade Crypto?

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

• Volatility – Crypto tends to make big moves compared to stocks and forex, creating more swing trading opportunities.
• Market inefficiencies – Crypto markets are newer with more inefficiencies to exploit.
• Trading fees – Crypto 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 substantial swings.

However, the volatility also makes crypto riskier than other assets. Swing traders need to have robust risk management in place, like wider stops and avoiding overleveraging.

Strategies to Swing Trading in Crypto

Many short-term trading strategies can be applied to swing crypto trading. Some strategies known to crypto swing traders include:

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 crypto 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 crypto 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 swing trades. Smaller caps can work but liquidity may suffer during market downturns.

Pros and Cons of Swing Trading Crypto

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

Pros

• Larger gains – Swing trades aim for larger gains per trade than scalping strategies.
• More flexibility – Swing trading 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 swing 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?

It can clearly be profitable, but also carries higher risk compared to stocks and forex. The high volatility results in big swings that represent large profit potential.

However, crypto markets move extremely fast, and substantial volatility raises the risk of sharp reversals and big overnight price gaps. You will use wider stops and avoid overleveraging.

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.

Some qualities of a good strategy include:

• Positive expectancy proven by backtesting
• Defined entry and exit rules for trades
• Accounting for transaction costs like fees
• Robust risk/reward ratios per trade
• Win rate typically 40%-60%

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 Strategies

Swing trading compared to day trading crypto differs in a few important ways:

Day trading involves closing all positions before the daily session ends. Swing trading 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.
• Watch order flow – Monitor Crypto Quotes and Time & Sales for clues on direction.
• 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 – Forcing marginal trades leads to more losers and commissions. Wait for quality setups.
• No stops – Not using stops results in large losses when trades go awry. Always use stops.
• Revenge trading – Don’t chase trades after losses to try making it back. Stick to the trading plan.
• No profit targets – Targets create an exit plan and help lock in gains. Exits shouldn’t be arbitrary.
• Poor risk/reward – Look for trades with profit potential at least twice the risk.
• Fighting trends – Don’t try picking bottoms or tops. Trade with momentum.
• Ignoring fees – Fees add up with frequent trading. Ensure fees don’t eat up profits.
• No strategy – Trading without a defined strategy leads to emotional decisions. Develop a strategy.

Swing trading cryptocurrencies successfully requires planning and discipline. Traders should avoid impulsive decisions and focus on high probability, high risk/reward trades.

Swing Trading Cryptocurrency Full Time?

Can cryptocurrency swing trading realistically be done full time as a primary source of income? Possibly, but it presents challenges.

Reasons swing trading crypto full time is risky:

• High stress – Volatility causes large swings in account balances.
• Burdensome – Full-time trading allows little free time away from markets.
• Unstable 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 substantial savings – Have adequate reserves to survive inevitable losing streaks.
• Start small – Prove profitability trading small size before increasing.
• Have a mentor – Joining an experienced trader can shorten the learning curve.
• Keep expenses low – Reduce expenses so required trading profits are less.
• Develop routines – Create healthy daily habits and avoid burnout.

Careful consideration should be given before attempting to swing trade cryptocurrency full time. Traders should prove profitable over at least 6-12 months trading small size first. Financial reserves can cushion drawdowns when scaling up.

Traders aiming to make a full-time living from crypto should network to find mentors, maintain a routine, and focus on consistent execution of a defined strategy. Swing trading profits can potentially support a full-time income with dedication and discipline.

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 crypto 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.

Remain disciplined in following the trading plan and managing risks.

We find these exchanges best suited for swing trading:

Bottom Line – How to Swing Trading Right as a Beginner

Cryptocurrencies provide great markets for swing trading due to their immense volatility. Swing traders make money capturing large price swings over several days to weeks.

However, the speed and volatility of crypto also makes it riskier than most assets. Effective risk management, proper strategy, and reasonable size relative to account balances are key for longevity.

Profits are certainly attainable for disciplined traders. Those able to expertly ride the short-term trends and fluctuations in cryptocurrency prices stand to realize substantial profits from swing trading.

Check out also these cryptocurrency trading types and strategies:

• CFD trading
• Copy Trading
• Leverage trading

FAQ for Crypto Swing Traders

What is the typical holding period for swing trading cryptocurrency?

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 in 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?

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 cryptocurrency?

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.