Swing trading is a type of trading strategy that tries to take advantage of the volatility that the crypto market offers.
A typical swing trader is expected to hold his crypto assets for more than a day and usually no more than 2 months.
The main tools that traders use in order to predict the price direction are the both technical and fundamental analysis.
Additionally, swing trading cryptocurrency is considered to be a beginner friendly strategy in contrast with scalping and intraday trading strategy.
If you are interested to learn more about scalping, click here, and if intraday trading catched your attention you can learn more about it here.
Finally, the best cryptocurrency for swing trading is considered to be the Ethereum.
So, let’s waste no time and let’s take a more thorough look at what swing trading is and how you can make the most out of it.
What is swing trading in cryptocurrency?
Swing trading is a technique that aims to get advantage from market trends.
It’s main characteristic comes from the period of time that the trader intends to keep his crypto asset, which is not too short and at the same time not too long.
The time horizon is usually from a couple of days to a couple of months.
All you need to do is to identify a cryptocurrency that it’s price seems to be undervalued and there is a possibility for the price to rise.
So you buy this crypto, wait until the price starts increasing and then sell it to make profit.
In addition, there is also a possibility to gain profit even though you anticipate for the value to fall.
In this scenario, if you own cryptocurrencies and you predict that their value is going down, you could sell some of them at a higher price and get them back when the price decreases.
Swing trading is recommended for beginners
In contrast with scalping and day trading, swing trading crypto strategy is more suitable for new and inexperienced traders.
The reason for that is the time frame, because swing trading doesn’t come with the stress that those fast paced strategies have.
Additionally, in order to profit from swing trading you don’t have to worry too much about controlling your emotions, which is a success factor in the other two strategies.
Swing trading success is based on the ability of the trader to detect price tendencies.
What type of analysis should I do to be successful in swing trading?
In order to achieve his goal the trader needs to dedicate time analyzing trading charts.
His aim will be to spend time studying historical data so as to discover hidden patterns in price charts and take advantage of them.
This prediction method is called technical analysis and applies very well in short term predictions like intraday, scalping and of course swing trading.
However, swing trading crypto not only has a short term horizon but also long term since trading may be completed after 2-3 months.
Therefore, fundamental analysis is also a necessary factor to consider.
This analysis is used to evaluate the substantial value of an asset by taking into consideration as many indexes as possible, like the reputation of the cryptocurrency, the actual value that the crypto offers, market capitalization and many more.
Is crypto good for swing trading?
The history of cryptocurrency trading has shown that swing trading is an excellent choice to get applied in cryptocurrency markets.
And that’s because a trend in the crypto market usually lasts from a couple of days to a couple of months which is exactly how long swing traders intend to hold their assets.
Furthermore, if the trader is skilful and well prepared, it is not that hard to identify lucrative market trends.
But you should not get confused and consider swing trading in cryptocurrencies to be free money.
Is just that this combination offers more profitable opportunities than other strategies as well as than other markets.
In a nutshell, swing trading is applied very well in the crypto market when compared to other markets, such as the forex market. And at the same time swing trading is better for crypto when compared to other strategies, such as scalping.
Best app for swing trading crypto
The answer here may differ depending on whom you are asking.
And that’s because swing trading doesn’t have any unique characteristics that might make a trading platform better than another.
Although some recommended apps are following:
- Kraken
- Etoro
- Binance
The above apps are among the most popular and have a lot of years in the market, which proves that they are safe, fast and reliable for cryptocurrency trading.
But, as far as this strategy is concerned, the choice it’s completely at your own disposal.
Which cryptocurrency is best for swing trading?
The ideal trading crypto should have the following attributes:
- High liquidity – Because you will need to exit your position anytime you wish
- Being useful – Okay, this is a feature that every crypto should have, but in case of swing trading (in which you might keep it for 2-3 months) matters a little more when compared with other strategies like day trading in which you enter and exit your positions within a day.
- Having good reputation – Because good reputation equals more investors and as a result the price will rise
- Relatively large percentage on volatility – If you want to see actual profit you will need to buy a crypto that offers a good percentage of returns. For example, over the last year Tether (USDT) volatility ranged from 0,1% to 5% which is very low if you try to make profit. On the other hand, Ethereum ranged from 0,1 to 165% on daily price changes.
But, you must always have in mind that large price fluctuations mean high profit potential but also high loss potential!
Therefore, after taking into consideration the above criteria, the best cryptocurrency for swing trading will be Ethereum!
Of course this doesn’t mean that it is the only cryptocurrency that is going to give you profit in swing trading, but surely places itself at the top of the list.
Final thoughts
Swing trading is a strategy that can be very profitable for traders and at the same time can be relatively safe compared to other types of trading.
For this reason it is considered to be suitable for beginners.
Of course, in order for it to be profitable the trader has to fully understand the concepts of technical and fundamental analysis, to be able to apply them and to understand when is the right time to take action.
Image source: Cryptowallet.com
