3 Easy Swing Trading Crypto Strategies to Implement
For the first time in history, cryptocurrency has created an asset market that never closes. Since it lives on the internet, investors can trade cryptocurrency at any time of the day or night. This 24/7 availability gives investors countless opportunities to make money. However, many people find trading crypto every single day to be exhausting and stressful. On the other hand, long-term investing can be a little low-action. Due to this, many investors prefer a style known as swing trading. This article will take a quick look at three of the easiest swing trading crypto strategies to implement. These strategies are fairly straightforward and can be used in addition to your existing strategy.
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What Is Swing Trading?
Swing trading is a trading strategy where investors stay in positions for a short to medium time frame. It can be used for basically any different asset (stocks, forex, crypto, etc.).
When it comes to investing, there are generally two different strategies. Investors are either day traders or long-term investors. Day traders will buy in and out of multiple cryptocurrencies every day. By doing this, they hope to profit from the day-to-day fluctuations of the coin. Day trading generally relies heavily on technical analysis.
On the other end of the spectrum, there are long-term investors. These investors buy into cryptocurrencies that they like with a plan to hold them for years. For example, let’s say that a long-term investor buys Bitcoin today. Even if the price rose or fell 40% in the next month, they would still not sell. They will probably hold their Bitcoin for 3-5 years before making another decision. Long-term investors usually prefer fundamental analysis when evaluating assets.
Swing trading is a blend of both these strategies. Swing traders generally hold their positions for anywhere from a few days to months. By doing this, they hope to take advantage of trends in the assets price. For example, let’s say that a stock swing trader wants to take advantage of an upcoming earnings report. They might enter a stock a few weeks before the earnings report is released. Then, they’d sell the stock the day after the report is made public.
Swing trading uses a blend of technical and fundamental analysis.
Keep reading to learn more about swing trading crypto strategies.
Is Swing Trading Right For Me?
So how do you know which style is right for you? This usually comes down to your goals as an investor.
If you want to try and earn a consistent income from investing then day trading is a good option. Day traders are generally very hands-on with their investments. They aren’t afraid of hard work and taking risks. They also don’t mind the pressure of doing their own due diligence.
On the other hand, long-term investors are very hands-off. They will make their investment decision and then stick by it for months to years. If anything, they will just buy more if the asset dips in price. They generally aren’t interested in day-to-day or even week-to-week price movements. This is a good option for people who don’t really want to focus on their investments every day.
Finally, we have swing trading. Swing trading crypto is a blend of the two. Swing traders have some money invested for the long term. However, they also are interested in jumping on any investment opportunities that they see. They usually stay up-to-date with crypto markets daily even if they aren’t making a trade each day.
Ultimately, it depends on your investing goals and preferences. If you are not sure which is for you, I’d recommend opening a demo account before starting.
Swing Trading Crypto Strategies
With all of that in mind, let’s take a look at a few swing trading crypto strategies. If you are familiar with day trading stocks or other assets then you might recognize a few of these. As mentioned, these strategies can all be used in addition to your existing strategies.
Catch The Wave
This is a strategy where the trader identifies a trending market. Once they identify a trend, they attempt to ride one large single move. For this strategy, you can literally envision a surfer identifying a wave and paddling along with it. The surfer catches the wave and rides it briefly but hops off before it crashes.
For example, a trader could use a 50-day moving average to identify a trending market. The moment the coin breaches the moving average, the trader goes long. Usually, this breakout is accompanied by increasing buying interest. A surge of buying follows this breakout. This surge boosts the price of the coin higher. The investor profits from this quick rise in price.
Keep in mind that this strategy can be used by looking at different timelines. An investor could try to catch the wave of an intraday price move. However, they could also zoom out and catch the wave of a weeklong trend.
Buy The Pullback
This swing trading crypto strategy is for investors that miss the initial breakout period. If you miss the breakout, you aren’t completely out of luck.
Instead of buying during the runup, many investors will do what’s called “buying the pullback.” Usually, a coin experiences a price surge following a breakout. However, at some point, traders will begin to take profits. This creates a sharp pullback in price. This sharp pullback creates another buying opportunity for traders that missed the first breakout. Being patient also prevents traders from buying right before a sharp pullback.
Follow The Crowd
The third swing trading crypto strategy is called following the crowd. In this strategy, a trader identifies the support and resistance levels for a coin over a given period. Again, this period could be a day, week, two weeks, etc.
The resistance level is the price that a coin will rise to, without breaking through. The support level is the price that the coin will fall back down to before reversing direction again. In this sense, the coin’s price acts like a bowling alley with the bumpers up. The price of the coin will bounce between the resistance and support levels. Keep in mind that these levels could be trending upwards, sideways, or downwards over time.
Once you have identified these levels, you simply follow the pattern. When the coin nears the upper resistance level, you take profits or enter a short position. The coin should reach this level and reverse direction again. Then, when the coin nears the lower support level, you enter a long position.
I hope that you’ve found this article on swing trading crypto strategies to be valuable! As usual, please base all investment decisions on your own due diligence and risk tolerance.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.