Introduction

Swing trading is a common trading strategy that is perfect for beginner traders. It is a relatively convenient way to express an opinion about the market through manageable time horizons. Swing traders are active in most financial markets such as forex, stocks and cryptocurrencies. But is this trading strategy right for you? Which is better to choose day trading or swing trading?

In this article, we'll explain what you need to know about cryptocurrency swing trading and help you decide if this strategy is right for you.

What is swing trading?

Swing trading is a trading strategy that involves trying to capture price movements that occur on short to medium time frames. The idea of ​​swing trading is to catch market fluctuations that last from a few days to a few weeks.

Swing trading strategies work best in trending markets. If there is a strong trend on the higher timeframe, swing trading opportunities can be numerous and swing traders can take advantage of large price swings. Conversely, swing trading can be more difficult in a consolidating market. After all, if the market is sideways, it's harder to catch big price moves.

How do swing traders make money?

As already mentioned, swing traders seek to capture price fluctuations that occur from several days to several weeks. Therefore, swing traders will hold positions longer than day traders, but less than long-term investors.

Swing traders typically use technical analysis to generate trading ideas, although not necessarily to the same extent as day traders. Because fundamental events can play out over several weeks, swing traders can use fundamental analysis in their trading system. 

However, price dynamics, candlestick patterns, support and resistance levels, and technical indicators are very often used to identify trade setups. Some of the most common indicators used by swing traders are moving averages, the Relative Strength Index (RSI), Bollinger Bands, and the Fibonacci Retracement.

Swing traders usually look at charts with medium and long time frames. Why? A strong uptrend or downtrend should be confirmed on a longer time frame. But they can also look at intraday time frames like 1-hour, 4-hour, 12-hour chart to find specific entry and exit points. These triggers can be, for example, a breakout or pullback in shorter time frames. 

However, the most important time frame for swing trading is probably the daily chart. Even in this case, trading and investment strategies can differ significantly among different traders. Please note that what we have discussed here are not hard and fast rules, but common examples.

➟Want to start trading cryptocurrency? Buy Bitcoin on Binance!

Day trading and swing trading - what's the difference?

Day traders look to profit from short-term price movements, while swing traders look for larger movements. Essentially, day trading is a more active strategy where traders need to monitor the market frequently and do not keep positions open for more than one day.

Conversely, swing traders may take a more passive approach. They may monitor their positions less often because their goal is to profit from price movements that play out longer. Because these moves tend to be larger, swing traders can make significant profits from even a pair of profitable trades.

Day traders will almost always use technical analysis. Swing traders usually use a combination of technical and fundamental analysis with a greater emphasis on technical aspects. On the other hand, investors may not consider technical factors at all and invest only based on fundamentals.

So what is best for you: day trading or swing trading? Shorter or longer time frames? Fundamental or technical aspects? The answers to these questions will help you determine which trading strategy best suits your personality, trading style, and investment goals.

You can consider your strengths and choose a trading style that best enhances them. Some traders prefer to open and close positions quickly and without worrying about them while sleeping. Other traders make the best decisions when they have more time to consider all possible outcomes and develop their trading plans.

Of course, you can switch between different strategies to see which one gives you the best results. You can also trade on paper (ie trade test funds) before implementing the strategies into your real trading plan.

Where to start cryptocurrency swing trading

Swing trading can be an ideal way to start trading. Why? Due to longer time frames (which are not too long at the same time), decisions can be made calmly and deals are easy to track.

If you are new to trading, be sure to check out The Complete Beginner's Guide to Cryptocurrency Trading. In this article, we'll explain what you need to know about trading and give you some tips to help you find your trading style. If you are satisfied with your knowledge, you can try trading on the Binance Futures test network. This way, you can test your swing trading skills without risking real money.

So, as soon as you feel ready, you can start trading on the cryptocurrency exchange. Which online trading platform is best for cryptocurrency swing trading? Well, there are many options, but the Binance ecosystem offers hundreds of market pairs, quarterly and perpetual futures, margin trading, leveraged tokens and more. Many of these products are ideal for swing trading.

Final thoughts

Swing trading is widely used not only for trading strategies in the stock market, but also in the crypto market. Swing traders typically hold positions for several days or weeks, depending on individual trading setups.

Should you try day trading or swing trading? The easiest way to find out is to try these 2 types of trading and see which one suits your style best. Also, before starting, it will be useful to learn about the principles of risk management, namely stop-loss or position sizing methods.