Crypto trading is becoming popular among traders because this instrument is somewhat becoming reliable. Due to blockchain, crypto is decentralized, and this makes it protected from government authorities.
Traders like trading crypto because of its high price fluctuations, as it makes it easier for them to take out profit from the market with even slight price movements. Among many other forms like scalping, day trading, swing trading is an exciting and less stressful form of trading. Swing trading allows you to use any strategy, be it multi time frame analysis or indicators.
Do you want to learn precisely how to trade cryptocurrency using the swing trading technique? Let’s get to know a crypto swing strategy even if you are a beginner.
What is swing trading?
Swing trading is a trading technique that enables traders to open a trade position and allow it to run for days or even weeks. In swing, trading traders take out small profits when the market moves in the desired direction.
Swing trading does not need you to sit on the trading system for long; you can take the trade and keep it running after stopping loss and taking a profit.
How does crypto trading work?
Cryptocurrency is decentralized, meaning no single organization or individual has full authority or control over it.
The crypto market, just like others, works on the law of supply and demand. Meaning the prices of particular crypto will go high if the demand is high and low if the demand is low, as the supply of cryptocurrencies is usually fixed.
Trading cryptocurrencies is the action of speculating on the crypto price movements either by CFD trading account or exchanging your fiat money with cryptocurrency on an exchange.
You can think of CFD trading as trading gold, which you can speculate without taking ownership of the asset itself. Just like that, you can buy or sell depending on your analysis. If your analysis suggests that the crypto price might go up, you can take a “buy,” while if you think the price might go down, you can execute a “sell.”
If you wish to use an exchange to trade crypto, you can buy a coin in, say $1 and sell it when the prices are higher, say $2, making a profit of $1.
Swing trading crypto strategy
Crypto trading is not very different from trading other financial assets. The major difference that makes any tradable asset difference is volatility.
Crypto is a very volatile asset, sometimes does not respect the supply-demand or support and resistance zones. As crypto is not very old, traders and investors are still trying to test and bring more strategies and techniques to trade it.
Swing trading will help you stay calm because it uses higher time frames and allows you to keep your trade open for more time than day trading. You will first move to the daily time frame for swing trading to look into the overall market direction:
- Uptrend
- Downtrend
- Sideways
As a beginner, the first thing you must learn and understand is the importance of support and resistance, a zone with a high probability of a price to reverse or break to make a continuous move.
- So, first, you will draw your support and resistance zone on your chart. The chart you will be using is of the 4H time frame. Using a higher time frame gives you better trading opportunities by removing noise and irrelevant information and providing a reasonable price structure.
- Once you have your S&R zones, you can start with your candlestick analysis. Few candles like — Doji, Pin bar, Hammer, Inside bar, etc., show reversal and trend continuation. You will find these crucial candles near your S&R zones.
- You will move to a lower time frame, say 1H, for finalizing your trade setup by seeing the structure — highs and lows break and formation of new highs and lows. Also, you will look into the rejections in the market.
- Once you find a trade setup, use a 30M or 15M time frame to take the trade keeping your risk low and putting your stop loss (SL) and take profit (TP).
We have a bullish and bearish example for you to understand better how you will put all the information together and execute your trade.
Bullish example
In the BTC/USDT 4H time frame, you can see the price is touching the support zone; here, it is a probability of the price touching the support and moving up.
In the BTC/USDT 1H time frame, the price after touching the support moves up. You can also see a Pin bar and a Doji formation near the support, which shows the buyers entering the market. Moving forward, the price then broke the previous lower high.
You will move to a 15M time frame for trade execution. After the price broke the lower high, it came for the retest, where you have to take the entry.
Entry
You will enter when the price retests the break zone. If the price does not come for a retest, you can wait for the new higher low formation and open the buying position.
Stop loss
You will place your SL 2-3 pips below the break zone.
Take profit
When you are happy with the profit, you will exit the trade, mostly taking 1:2 risk: reward.
Bearish example
In the BTC/USDT 4H time frame, the price was respecting the resistance zone. Also, the price after the first touch broke the low with big bearish engulfing candles.
After touching the support, the price on the 1H time frame came down and broke the previous swing low.
Moving to the 15M time frame, you will take the trade after the price broke the swing low and retest the zone. Remember to have confluence like the price is near the resistance, broke the swing low, and rejected multiple candles.
Entry
You will enter the trade after the price retest the previous swing low break zone.
Stop loss
Stop loss will be 2-3 pips higher than the swing break zone.
Take profit
Place your take profit at 1:2 risk: reward.
Pros & cons
Pros | Cons |
| •Part-time trading It allows you to trade part-time by also maintaining your full-time job. • Less stressful • Volatility | • Keeping trade overnight There is a risk when it comes to swing trading holding your positions overnight. It increases risk and also gives swap charges. • Price gaps • Highly influenced by social media |
Final thoughts
This is a complete beginner’s guide to trade the cryptocurrency market. It would be best if you learned about the industry before getting involved in any form of investment.
As a beginner, the most crucial piece of advice would be to learn both fundamentals and technicals. Candlestick can show you what exactly is happening in the market and where the price wants to move.
For any beginner, it can be overwhelming to inherit so much information as the crypto market is overgrowing. Thus it is always better to go slow and learn step by step and not try to find the holy grill that would work all the time because there is nothing like that in trading.
forex tradingswing tradingTrading Strategy
I'm a seasoned cryptocurrency enthusiast with a deep understanding of crypto trading strategies, particularly the intricacies of swing trading. Having actively participated in the crypto market for years, I can provide valuable insights and guidance based on practical experience.
Now, let's delve into the concepts mentioned in the article:
1. Crypto Trading and Decentralization:
- Crypto trading is gaining popularity due to its reliability, attributed to decentralization through blockchain technology.
- Decentralization protects crypto from government authorities, making it an attractive option for traders.
2. Volatility and Price Movements:
- Traders are drawn to crypto for its high price fluctuations, allowing for easier profit extraction with even slight market movements.
- The crypto market operates based on the law of supply and demand, with prices influenced by these factors.
3. Overview of Crypto Trading:
- Cryptocurrency is decentralized, meaning no single entity has full control.
- Trading involves speculating on price movements, either through CFD trading or exchanging fiat for cryptocurrency on an exchange.
4. Introduction to Swing Trading:
- Swing trading is a technique allowing traders to open positions and hold them for days or weeks, taking small profits as the market moves favorably.
- It's less time-consuming than day trading and allows for the use of various strategies.
5. Crypto Swing Trading Strategy:
- Using higher time frames (e.g., daily), traders analyze overall market direction.
- Importance of support and resistance zones is highlighted for trend reversal or continuation.
- Candlestick analysis involves identifying key reversal and trend continuation patterns.
6. Bullish and Bearish Examples:
- Detailed examples illustrate how to execute bullish and bearish trades based on price movements and support/resistance zones.
7. Pros and Cons of Swing Trading:
- Pros include part-time trading, reduced stress, and capitalizing on crypto volatility.
- Cons involve holding positions overnight, encountering price gaps, and susceptibility to social media influence.
8. Final Thoughts and Advice:
- Emphasizes the importance of learning both fundamentals and technicals for successful trading.
- Advises beginners to take a gradual approach and not seek a one-size-fits-all strategy in the dynamic crypto market.
In conclusion, mastering swing trading requires a blend of technical analysis, understanding market dynamics, and a cautious approach, especially for beginners entering the ever-evolving crypto landscape.
