The Complete Guide to Swing Crypto Trading

Swing Into Profits: Mastering Swing Trading in the Cryptocurrency Market

Introduction

If somebody would ever ask what swing trading is, then the right answer is: it is the strategy for the longest period in a short-term window to approach the financial markets. 

Swing traders hold positions that range from days to weeks expecting to capitalize on the price movement of an asset.

Securities that have a steady trend are ideal for long-term investors. But in contrast to those, swing traders feed their expectations by taking advantage of volatile assets. Crypto assets offer these opportunities.

The cryptocurrency market in general characterizes itself for its high price fluctuations, driven by greedy participants who tend to over-leverage positions (over-leveraging is very common in crypto markets unlike traditional markets that are regulated). This makes it very attractive for those experienced traders who can benefit from the high liquidity.

Overview of the potential benefits and risks associated with swing trading.

Swing trading strategies allow trading the market without having to track it constantly. It is, in fact, perceived as less stressful compared to day trading.

However, it is not exempt from risks, it involves potential profit and loss margins as other strategies, and all the odds have to be considered to succeed.

It suits those traders with low tolerance to risk or those who do not have enough time to be in front of a screen or are just unable to maintain concentration for continuous hours as day trading requires.

Using Altrady to optimize swing trading strategies

Altrady is a crypto platform that presents itself as “a comprehensive trading platform designed to assist cryptocurrency traders in managing their portfolios, analyzing market trends, executing trades, and optimizing strategies”.

The platform offers full-automation, semi-automation, and bots that perform algorithmic strategies.

Algorithmic trading is a powerful way of optimizing a swing trading strategy once you have back-tested it enough.

Common Pitfalls in Swing Trading and How to Avoid Them

Trading is an activity that requires planning, knowledge, and discipline at the moment of execution of a trade. It is very common for aspirants in swing trading to fall into self-destructive behavior of their initial capital.

Avoiding these errors implies:

• Don’t overtrade.
• Don’t break the rules of risk management.
• Suppress emotional trading.
• Proper research and knowledge about the asset you’re trading.
• Don’t add or stay on losing trade positions.

Fundamentals of Swing Trading

Swing trading is, essentially, a speculative activity. Since it aims to capitalize on short-term movements of prices, it takes a considerably superior amount of risk compared to long-term investments but less compared to day trading. Swing traders seek for trades that might last days and weeks until their targets are reached.

Compared to Day trading, it is a highly skilled approach that demands rigorous mental capacities, constant monitoring of the market, emotional management, quick decision-making, and high tolerance to risk. 

A day trader could lose or win money within very short time frames, minutes, or even seconds. This modality relies heavily on leverage and scalping is its main approach. Crypto market providers can offer leverage ranging from 1:20 up to 1:100, which means it multiplies the margin capital by 100, so if a trader has 1,000 dollars of margin, now can trade as if has $100,000 available.

Long-term investing holds trades for months and even several years. This approach focuses on the fundamental value of a determined asset. For example, in the crypto sphere, the “whales” are a type of long-term investor. They simply “HODL” (HODL is a crypto term that means “holding”), and many of them have been holding Bitcoin since the foundation of the cryptocurrency. 

Key Characteristics of Swing Trading

Swing trading has some key characteristics:

1. Time frames: to achieve weekly outcomes, 1h and 4h are the most used time frames of a swing trading strategy. However, a trader could be also looking at 30min to seek a specific setup, a very exact price, or a confirmation pattern.
2. The trend is your friend: When swing trading, it’s very common to seek strong trends, as a ranging market (also known as a ‘choppy market’) may not offer the best setups.
3. Technical Analysis: swing trading uses indicators to study the price action, draw trendlines, and support and resistance levels to identify future potential entries as well as exit points for trades. Patterns like “head and shoulders” are also vastly sought.

The Importance of Technical Analysis in Identifying Swing Trading Opportunities

The flexibility of swing trading, as we mentioned before, allows for more time to analyze the market, which conveniently leads to better decision-making. The importance of technical analysis relies precisely there: decision making. 

A well-founded strategy in combination with good technical practices helps traders to:

• Identify entry and exit levels.
• Discover new price patterns.
• Historical price correlation.
• Price action and market sentiment tracking.

In this article, Catalin from Altrady provides a comprehensive guide to crypto trading charts.

Tools and Techniques for Successful Swing Trading

Swing trading using technical indicators like:

1. Fibonacci Retracement: an indicator that seeks price retracement based on the popular mathematical sequence of Fibonacci
2. Moving Averages (simple and exponential): lines that follow the price of an asset based on periods. The most popular are the SMA and EMA of 20, 50, and 200 periods, being the 200 the one that fits better for medium-term trades.
3. RSI (Relative Strength Index): this indicator normally ranges between 0 to 80 and indicates when an asset is overbought or oversold based on momentum, measuring the speed and change of price, and compares the magnitude of gains and losses.
4. Stochastic: this is an oscillator similar to RSI, it identifies overbought and oversold conditions while comparing the closing price to the price range of an asset.
5. MACD (Moving Average Convergence Divergence): it is a versatile indicator that combines moving averages to address momentum and trends while displaying a histogram as a result.

• How to use price action and volume to make informed trading decisions.

Price action and volume are two of the most respected concepts in the crypto trading sphere. Together, they can provide high-probability setups. When combined with technical analysis, we can identify two key factors: confluence and divergence.

A price action pattern like a Pin Bar, at the same time that the volume experiences a high peak, suggests that the market has a conviction, there is confluence, and will likely move in a direction in a sustained way.

Divergence can occur when, for example, the RSI is overbought but the volume is descending. This suggests the market won't be able to keep trending and a reversion movement is about to start.

Strategies for Entry and Exit Points in Swing Trading Scenarios

To find entry points, a swing trading strategy can seek a line cross of the EMAs. For example, when the line of a shorter period like the 20-day goes upward, crossing over the line of the 50-day, the price of the asset will likely trend up.

An exit point would be the opposite, when the shorter period line goes downward, crossing below a longer period line of a moving average (MA), it suggests the price might reverse and it's better to exit from the position, or a trader could open a short position.

Using Altrady for Swing Trading

Altrady is an all-in-one crypto platform. It offers risk management and automation tools designed for beginner traders, advanced traders, and institutional investors. Paper trading, backtesting, portfolio management, and price alerts are good features for swing traders.

Altrady’s tools focus on saving time in a specialized environment for traders to focus on what’s important at the moment of execution of a trade and track its evolution.

The platform offers the Crypto Base Scanner that triggers a signal if the price cracks a base and falls below the median drop for that pair. This can be used with a Signal Bot to identify profitable trading opportunities.

For example, bot settings can take arguments like:

You can learn more here.

Risk Management in Swing Trading

The most important thing in any market, but especially in crypto markets, is to have strong risk management that not only preserves capital but defines a risk-to-reward ratio. This might be a 1:2 or 1:4 ratio; it will depend on the swing trading strategy's effectiveness.

For example:

A swing trader should set a stop-loss that does not exceed its risk management, and it might be positioned initially at the bottom of the candlestick of the entry trade, or below a psychological price in the market, where there are high probabilities there could be a price action in favor of the position.

This stop-loss can be made dynamic and the stop loss can trail upward while the position is open and winning. Altrady offers trailing stop tools to achieve dynamic results.

How to determine the size of positions and manage portfolio exposure during swings.

Determining the size of a swing position involves several approaches, a position might rely on an isolated margin or gross margin. In Altrady there is a risk-reward calculator that helps traders get this solved efficiently.

It covers concepts like:

• Portfolio Equity
• Account Equity
• Fixed Amount
• Currency Balance

Advanced Swing Trading Strategies

Once swing trading is proven to work, a consequent advance improvement would be the next step. Crypto markets are normally affected by news releases, it might be economic news, political news, or a development in a determined blockchain ecosystem of a determined crypto project.

Swing traders can take advantage of these fundamental events to capitalize on medium-term positions. A great recent example is the launch of the Bitcoin ETF in the spot market of the United States. This event took Bitcoin to a maximum of 73,000 dollars since the ETF products were released on January 10th.

Traders in the options, spot, and futures markets were opening positions before the official approval was announced by the SEC when Bitcoin was quoting around 40,000 dollars.

Recently when the FOMC of the Federal Reserve had their meeting to announce news about the interest rates, Bitcoin suffered from tremendous volatility in a matter of minutes. In this environment, a swing trader could adjust the strategy and track the stop loss. One way to survive this scenario could be reducing the size of new positions and setting a wider stop-loss to not get out of the market movements earlier than the expected outcomes.

Conclusion

There’s no doubt crypto trading could be a hard activity but not impossible. Swing trading is the best option for those who desire to obtain benefits from the markets but don’t want it to be a stressful task or simply don’t have enough time and would like to complement their main income with another source.

The crypto trading sphere is a field in constant evolution, where learning is an eternal process and a key point in the success path of every trader. The Internet is full of information, courses, and books. AI has joined the scene with its best tools. Exchanges have their academies, and definitely to continue learning is not a problem since it is cheap and accessible.

Platforms like Altrady contribute to demolishing the barriers of entry for beginner traders and improve those already experienced professionals. Its vast ecosystem of tools can fulfill the expectations of every trader who wants to expand their strategy. 

Automation, bots, a market scanner, a risk calculator, and wide documentation of his tools, make the Altrady platform the best option to start trading swing or to continue a professional career.

If you’re an aspirant to swing trading, you can start now without any barrier, not even capital. The general recommendation to try swing trading for the first time is to start with a small amount of investment that you would feel comfortable with or use the paper trading feature on Altrady to get started.

Begin by planning your strategy, trying the indicators presented here to gain experience with them, choose a crypto asset that you like, and study it and its market, until you earn your first profits.

Atrady has a FREE Paper Trading environment to start testing the platform and a lot of strategies. Sign Up for free and get on an exciting path to conquer your first earnings swing trading.