Crypto trading has come a long way since the inception of the first digital currency, Bitcoin, in 2009. During the period after its launch, Bitcoin largely remained valueless. No one had purchased the coin nor invested in it.
Today, more and more investors and governments seem to join the bandwagon of those who either trade cryptocurrencies or accept their use.
2020 saw thriving trading in cryptocurrencies. Thus, even individuals who were new to trading developed a keen interest in how crypto trading works. Any trader must understand the numerous crypto trading strategies out there before starting crypto trade. Also, the newbie should choose one technique that suits their style of investment.
There are three commonly used crypto trading strategies. These are:
- Day trading
- Crypto Swing trading
- HODL and Sell
The Difference Between Day Trading and Crypto Swing trading
Day trading is the process of capitalizing on short-term market fluctuations and price trends, usually in a day, to profit from selling crypto. Day traders closely monitor price trends, sometimes on an hourly basis, enabling them to make informed decisions about when to close a position.
Crypto swing trading is the process of utilizing crypto price trends over a short to medium term, usually a couple of days or weeks. The cryptocurrency market is highly volatile, giving small scale investors a small window of opportunity to invest in the market. These investors should be cautious enough to keep in mind the best crypto swing trading strategies and to employ these in their trades.
The following are some of the common crypto swing trading strategies:
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Stop-Loss
The Stop-Loss feature enables the crypto trader to set the maximum loss they can take in a given trade. Crypto trading platforms offer this feature to automatically prevent devastating losses when the trades go against expectations and predictions.
The most seasoned crypto traders and investors employ this strategy to halt the severe loss of their investments. Thus, Stop-Loss is a crypto swing trading tactic that every investor, both seasoned and newbies, must employ while taking part in swing trading crypto.
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20 Percent Price Change
This strategy is based on the premise that the crypto market tends to be neutral across the board. For instance, when Bitcoin prices fall, other digital currencies are also likely to fall in value.
When your digital currency is the only coin rising in value by 20 percent, for example, while the rest are dwindling in value, you should sell it in expectation of it losing value the next day. The digital coin is likely to drop in value just like the rest since the industry is standard and is affected by similar factors.
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Being Informed on Daily News and Announcements
A swing trader must always be aware of all announcements and news, especially those related to the crypto industry. A positive announcement can cause a soaring upward trend of a cryptocurrency. A negative announcement may completely diminish the value of a given cryptocurrency.
Cryptocurrencies are affected by celebrity, expert, and prominent persons’ opinions. A simple tweet by a renowned investment expert can lead to severe price changes in a given digital currency. One unforgettable occasion was when Tesla and Space X Chief Executive Officer, Elon Musk tagged “#Bitcoin” on his Twitter bio. As a result, Bitcoin surged in value by about 20 percent.
Swing trading banks on such massive price changes to generate higher profit margins. Swing traders must, therefore, be well-informed of what is trending in the crypto world.
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Catch the Wave Crypto Swing Trading Tactic
This application of this tactic happens during the pullback of a trending market. When applied carefully, this strategy generates higher profits for the trader. One careful way to employ this strategy is to enter trades during a deeper pullback in a trending market. Thus, the trader will go LONG at significantly lower prices and sell the crypto when the bull run picks up.
All the crypto swing trading tactics discussed above require some degree of both technical and fundamental analysis. The technical analysis compares historical data and trends to predict the current and future market behavior.
Fundamental analysis employs economic indicators to assess the exact value of a crypto asset. Also, it ultimately suggests the best investment strategy to partake.
Benefits of Swift Trading Crypto
Swing trading crypto is an essential strategy since it is beneficial in several ways, including:
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Automation of Stop-Loss Trading Option
A Stop-Loss tool enables risk mitigation by letting a trader invest only the amount they can afford to lose. The Stop-Loss feature automatically closes the trade to prevent further loss to the trader/ investor when the crypto value reaches a certain level in a downward trend.
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Easy to Execute
Unlike traditional stock trading and other crypto trading strategies such as day trading, bitcoin swing trading strategies are easy to execute. Stock trading requires an in-depth analysis of the financial statements, market and industry trends to make successful trades. Day trading requires close monitor of the trades between the different hours of the day.
In contrast, bitcoin swing trading strategies, for example, allows the trader to monitor the trade progress from afar since making the right trading call takes days or weeks. Conversely, day traders have to fully concentrate on hourly price movements to determine when to enter and close a position.
CONCLUSION
Swing trading can be beneficial to crypto traders, especially the newbies. However, crypto swing trading requires mastery of the various techniques to capitalize on its use fully. At mycryptoparadise, our team of crypto experts will help you get an in-depth learning experience of the ins and outs of crypto trading.
We also provide highly accurate trade signals that guarantee success in your trades. In addition to these trade signals, our blog at mycryptoparadise will keep you updated on the new developments regarding crypto trading in general.
Mycryptoparadise news, on the other hand, will keep you informed of the announcements and news in the crypto world. As you have seen above, the importance of crypto news to swing trading cannot be ignored.
