Swing Trading Cryptocurrency [Beginner Guide]

For many, day trading crypto is more complicated than trading stocks, forex or indices. The reasons include the higher volatility, the lack of extensive history, the ever-changing dynamics, shaky fundamentals and more. However, many traders find their sweet spot in swing trading. Swing trading in the cryptocurrency niche often works even better than with the conventional asset classes. This guide will focus on how swing trading crypto assets can help you make steady profits and propose concrete steps on when to buy and sell by using the best apps for crypto.

What is Swing Trading?

Think about the term “swing.” It describes the process of going back and forth or side-to-side around a particular point. This already gives you a picture of what swing trading is.

Swing trading is the process of exploiting the market “swings” for profit. Alternatively, swing traders look to capitalize on price movements by buying the dip and selling at the top. Swing trading strategies usually attempt to capture the momentum changes in any trend, whether bullish or bearish. The important thing here is for the price to move. If it does, it will create an abundance of trading opportunities.

Swing trading is among the most popular trading approaches. It is used in various markets, including forex, stocks, and cryptocurrencies.

Swing Trading vs Day Trading and Trend Trading

You may wonder how it is different from day trading. Like everything else, the difficulty is in the details with the day trading vs. swing trading comparison.

Swing and day trading are fundamentally similar, with the main difference is that swing traders might apply their strategies over a few days or even weeks (short-to-medium time frame). In comparison, day traders aim to avoid keeping open positions overnight. As a result, they make more trades and trade more frequently. They can often employ a crypto trading bot to exploit the opportunities in trending markets better.

Swing trading is also different from trend trading because it is more aggressive and frequent. Swing traders enter on momentum upswing and exit when momentum loses steam.

On the other hand, trend traders can ride a trend that lasts over a couple of months.

Think of swing trading as a blend between short-term active trading and long-term investing.

In a nutshell, swing traders are less aggressive and frequent in their activities than day traders, but more so than trend traders.

See Also: Best Crypto Day Trading Platform

Swing Trading Advantages

  • Requires less dedication than day trading – you won’t have to frequently monitor the price action as some momentum opportunities can extend over days or even several weeks;
  • Swing trading cryptos doesn’t require a significant amount of effort aside from technical analysis, understanding and keeping tabs on the news. The available tools and indicators alongside the most recent fundamental events can give you everything you need to start swing trading on the crypto markets;
  • A proper swing trading crypto strategy can provide great short-term profit opportunities since it is focused on exploiting the momentum within smaller time periods (e.g., in a couple of hours or a few days).

Swing Trading Disadvantages

  • Most crypto trading strategies applied by swing traders require you to hold positions overnight, exposing you to various risks, which are even more glaring in the world of crypto assets;
  • Requires mastery of technical trading since many false signals can lead the trader to hold on for too long or close a position too early.

Is Crypto Good for Swing Trading?

The essence of swing trading is to capture the price swings. Therefore, the more the trend changes, the more opportunities swing traders will have. The cryptocurrency trading niche is the perfect environment for this.

Cryptocurrencies are the most volatile asset class compared to stocks, bonds, FX and indices. There are periods when Bitcoin and the leading crypto coins can lose or gain 10% or even 20% in value in just a few hours. These price changes can even reach triple figures with altcoins have or those with a small market cap. For example, you can’t see such opportunities when trading the US dollar. The frequent occurrence of big price swings makes the crypto niche the ideal soil for swing traders.

Furthermore, digital asset trading venues are open 24/7/365. Crypto exchanges don’t have any official hours, and crypto investors and traders can buy and sell whenever they want. This also broadens the opportunities since it makes room for the application of not only the most popular trading strategies but also gives traders with a more sophisticated trading style to flourish.

Besides, a swing trader can succeed in the crypto niche much easier than in the stock market. The reason is that crypto traders don’t have to focus too much on fundamental analysis (due to the lack of consistent metrics or the minor role they play in the price mechanics). Instead, all they have to do to maximize their profits is find the right combination of technical trading indicators.

Swing Trading Crypto Strategies

If you are an experienced swing trader, the chance is you already have a battle-tested strategy under your sleeve. Whatever you have applied in other markets can be translated into the crypto market with equal success.

For those just starting, let’s focus on the three basic strategies for crypto swing trading.

Catching the Momentum

The essence of this strategy is in identifying a trend and riding it for as long as possible. There are several boxes to tick to maximize the efficiency of this strategy.

First, set clear rules (it’s best if you have a paper trading account or a demo account with fake money to test them out first). If you are have just started trading with technical analysis or struggle to forecast price reversals, the golden rule is to just set a profit target. For example, if you buy Bitcoin at $40,000 and have a profit target of $1,000, make sure to sell when its price hits $41,000. Don’t hold for too long. Once you hit your profit target, leave. That way, you will be locking your profits without taking excessive risk. Bear in mind that greed is your worst enemy in a high volatility environment like the crypto swing trading one.

On the other hand, if you are experienced in using oscillators, momentum and trend-reversal indicators, you will want to ride the wave until the last possible moment. Such might be the Moving Average (MA), Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI) and more. Look for the moment when your indicators start signaling a change in the current balance between buyers and sellers (growing/weakening buying or selling pressure). The most important thing here is not to join at the right time (the beginning) but to leave at the right time (before the trend ends). Think of this as you are a surfer catching a wave – you have your fun and hop off before it crashes.

If there is one strategy for trading cryptocurrency that best resembles long-term trading, it is this one. Usually, traders who apply it, try to ride the wave through a single large long position.

Timing the Pullback

The perfect strategy to trade cryptocurrencies is the one that helps you capture all the lows where trends originate from. However, there are no perfect strategies, which makes financial markets so complex and exciting. No trader can ever time all the perfect moments to catch a trend, so don’t be too harsh on yourself if you can’t too.

Fortunately, you can be profitable even if you don’t buy at the lowest price. Here is an example – imagine that Bitcoin’s price has dropped to $35,000, and the selling pressure is at its lowest point. Buyers start flooding the market, and the price starts rising steadily, reaching $38,000, $40,000 and so on. Even if, for some reason, you miss buying at the lowest, don’t rush to make trades – just wait for the pullback. During bullish trends, there are always pullbacks where traders decide to sell to lock their profits in. Let’s say this point is $40,000. Once traders start cashing out, there would be a slight decrease in the instrument’s price to, say, $38,500. This provides an excellent opportunity for those late to the party. The influx of bullish-oriented investors during pullbacks usually pushes the price upward again.

Looking for pullbacks is an excellent strategy for traders who have missed the initial breakout period. Instead of buying during a run-up, always wait for the pullback. This will help you buy at a better price and ride the rally for longer.

Follow the Market Sentiment

The market wisdom says that traders move in herds. So, why not capitalize on this?

To make the most out of the swing trading market opportunities, make sure to follow the crowd. The best way to do that is by identifying the support and resistance levels. There are plenty of sophisticated indicators that can help you in that task. However, I suggest you stick to the battle-tested Fibonacci retracement levels. The indicator comes in the form of horizontal lines, showing the levels where support and resistance are most likely to occur.

Now that you have indicated those levels, you have a range to look at and can take a more passive approach. During a trending market, the price will be moving within the given range most of the time. An easy and quite efficient strategy to trade cryptocurrency in such situations is to buy when the price is near the support level and sell when it is near the resistance one.

However, remember that the support and resistance lines aren’t permanent. In some cases, the price would break the lines and find new support and resistance levels at different prices.

See Also: Is it too late to buy Bitcoin


What is the best crypto to swing trade?

In theory, the best crypto to swing trade would be the most volatile one. Usually, these are the newly-launched digital assets. However, bear in mind that they are often very risky, and I suggest sticking to established protocols like Bitcoin or Ethereum. You can also consider forks like Bitcoin Cash, Bitcoin Gold or Bitcoin SV. Ripple, Dash, Cardano and Solana are other worthy choices.

How do you swing trade crypto?

First, choose an exchange. Consider its privacy practices and your personal preference and the asset you want to trade. Swing trading crypto requires a good understanding of technical analysis and indicators. You can ease the process if you have done sufficient research before you start. Swing trading crypto would require several hours of dedication per week if you don’t plan to trade frequently or to make many trades.

Is swing trading Bitcoin profitable?

Swing trading Bitcoin can be very lucrative, and many traders even go for it as full-time careers. Considering that the crypto market is highly volatile and consists of thousands of assets, it gives traders a field of opportunities to exploit through a variety of different strategies. Due to this, more active swing traders can ensure a stream of steady and consistent profits.

How much can you make swing trading crypto?

It depends on the capital you start trading with and your strategy. The niche gives many opportunities, so the more you trade, the more you can profit. Bitcoin and other cryptocurrencies usually mark overnight price changes of approximately 2 percent when the market is calm. If you play your cards right and capture the momentum by taking a short position in the best possible moment, a single asset can give you a $2 profit for every $100 invested per day.

About the author: Alexander is the founder of daytradingz.com and has 20 years of experience in the financial markets. He aims to make trading and investing easy to understand for everybody and has been quoted on Benzinga, Business Insider, Investors Business Daily, Newsweek, GOBankingRates, capital.com, investing.com and other top financial publications.