Swing trading cryptocurrency is something that has become very popular but many traders fail at it. Most traders don’t even know what they are doing wrong, the only thing they know is that they get stopped out the same day or within a few days after entering the market. There is probably nothing wrong with your setups, it’s usually a problem of position sizing, knowing the market, and the correct stop loss distance.
This article is dedicated to anyone who is trying to learn how to swing trade. We are going to keep things very simple and I will explain this topic differently. Most people have probably told you that you need a lot of money to even start and you need to be the best market analyzer on the street to make a penny.
That’s not true. However, it takes time. But with the right guidance, you can skip ahead a year or two if you really put in the work, starting today. Let’s take a look at what we are going to learn.
The best crypto coin to swing trade depends from trader to trader. For some investors, it’s easier to spot good swing trading patterns in a coin that is very volatile range-bound trading is predominant and sometimes a more calm coin is easier to predict.
You will learn
- The basics of crypto swing trading
- The best indicators for swing trading cryptocurrency
- How much money do you need to be a swing trader?
- Can you swing trade Bitcoin?
- Crypto swing trading strategies
- Does swing trading work?
Remember that this is a basic tutorial. To really master the craft you need to spend hours practicing. I know that sounds boring but that’s just the truth. I’ve spent years learning it and I am no master yet.
But I think I have some good tips for anyone starting to save you some time on your journey.
Below I’ve listed the best cryptocurrency exchanges.
These exchanges all have very good trading interfaces with all the possible indicators and other functionalities to help you out.
Cryptocurrency swing trading basics
Ok to start, I want to point out a big mistake most new crypto traders do.
The biggest mistake traders make is that they expect to make a lot of money fast when they are starting.
This style of trading is not meant to generate huge gains in the beginning.
It is all about consistency.
You start with a small amount and gradually work your way up as you make profits.
This is not a day trading momentum strategy where you can generate huge profits in a matter of minutes.
The first step before you start learning how to swing trade cryptocurrency is to have the right expectations.
If you still don’t like the idea of starting small, then this style might not be for you.
Then I would suggest that you try day trading or other more exciting strategies.
How do I start swing trading crypto?
You need to start small and with a lot of patience.
In the beginning, you will be watching the market more than you trade it.
And when you enter the market there is not much you are going to do other than try to be very objective about your positions and hold on tight.
Another important factor you need to learn is the ability to hold on to your positions and don’t close yourself out due to volatility.
If you do, then your position size is too big and you can’t think objectively.
You need to be able to withstand the emotional swings you feel when the market is fluctuating.
And as we all know, the crypto market is very good at creating volatility.
Here is a great tip if you are struggling to hold your positions.
If you never try to hold a position for 2 or 3 weeks you will never make the money you want to make.
What I mean by this is, try to open a position with only one goal.
To not close the position out yourself.
Let it run and let it do what it wants.
As long as you don’t close it out, it will have room to run and generate more profits.
Swing trading cryptocurrency with leverage
Another thing to understand when you start is that you can’t swing trade cryptocurrencies with leverage.
At least not as a beginner
A lot of traders start with a small account size and they make up for it with extra margin.
The reason you will fail is that you will get stopped out all the time due to the normal fluctuations.
The leverage you use will not let you use a wide enough stop loss to get your positions going.
When you first open a position you want it to go green as quickly as possible but if the market doesn’t take off straight away you need to be able to have some wiggle room.
So, start with your own money, even if it’s only 100$.
How much money do you need to be a swing trader?
This is a question that is very often asked.
The answer depends on how much money you can afford to trade with.
All your trading capital should be viewed as risk capital and there is a chance that you might lose it all.
So don’t start with more than you are comfortable losing.
If you only have 100$ as risk capital, then start with 100$.
The reason most people are asking this question is that they want to know if they are going to be able to make a lot of money with a small account.
The answer is no in most cases.
When you start with a small account size you are going to trade small positions.
Learning how to swing trade means that you are playing the long game.
Think about it like this.
When you are starting as a trader you are most likely going to lose.
That’s a fact.
So, would you rather lose with a small account size or lose with a large account size?
So bite your ego and start small.
It’s perfectly normal to start with an account size that is less than 500$.
As you learn, you will make more money, and only then can you increase your position size.
Best indicators for swing trading Cryptocurrency
Ok, so you want to swing trade cryptocurrencies with indicators.
I would say that these are the best technical crypto indicators:
- Moving Average
These indicators are the best at helping you find a trend in the market.
The goal with an indicator here is to identify which way the market is trending.
RSI and MACD might be helpful in certain scenarios, but they won’t help establish a confirmed trend.
Once you have identified the direction of the market, the rest is easy.
The most difficult part is to tell if the market is going to continue up or down.
And remember, if there is no trend, you should stay out of the market.
You need a trend to carry your position.
So, if you notice that the market is stagnating and is having trouble moving you should hold your horses until a clear trend is established.
It’s very frustrating to trade a market that won’t move.
Therefore, it’s very important that you can somehow identify if the market is in an accumulation phase or if it’s actually trending.
Moving Averages will help you because they can help smooth out the noise from the market.
Make sure that you use the moving averages in a longer time frame to capture the bigger picture of the market.
Are you looking to become a skilled crypto trader?
Check out our detailed crypto trading guides in our educational center.
You will learn new strategies and how to read charts in real-time.
Can you swing trade Bitcoin?
Yes, of course.
I have been swing trading Bitcoin for years and it’s been great.
The trick to do it successfully is to understand if the market is:
Nothing else can be true about the Bitcoin price.
It can either be negative and if that’s the case you should short-sell Bitcoin.
All of the exchanges I mentioned earlier have the option to short Bitcoin.
If the market is positive, the only thing you need to do is to find an entry and give the position room to move.
When Bitcoin is in an accumulating stage it means that it’s not moving up or down.
The bigger players in the game are either loading up on long positions or short positions.
It sounds very easy to say, but it’s more difficult to identify.
However, when you become good at reading the price, trading becomes easier and more relaxed.
You are going to learn when to engage in positions with Bitcoin and when to sit tight and wait.
When this happens, trading becomes a little bit more boring but more profitable.
Swing trading Bitcoin tips
A great way to know which way Bitcoin is moving is by following the price on a larger time frame, for example, the 4h or 6h charts.
If the market is pointing up in a positive angle, the market will most likely continue up.
This is because the 4h and 6h charts are big enough to capture the larger trends in price and this is where you want to be analyzing.
It’s always more interesting to look at the smaller time frames.
There is more action on the 1min and 5min charts.
But this doesn’t help you swing trade Bitcoin better.
You need to zoom out to find the general direction of the whole market.
Crypto swing trading strategies
A good crypto swing trading strategy I like to use is where I only enter when the volume is very low.
What I mean by this is I only enter the market when the volume is dipping very low on the 4h, 6h, and 12h charts.
When this happens I know the market is about to move faster in the direction I’ve analyzed.
The reason is.
When the market is experiencing low volume, there is not a lot of trades going through the order books on the exchanges.
This means that big orders will have the power to move the market faster.
Did you get that?
When the market is thin, it’s easy to move the market.
This is a very good time to enter the market for two reasons.
There is a higher probability that the market will make a bigger move.
If it is in my direction I will be in the green faster which is always good.
Also, when the market is smaller I will be able to enter with a little bit tighter stop loss.
If I’m wrong on the trade, I lose less and I know for sure that I’m wrong because the market will let me know for sure.
If I’m right, the market will jump in my direction and give me a head start with early profits.
One thing to think about when you use this strategy is.
The market should be moving a little bit in your direction before you open your position.
That is the last confirmation you need before you enter.
Should you be a trader that relies on margin I recommend that you also read our crypto margin trading strategy guide.
Day traders should visit our latest crypto day trading strategy guide to learn how to tackle the market from a short-term perspective.
Does swing trading work?
The short answer is yes.
The truth is that it takes time and in the beginning when you start you will find it boring and not very profitable.
One of the reasons most traders give up is that it takes a bigger account to make more money as a crypto swing trader.
When they also realize that this will take a long time to master, most 95% of them give up and look elsewhere.
I will tell you what you will gain from learning this style of trading.
The benefits come later, so you should see it as invested time for the future.
Because it’s true, in the beginning, you will not make money.
But that’s the case with most new professions.
The benefits of becoming a really good swing trader in a couple of years are:
- No employment
- No boss
- Semi-passive income
- Stress-free job
- Financial freedom
- Work from anywhere
Consider this future lifestyle.
But also consider the amount of hard work and dedication it takes to make it.
You’ve learned the basics of swing trading cryptocurrency, swing trading indicators, and a little bit about strategies.
The tips I gave about Bitcoin are something I highly recommend that you try on your own.
And give it time, the first setup might not be the best one.
When it comes to exchanges, I’ve given you 5 exchanges that I know will suit well for this style of trading.
I recommend that you read through this article first before you choose your exchange.