TO SWING OR DAY-TRADE? HELP I’M A NOOB!
One of the biggest struggles new traders face is finding what strategy best suits them.
To be honest, crypto trading is far from easy, well except you’re copy-trading an expert.
Most times, new traders are caught up between day-trading and swing trading. Perhaps, because they got a little hang of leverage trading.
Ideally, a new trader shouldn’t have business leverage-trading – except you’re using very low leverage. Even at that, it’s still risky and can be emotionally draining for a new trader because of the extremely volatile nature of the crypto market.
Today, we’ll talk about why Swing trading is a better strategy for a new trader.
Swing trading is basically one of the most convenient strategies for any retail trader.
Why?
You can do it even if you have a full-time job! It doesn’t require that you sit in front of your computer screen 24/7, and still offers you opportunities to make massive returns from the market.
The idea with Swing trading is to capture larger price swings in the market and exiting before it reverses against you. These trades can last from days to several weeks. So it basically plays out on a short to medium timeframe.
Swings can be difficult when the market is ranging because it’s harder to capture any relevant moves in a consolidating market. So trending markets are more favorable to swing traders.
Unlike day trading where you have to close your trades before the end of the day, swing traders have to hold for longer, but not as much as an investor who is willing to hold for years.
The preferred timeframe for swing trading is a higher timeframe like the “daily” since it often takes a couple of days to achieve bigger price swings. However, you must look at medium timeframes like 1hr, 4hr, 12hr to find better entries for your trade. This would depend on the trader though so these rules are not set in stone.
While a trade set-up must be confirmed through technical analysis, the swing trader may not need as much technical analysis as a day trader. Also, you’re not heavily hunting for fundamental analysis to drive the price up since F.A usually plays out over several weeks of holding.
One of the most popular patterns you can use to determine entry for swings is “support and resistance”. If you’re trying to catch a good swing, your idea would be to Long (buy) support & Short (sell) resistance.
Another one is the moving average. This is good for trending markets where the MA lines serve as support and resistance depending on the direction of the market. You’d do better by combining some other indicators like the Relative strength index RSI, Bollinger bands, or FIB retracement tool.
With swing trading, you can be profitable even with little funds because you intend to wait it out for larger swings that may span over 50%.
The major difference between day trading and swing trading is that day traders aim to capture small price moves within the day while swing traders look to capture bigger moves that may take some time to play out. Day traders must close all positions within the day. Swing traders on the other hand leave trades open. in addition, you don’t get to worry much about daily noise in price as you’re focused on higher timeframes.
If you’re a new trader or even a busy corporate worker, you should be looking at swing trading as it’s more passive than active. Remember, you don’t have to use leverage as you can comfortably trade the spot markets.
Also, you don’t need to monitor the market frequently and you can make sizable returns from just a few trades if you go harder with your capital.
Now that you know how both strategies work, you still need to test out different strategies when you begin trading, just to know what better suits your personality.
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