Cryptocurrency has undoubted benefits over traditional money, which is why people continue to invest in it despite its many fluctuations. Trading in cryptocurrency has become the new favorite of thrill-seekers, who take the losses in their stride for the massive gains that can be won. For those wondering how to effectively trade cryptocurrency, this quick and easy guide introduces you to one of the popular trading techniques so-called swing trading.
Swing trading – What is it?
Swing trading is essentially the trading process in which a trader holds on to particular cryptocurrency investment for as many days as it takes to accumulate gains. While other traders may buy and sell investments in hours or even minutes, swing traders keep their position open until they’ve registered again. The rationale behind this trading method is to benefit as much as possible from the upward price movement. It is a relatively safe trading option for new traders as it is less subject to volatility.
How to Swing Trade Crypto?
While there is no fixed answer to the question of how to swing trade cryptocurrency, certain practices may help. Keep in close touch with financial news through daily news updates, as these will give you insight into which direction the cryptocurrency market is likely to go. It also helps to have a good understanding of the exponential moving average (EMA), which gives weight age to recent price information and can help you to devise a strong swing trading plan.
Advantages of Swing Trading
Swing trading is ideal for the patient, analytical trader who pays careful attention to the market and can thus sense better than many others when the market is moving upwards. It allows you to hold on to a position for a longer time and make the most out of it. For this reason, it is also ideal for the amateur or risk-averse trader who doesn’t want to play the market on a daily basis.
Disadvantages of Swing Trading
Just as the market can move up over time, it can also plummet without warning. As a swing trader, you need to hold on patiently through such falls and monitor the market carefully for signs of upward movement or to decide when you need to make an exit. This is a highly time-consuming job and requires you to be constantly updated about market conditions, and is thus not ideal if you have a demanding full-time job.