Swing Trading Crypto

Swing trading crypto is popular among traders of all experience levels. Strategies appeal due to the longer timescales compared to other types of day trading along with the volatility of cryptocurrencies like Bitcoin. In this article, we cover the basics on how to swing trade cryptos using charts, bots and our top tips.

Crypto Brokers

eToro lead the way in Crypto trading. The lowest spreads (from 1% for BTC), their own wallet service and the largest number of Cryptos to trade. FCA Regulated.
Trade the major Cryptos against USD, EUR, GBP and AUD. All traded with tight spreads. No virtual wallet required, just a trading account.
Coinbase offers access to almost 4000 digital coins. It the easiest place to buy, sell, and manage your cryptocurrency portfolio
This post contains affiliate links, and this website will be compensated if you make a purchase after clicking the links.
BitMex offer the largest liquidity Crypto trading anywhere. Contracts from $1. Compliant with global AML guidance, the platform offers cutting edge crypto exchange and hedging.
Coinmama aim to make entering the crypto market as easy as possible, offering BTC,ETH,LTC,ADA,BCH and XTZ
Buy and sell an extensive list of leading and emerging crypto coins at Binance.
Paxful offers buying and selling of the world's leading cryptocurrencies.
Kraken is a top crypto trading exchange offering the largest altcoins by market cap.
Trade over 50 crypto pairs on an extensive list of popular and emerging digital currencies.
Webull offers trading on popular cryptos such as Bitcoin against the US Dollar.
Trade a handful of the top cryptos at Quotex.
Trade on dozens of cryptocurrency coins.
Just2Trade offer hitech trading on stocks and options with some of the lowest prices in the industry
IB Boast a huge market share of global trading. With a minimum deposit of $10,000 however, they remain an option for larger traders only.
Zulutrade work with a range of brokers that deliver trading on a huge range of cryptos - See each brand for specifics
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What Is Swing Trading Crypto?

Swing trading is a strategy whereby traders aim to profit from price movements across a short to medium time frame. The idea is to catch any ‘swings’ in the market which can occur over days, weeks or months.

There are two swings that traders look out for:

  • Swing highs – When the market peaks before pulling back, providing an opportunity for a short trade
  • Swing lows – When the market dips and bounces, providing an opportunity for a long trade

Swing trading strategies work well with trending markets, including forex, stocks and cryptocurrencies. The best crypto coins for swing trading, especially if you’re a beginner, include Bitcoin, Ethereum and Tether. This is because they have the largest market capitalisation and are some of the most actively traded and volatile coins on the market.

Successful crypto swing traders typically use technical analysis to observe short to medium time frame charts in order to catch daily and weekly trends. The use of fundamental analysis is also essential, as economic events can often occur over days or weeks.

Day Trading Crypto Vs Swing Trading Crypto

The main difference between day trading cryptos and swing trading cryptos is the timescale. Day traders aim to profit from short-term price moves within the course of a day. As a result, they are more active than swing traders and typically do not leave their positions open for longer than one day.

There is also a greater emphasis on technical analysis in day trading, whereas swing traders tend to focus heavily on fundamentals. In fact, some crypto investors may base their analysis solely on fundamental events.

Swing trading Bitcoin

Deciding between day trading or swing trading crypto is ultimately down to individual investing styles and goals. Whilst some traders prefer to carry out all their trades during the day, others are not phased by the prospect of holding positions overnight. In addition, some traders may thrive in high-pressure environments, whilst others prefer to take a more passive approach.

Either way, it’s a good idea to try out different strategies within a demo account, before rolling it into your trading plan.

Swing Trading Crypto Strategies

There is a range of approaches that you can implement when swing trading crypto, though it will take some time to determine which ones suit your preferences. We’ve provided two popular examples below.

‘Stuck In A Box’

This strategy follows a market range by utilising support and resistance levels. The market is therefore sometimes known as being stuck in a box between the two lines above and below.

Once the price breaks below support, the trader waits for a strong price rejection (a candle closed above support) and then goes long on the next candle open. The aim is to essentially exit the trade before the selling pressure comes in at resistance.

To ensure success with this strategy, you will need to have a sound understanding of your daily candlestick chart and support and resistance levels. Your stop-loss and take-profit will also be vital in ensuring you don’t exceed these levels.

‘Catch The Wave’

As the name suggests, the aim of this strategy is to catch one move in a trending market, whereby you enter after the pullback has ended.

To catch the wave, traders identify a trend in relation to, for example, a 50-period moving average. If the Bitcoin market approaches the moving average, traders will wait for a bullish price rejection, before going long on the next candle.

As a good rule of thumb, you should set your stop-loss below the candle low and set the take-profit just before the market swings high.

Swing Trading Crypto Tools

Whether you’re trading Bitcoin or other altcoins, multiple tools can significantly enhance your swing trading strategy and ensure peace of mind when things get challenging.

Social & Copy Trading

If you’re a beginner and curious to see swing trading cryptos in action, you could always look out for a broker that offers copy trading. This allows you to share trading ideas and copy other successful deals, making it an ideal feature for traders still finding their feet.

You can also search for copy-trading providers who have mastered their swing trading strategy within the platform. eToro, for example, has one of the best social and copy trading platforms for beginners.

Automation & Signals

Automated tools such as crypto bots and signals can help you to execute more trades faster. Trading robots will scan the market and automatically buy and sell assets at once defined criteria have been met.

Swing trading crypto signals
Automated swing trading cryptos on MT4

There are many types of robots to choose from, which can suit various swing trading strategies. You can also program bots to suit your preferences, based on volume, orders, time and price, for example.

Similarly, some platforms offer a vast range of signal providers, which can be managed either by another trader or can be fully automated. These can work well with swing trading crypto strategies as they can operate overnight when positions are still open.

Technical Analysis

Crypto swing traders typically aim to analyse price action and candlestick chart patterns using support and resistance levels, Relative Strength Index (RSI), Bollinger Bands, Fibonacci Retracement, Volume, Stochastic oscillator, and moving averages.

Swing trading cryptocurrency strategies
Swing trading cryptos on MT4 charts

Technical tools help traders to identify bullish and bearish zones within the chart where they can buy and sell. Traders will therefore aim to identify two types of opportunity: trends and breakouts. Trends are long-term market movements characterised by short-term oscillations. Breakouts mark the beginning of a new trend.

Moving averages are probably the most popular tools used in swing trading. These calculate the mean of a crypto asset’s price movement over a period of time. If any crossover is identified, this can indicate a bullish or bearish momentum. You can also use moving averages as your support and resistance levels.

Risk Tools

The golden rule with any swing trading crypto strategy is to not risk more than you can afford to lose. Once you’re in a trade, the best way to mitigate your risk is to set stop-loss parameters.

Since swing trading often requires holding positions overnight, stop losses must be set to protect your funds whilst you’re not at your computer.

These ensure that any losses do not completely wipe out your account and that you take profit at a reasonable level. The idea here is to keep your losses small and manageable so that over time, they will be outnumbered by your gains.

Pros Of Swing Trading Crypto

Swing trading can be an excellent strategy to master and is ultimately not as demanding as other crypto trading strategies. In addition, you also enjoy other benefits:

  • Long-term strategy – Compared to other forms of trading, there’s no need to spend hours monitoring trades when swing trading because trades can last days or even weeks.
  • Lower intensity – Many traders consider swing trading cryptos as less stressful than day trading because of the longer timescale and lower frequency of trades.
  • Trade part-time – Because of the above, it is possible to trade around your lifestyle and even maintain your full-time job.
  • Volatility – Due to the nature of swing trading cryptos such as Bitcoin, volatility is key. The cryptocurrency market is highly volatile, which can be attractive for experienced swing traders.

Cons Of Swing Trading Crypto

Unsurprisingly, swing trading cryptos can present challenges both for the inexperienced trader and the professional:

  • Overnight risk – Swing trading can lead to substantial losses because you are holding positions for longer than day traders. You also need to take into account any overnight swap fees.
  • Price gaps – Some traders may experience price gaps when they hold positions overnight or over the weekend. This can happen when developments and reports occur during the after-hours market.
  • Market timing – Timing the market swings can be tricky, even for experienced crypto traders.

Swing Trading Crypto Tips

Demo Account

If you’re undecided about whether swing trading crypto is right for you, a demo account will allow you to access the markets in real-time and practice first-hand.

Most brokers offer a free demo account which will include virtual funds, so you will never risk your own capital when testing your swing trading strategy.

Pay Attention To Bitcoin

Most altcoins are closely linked to the movement of Bitcoin, so if the price of BTC surges, the price of cryptocurrencies tends to drop. This is due to people exiting the altcoin market in order to ride the Bitcoin wave.

Conversely, if the price of BTC suddenly drops, cryptocurrencies usually drop. The ideal time to trade altcoins is therefore often when Bitcoin is steadily increasing over time.

BTC swing trading

Fees & Costs

Since swing trading cryptos involves placing fewer trades over longer periods of time, the spread is also charged less frequently and is generally smaller. However, swing traders will accumulate swap fees, which are daily interest rate charges levied on overnight positions.

Some brokers may also charge high commissions or other account-related fees, so make sure to check these before signing up. Depending on your jurisdiction, you may also be subject to crypto trading taxes.

Education

Swing trading crypto can often attract novices looking to ease themselves into medium to long-term trading. With that said, you will still need access to good educational resources and additional tools that can help you develop your knowledge.

This might include a crypto training course, a community forum, or even an online swing trading book. It’s important to take this into account when choosing your crypto broker.

Analysis

Effective swing trading crypto strategies are built on the use of technical tools as well as fundamental analysis.

A good understanding of daily candlestick charts and basic indicators will set you off to a good start, but it is essential to keep on top of fundamental events and financial reports that can cause any swings in the market.

For cryptocurrencies, it’s worth following reputable sources such as Binance, Coin Metrics, CoinDesk or Coin Telegraph.

Final Word On Swing Trading Crypto

The allure of swing trading in the crypto market is largely thanks to its comparatively lower level of time commitment and stress in relation to other forms of trading. With that said, new traders should take time to learn how to swing trade cryptocurrency assets and practice within a demo account before committing. Once you’ve nailed the basics, you can then start determining which swing trading crypto strategies will best meet your needs.

FAQ

What Is The Difference Between Day Trading Vs Swing Trading Cryptos?

The main difference between day trading and swing trading cryptos is the time frame used to execute trades. Day trading focuses on short-term price moves within the course of a day, whereas swing trading aims to profit from longer-term moves over days or weeks.

Is Day Trading Crypto Better Than Swing Trading Crypto? 

This will depend on your personal preference and risk profile. Day trading is ideal for individuals who have the time to commit to frequent daily trades, whilst swing trading crypto works better for those who prefer to hold trades for a longer period of time.

How Are Crypto Swing Traders Taxed? 

This depends on the jurisdiction but in the UK, for example, the HMRC taxes day trading activities based on different classifications (depending on what you are trading and how you trade them). To find out how you might be taxed, visit the respective governmental agency in your jurisdiction.

What Is The Best Crypto Trading Bot? 

For the best technical features, an excellent option is 3Commas, which is a web-based crypto trading bot that can implement multiple strategies. If you’re looking for unique automated trading bots, Bitsgap is a good choice for any experience level, offering a 14-day free trial for new users.

What Is The Best Indicator For Swing Trading Cryptos? 

This depends on the trader, but among the best indicators for swing trading cryptos is moving averages (MA) which calculates the mean of a market’s price movements over a certain period. This helps to smooth out any short-term spikes and is therefore ideal for longer-term swing trading.

Can I Swing Trade Crypto On Robinhood And Is It Safe?

Yes, it is possible to safely swing trade cryptocurrencies on Robinhood. You can find more information on how to swing trade Bitcoin and other crypto coins on the Robinhood website. Note also that Robinhood is currently not available to clients outside the US.