A few days ago Binance on it’s blog wrote a guide for beginners on the Swing trade trade modality and we have replicated it and brought it here to make our personal comment.
Really, many who are new, fall into some traps that prevent them from evolving over time. Many traders sell them the false idea that being aware of the financial markets minute by minute is the great magic layer to be successful. The truth is that this guide will open your eyes.
Day Trade Will Never Leave You A Millionaire
Yes, that’s so true. Day trading will never fill your pockets with money. Rather, what you will gain will be a lot of stress and little time to dedicate those you love.
We must remember that the cryptocurrency market, especially, is a market that never closes. It is a 24/7 market available at any time of the day, seven days a week and every month of the year.
That is why binance in the introduction of the article is clear saying that Swing trading is a commonly used trading strategy that can be ideal for beginner traders. It’s a relatively convenient way to express opinions about the market due to the manageable time horizons involved.
What Is Swing Trading?
As explains Binance’s blog Swing trading is a trading strategy that involves trying to capture price moves that happen on a short to medium time frame. The idea behind swing trading is to catch market “swings” that play out over a few days to several weeks.
Swing trading strategies work best in trending markets. If there’s a strong trend on a higher time frame, swing trading opportunities can be plentiful, and swing traders can take advantage of larger price swings.
In contrast, swing trading can be more difficult in a consolidating market. After all, if the market is going sideways, it’s harder to capture large price changes.
How Do Swing Traders Make Money?
As Binance mentioned, swing traders aim to capture price swings that happen from a few days to several weeks. As such, swing traders will hold positions for more time than day traders, but less than buy and hold investors.
Swing traders will typically use technical analysis to generate trade ideas, though not necessarily to the same extent as day traders would do. As fundamental events can play out over weeks, swing traders may also use fundamental analysis in their trading framework.
Even so, price action, candlestick chart patterns, support and resistance levels, and technical indicators are very commonly used to identify trade setups. Some of the most common indicators used by swing traders are moving averages, the Relative Strength Index (RSI), Bollinger Bands, and the Fibonacci retracement tool.
Swing traders will typically look at medium to high time frame charts. Why? A strong uptrend or downtrend has to be confirmed on a higher time frame. But, they may also look at intra-day time frames, such as the 1-hour, 4-hour, 12-hour chart, to look for specific entry and exit points. These triggers can be a breakout or a pullback on a lower time frame, for example.
However, the most important time frame for swing trading is likely the daily chart. Even so, trading and investment strategies can differ substantially between different traders. Note that what we’ve discussed here aren’t strict rules, but just common examples.
Difference Between Day Trading And Swing Trading
Binance also explans that Day traders aim to capitalize on short-term price moves, while swing traders look for larger moves. In effect, day trading is a more active strategy, where traders need to frequently monitor the market, and they don’t leave positions open for more than a single day.
In contrast, swing traders can take a more passive approach. They can monitor their positions less frequently, as their goal is to profit from price movements that take longer to play out. Since these moves tend to be larger, swing traders can bring in sizable returns from even just a few winning trades.
Day traders will almost exclusively use technical analysis. Swing traders will typically use a combination of technical analysis and fundamental analysis, usually with a stronger emphasis on the technicals. On the other end of the spectrum, investors may not consider technicals at all and invest only based on fundamentals.
Which one is better for you, day trading or swing trading? Well, where do you see yourself on this spectrum of smaller to larger time frames, and technicals and fundamentals? Answering these questions will help you find what trading strategy suits your personality, trading style, and investment goals the best.
You could consider what your strengths are and choose the trading style that best magnifies those strengths. Some prefer to get in and out of positions fast and not having to worry about open positions when they’re asleep. Others make better decisions when they have more time to consider all possible outcomes and elaborate on their trading plans.
Naturally, you could switch between different strategies to see which one produces the best results. You could also do paper trading (i.e., trading with fake money) before implementing the strategies into your actual trading plan.
How To Get Started With Swing Trading Cryptocurrency?
Swing trading can be an ideal way to start trading. How come? Due to the longer time horizons (that are still not too long), decisions can be made calmly, and trades can be monitored easily.
If you’re completely new to trading, you could check out A Complete Guide to Cryptocurrency Trading for Beginners. In that article, we explain what you need to know about trading, along with some tips that can help you find your trading style.
If you’re comfortable with your knowledge, you could then try out paper trading on the Binance Futures testnet. This way, you can test your swing trading skills without risking real money.
So, once you feel like you’re ready, you can start trading on a cryptocurrency exchange. Which is the best online trading platform for swing trading cryptocurrency? Well, there are multiple options available, but the Binance ecosystem offers hundreds of market pairs, quarterly and perpetual futures, margin trading, leveraged tokens, and much more. Many of these products can be ideal for swing trading opportunities.
Swing trading is a commonly used trading strategy in the stock market, as well as it is in cryptocurrency. Swing traders will typically stay in positions for a few days or weeks, depending on the individual trade setup.
Should you start swing trading or day trading? The easiest way to find out is to try them out both and see which one fits your trading style best. It could also be helpful to learn about risk management principles before you start, such as using a stop loss and proper position sizing methods.
Completing all the concepts that Binance explained to us in its guide, our primary reason for preferring Swing Trade as our favorite modality is based on the principle of a detailed study of more than three years that tells us that trading the market daily is literally losing a lot of money .
With the above personal opinion, we want to reinforce that with Swing Trade we have more time to have an optimal social life and much more prosperous than sitting daily in a chair with a table and monitoring the market movements minute by minute. We really hate slavery.
Another great reason to use more Swing Trade, and most importantly, is the fact that it allows us to think more like high value investors and not as market euphoric. We detest market noise, we do not operate with noise, we simply study, analyze, create a strategy, execute what we have analyzed and studied, and so we get great results.
Patience Is The key
We love the philosophy of Warren Buffett, who says that in financial markets, the only ones who make money are those who are patient and manage to accept adversity over time. He is very clear they said his famous phrase “The stock market is a means of transferring money from the impatient to the patients.”
Then and as a closing, the previous philosophy goes very hand in hand with the Swing Trade mode, where what prevails is patience as a great value to be developed.
See you in the next story! With love 💛 Rubikav® Team!