The Best Crypto Exchanges for Swing Trading (margin trading)

The Best Exchanges for Swing Trading (margin trading)

Do you want to for Swing Trade? Now you are looking for an exchange to invest in Cryptocurrencies with Swing Trading strategy?

Check out the 3 best exchanges to perform Swing Trading today.

Swing trading refers to an approach that utilizes multiple indicators to set up trades lasting days or weeks. Swing traders look for hints or signals that indicate the direction and length of a future price “swing” with fundamental or technical analysis. The trader opens positions accordingly and patiently waits for the price to move as expected.

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Day Trading vs Swing Trading

Swing trading is suitable for people who usually lack the time or cannot fully focus on day trading and cannot devote all their time to analyzing lucrative short-term market movements. Day traders process both buys and sells on the same day so they don’t go past the same night.

Swing traders, on the other hand, capture market movements that last for days or weeks. This is the most distinct characteristic of swing trading. Swing traders want to make profits on a short to medium term (days or weeks) basis, while day traders open and close forges in hours. Overall, swing trading is less aggressive, but it’s as good a way to make money as other trading.

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Buy and Hold vs Swing Trading

Buy-and-hold is a long-term investment strategy that requires patience and trust in the intrinsic value of a project. It may take days for a swing trader’s predictions to come true, but they remain in position until their predictions go wrong or come true, without considering the long-term value inherent in cryptocurrencies.

Both types of traders above need to learn to keep their composure and trust their analysis. Even if the stock price fluctuates in a short period of time. It should also not be forgotten that when compared to day trading, these two strategies expose you to overnight trading risk in exchange for a larger target price. Even so, new traders will feel much less stress as swing trading doesn’t require terribly aggressive monitoring or continuous trading.

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How to do Swing Trading on Bitcoin

The first step in swing trading is learning how to analyze the market. As with any trading strategy, swing trading requires a certain amount of time and focus. Traders should skillfully analyze charts and patterns to find cryptos that are showing strong signals that a big move is imminent.

Among the methods needed to spot such opportunities are fundamental analysis and technical analysis.

Fundamental analysis refers to a method that focuses on studying the microscopic factors surrounding an asset, including news and events. For example, if you are a swing trader interested in Ethereum, you will be constantly monitoring all new news related to it. The progress of Ethereum’s recent adoption of a new proof-of-work consensus protocol is a perfect example of an actionable signal. Many would argue that with such an upgrade event, the price of Ether (ETH) will likely increase as well. Overall, when conducting fundamental analysis, traders should become more familiar with the structure, innovations and news of the project in question. The more knowledge you have about an asset, the more accurately you can predict its future movements.

On the other hand, technical analysis only cares about actionable signals related to asset prices. This means that we do not care at all about the structure or management of the project or any other macro/microeconomic factors. Technical analysis strictly focuses on monitoring factors that hint at price direction, such as charts and indicators. Swing traders can use either of these two methods for asset valuation, but they primarily rely on technical analysis.

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Useful technical indicators for swing trading

Below are some great technical indicators that can be useful for judging potential future price movements.

1. Moving average

This technical indicator is used to closely examine the price action of an asset over a specific time period to determine the average price action over time. When representing Moving Averages (MA) on the chart, a single straight line is used to indicate the movement rather than small changes caused by random price fluctuations. The most frequently used moving averages are the 200-day, 100-day, and 50-day moving averages. Combining different MAs can reveal an impending swing or a big price change. For example, if the 50-day/200-day MA line of Bitcoin increases steadily and steadily over the long term, then the 50-day baseline suddenly drops and crosses the 200-day baseline, then the point at which these two lines meet can be considered as a signal. there is. In this case, a downtrend occurs if the short-term MA line crosses below the long-term average. As such, a signal indicative of downward pressure appears when the short-term average breaks and enters above the long-term line.

2. Relative strength and weakness index

It is the buy-sell cycle that determines market movement. The Relative Strength Index (RSI) shows the market overbought and oversold. In general, when the market is overbought, you expect it to soon calm down and move in the opposite direction. The same goes for oversold conditions. In technical analysis, price movement is the rate at which it increases or decreases. Because RSI measures the speed and magnitude of price movements, it is called a momentum oscillator.

3. Volume Indicator

You can use volume indicators such as On Balance Volume (OBV) to view volume flows and predict changes in price movements. The OBV indicator is an indicator designed based on the basic concept that the price of an asset is determined by the buy/sell volume of both institutional and individual traders. When individual traders panic, institutional traders buy large volumes. The price will remain flat for a while, but as a result it will rise due to high volume. When the price peaks, individual traders rush in hopes of an uptrend, while institutional traders sell larger volumes, driving the price down. This indicator can be used in conjunction with a volume histogram to determine the current level of interest in an asset. If the line joining the two peaks on the volume histogram forms a slope (either upward or downward), the market is likely to swing in a new direction.

4. Swing trading strategy

Effective swing trading requires not only the right tools and indicators, but also the right strategy.

Breakout strategy

This strategy allows you to use indicators such as volume data or moving averages to determine if the market is forming a sudden bullish signal. Traders can buy and drive to the highs as soon as the price breaks through the key resistance zone. As an uptrend can last for several days, swing traders should always be on the lookout for the most appropriate time to liquidate.

Breakdown strategy

A breakdown strategy is a strategy that either liquidates right before the price decline or takes a short position. Also known as a downward breakout, it is the practical opposite of the breakout strategy described above.

Retracement strategy

A retracement strategy is to find the point at which the price is about to temporarily reverse. You can think of this strategy as a strategy to find a trend within a trend. RSI is a useful indicator for this strategy as it can indicate when the price will reverse. As these are considered temporary reversals, swing traders must know when to reverse or liquidate positions.

Reverse trading

A reversal trading strategy is used when new highs or lows are updated in succession and then reverse with lower lows or lower highs (or vice versa). If the price moves below the moving average, it indicates that there will be a reversal soon.

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Who Can Be a Swing Trader?

Because swing trading requires more patience than an aggressive approach, it’s often best for those who struggle with full-time trading. Considering that a predicted move or trade can take weeks to complete, swing traders can trade with their full-time job. However, if you prefer to trade at a faster pace, day trading or scalping seems to be a better strategy. Due to the volatile nature of cryptocurrencies, swing traders must analyze the market carefully before taking a position. To be truly successful at analyzing, you will need to devote a significant amount of time to research, practice, and improve your skills.

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