Day trading vs Swing trading Cryptos: Find the Comparison
The first thing that comes to mind when starting crypto trading is strategy. Which strategy to go for is the most common question for beginners.
Day trading and swing trading are the most popular methods that confuse a crypto trader. To select an ideal one, you need to conduct an in-depth study on day trading vs swing trading cryptos.
Being a leading signal provider, Carlos and Company understand the importance of choosing the right strategy in the crypto market. Thus, in our blog, we will compare these two strategies and find out which one works well for you. So let’s start the comparison with meaning.
Meaning: Swing trading vs Day trading for Beginners
Day trading is a short-term trading strategy to open and close a trade within a day or the trading hours. Under this, day traders take advantage of short-term price fluctuations with the aim of making small profits.
Swing trading is a medium-term trading strategy where traders hold positions for a few days. Under this, swing traders take advantage of medium-term price swings with the aim of earning a decent profit.
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It solely depends on one’s trading style and time commitment. Usually, Day trading for crypto suits those who are seeking quick gains, while Swing trading for crypto suits those who prefer fewer trades and like to hold positions for days or weeks.
The 1% rule advises traders to risk not more than 1% of their trading capital on a single trade. This will help them manage their risk and protect their account from large losses in market fluctuations.
It depends on one’s availability and goals. Day trading requires quick decisions and constant attention. Swing trading is less time-intensive and suits those who are aiming for medium-term gains with fewer trades.
Day Trading can be profitable in crypto due to high volatility and liquidity, but it also carries lots of risks. It is risky for beginner-level traders, those who cant monitor markets closely an react quickly to the changing prices.
Swing Trading vs Day Trading Crypto Example
Swing Trading Example
A swing trader had some money, so the trader decided to open a buy position in BTC/USD, expecting a rise. The traders open a trade when the price is trending at $83000, aiming for a 10% profit in 15 days. The trader’s prediction became true, and the trader closed the position on the eighth day at the desired profit.
Day Trading Example
Suppose a day trader was watching the daily chart and expected a price rise based on the analysis. The traders entered a bullish trade in BTC/USD when the price was trending at $93000, aiming for a 1% profit. The trader’s analysis becomes true, and the price rises. The trader closed the trade at $93930 and made a profit of $930.
Swing vs Day Trading: Time Frame & Trade Frequency
Generally, day trading aims to close a position within the trading hours. The trading time frame can be in hours, minutes, and even seconds. When it comes to trade numbers, day traders generally open 1 to 5 trades in a day. However, with scalping day trading, the trade number can go upto 100.
Swing traders can hold a position for more than a day and less than a month. The time frame can be a few days to weeks. The trade frequency depends on trader to trader. Generally, swing traders place around 3 to 10 trades in a month.
Swing vs Day Trading Strategy: Capital
Day trading requires a large capital account. The capital requirement per trade is relatively small. However, due to the high frequency nature and risk, traders need a significant amount; otherwise, the chances of blowing up the entire capital are higher. On average, you need at least $25000 to start day trading.
Swing traders’ capital requirements differ from trading numbers and profit expectancy. On average, a swing trader needs at least $5000 to get started.
Day Trading vs Swing Trading: Analysis Method
Day traders generally use technical analysis to identify short-term trading opportunities. It requires knowledge of trading indicators, candlestick patterns, trends, momentum, and other crucial technical analysis concepts. A day traders generally watch a daily or hourly chart to determine an opportunity.
Under Swing trading, traders hold a trade for a comparatively longer period. Thus, swing traders need to combine technical analysis with fundamental and sentiment analysis. A swing traders generally watch daily or weekly charts, economic events, and geopolitical conditions.
Swing Trading vs Day Trading: Which is more profitable
Day traders aim for a 1 to 2% return per trade. However, they place multiple trades, so together, the profit makes a significant amount. While swing traders aim for 8 to 15% profit. However, due to fewer trades, the profit is less than that of day trading.
Day vs Swing Trading: Risk
Crypto is a highly volatile asset, and with day trading, the risk is comparatively high. So day traders can lose a potential amount in the market with the probability of making a high profit.. As swing traders hold a trade for a longer period, the risk is less compared to day trading. So both profit and loss are less with swing trading.
Swing vs Day Trading: Suitability
Day trading is an advanced trading strategy that requires in-depth market knowledge and impeccable analytical skills. You need to dedicate proper time and a lot of effort to practice day trading. In addition, this strategy needs the right psychology, discipline, and rule following. So it is more suitable for active and experienced traders with great market knowledge.
Swing trading can be a suitable strategy for beginners, intermediate, or passive traders. You don’t need to stick to the charts all day, and you can start trading with just basic knowledge. You will get proper timing to make trade decisions. Also, the flexibility of closing trade at a desired time is greater.
Day Trading Vs Swing Trading Cryptos: Which to Choose
The ideal crypto trading strategy depends on several factors. It includes your profit expectancy, risk capacity, experience, interest, time frame, type of cryptocurrency, and others.
Beginners who lack knowledge, have small capital, and cannot afford to take high risks can consider swing trading. While advanced traders with aggressive risk criteria and high profit expectancy can consider day trading.
Swing vs Day Trading: Final Words
Swing and Day trading are among the best strategies for trading in the crypto market. You can select any of the styles according to your requirements.
However, whichever you choose, ensure that you have a detailed understanding of that method. Also, before starting live crypto trading, test it first on demo accounts. It will help you identify whether the style works for you.
In the initial days of your trading journey, you may struggle with determining trade opportunities. And we can help you with that. At Carlos and Company, we provide both intraday and swing trading signals. Visit our contact us page to try our demo signals and take your trading journey further.