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Swing Trading vs Day Trading

When it comes to Cryptocurrencies, there are 3 different approaches, essentially decided by timeframes – long, medium and short term. Long-term investments are generally left alone, or added to over time. However medium (swing trading) and short-term (day trading) can be very different.

  • Long term (HODL’ing) – many people understand that we are very early within the crypto journey, they are early investors and have bought specific coins which they have researched, with view that in around 2-5 years, their investments will be worth significantly more. This is by far the least riskiest method and means the individual does not need to keep regular tabs on the prices of their investment. They can sell their holdings at any point should they wish to “cash in”.

  • Medium term – inter-day trading (SWING TRADING) – this is a very popular method where investors look at a daily or even weekly timeframe to spot buy and sell some of their holdings at low and high prices points accordingly. This is done via an exchange i.e. Kraken or Binance. By analysing price action on the charts, they can increase their holdings without having to inject any further fiat currency into their account. It also enables them to withdraw profits and either spend or re-invest accordingly. This holds a slightly higher risk than longer-term investing, however if done correctly can give significant and constant returns.

  • Short term – day trading – extremely high risk, but with potentially high rewards. By using high leverage, many traders attempt to profit off the price movements from a certain coin. However, the market is heavily manipulated, and there are constant, unexplained moves that look to catch out day traders. You may find yourself waiting hours, or even days to find that perfect set up, that’s if you haven’t already been caught out by market manipulation!

There has been a lot of attention drawn to day-trading cryptocurrencies recently, and many of the truths and realities have simply been glazed over.

What makes day trading cryptocurrencies so attractive? Due to the extremely high volatility of the space, a coin only needs to move a fraction of a cent, in order for significant PIPs to be obtained. Marry this up with up to 1:500 leverage, if you manage to catch any move just right, you may well be onto a big winner. However, if you get caught out by one of the many, many manipulative moves, you run a very high risk of your stop loss being triggered and/or your entire account being wiped out in an instant.

Much confusion has occurred around the differences between INTER-day trading and INTRA-day trading., Simply put, inter-day is where one seeks to buy a certain number of coins at a low price point, and then sell the coins at a higher price. Intra-day trading is where one places a trade, (similar to Forex) via a broker, using leverage to profit off the price movements on a coin, without owning any physical currency.

Many novice traders have seen more experienced traders have some success with intra-day trading and assumed they can jump straight into day trading.

Day-trading cryptocurrencies is a highly risky approach, even for a seasoned trader. For a novice, it is almost a kamikaze mission, that will eventually end in disaster. There may be significant wins, but they will be sporadic and most importantly, they are not sustainable. The definition of a successful trader, is one who can be consistently profitable over a significant period of time. The volatile nature of cryptocurrencies does not make this feasible.

Swing-trading is a much more sensible, practical and sustainable approach that rewards correct technical analysis, and is a lot less stressful!

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