What Is Swing Trading? Definition, Strategies, and Example

What is Swing Trading

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What is swing trading vs day trading?

The biggest distinction between the two approaches is duration. Day trading, by definition, involves holding positions for less than a full trading day, and sometimes for as little as a few minutes. Swing trading typically involves a multi-day holding period, and sometimes takes place over multiple weeks.

The cardinal rule though is that this capital should be money the investor can afford to lose. Even with the strictest risk management, the unexpected is always possible. Because trades last much longer than one day, larger stop losses are required to weather volatility, and a forex trader must adapt that to their money management plan. As mentioned, other methods can be used to profit from the market’s short-term swings.

You might NOT want to be a swing trader if:

For example, if a crypto coin rises from its low till the end of the day, a bullish candlestick will reveal that the market was on an uptrend all day. These lines can help swing traders build a solid trading strategy. The first strategy for them is to buy on the bounce off the support line and put a Stop Loss just below it. The second strategy is to enter a sell position on the bounce off the resistance line with a Stop placed just above it.

  • While catching a swing point can be incredibly lucrative, it isn’t necessary.
  • There are different ways to trade cryptocurrencies, and your success largely depends on choosing the right way.
  • In this case, the market is carving lower highs and lower lows.
  • Surface-level analysis helps you assess the position you need to hold.
  • IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

Similar to a reversal, a retracement is when a trend reverses its position, but not completely and not for long. It retraces its movement (goes back to where it was) before continuing again in the same direction. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The right combination is different for every trader, so it’s important to start with the basics and work your way into using the indicators and patterns that make the most sense to you. Smaller gains can only produce growth in your portfolio if losses are kept small. Rather than the normal 7% to 8% stop loss, take losses quicker at a maximum of 3% to 4%.


In general terms, the price goes up until traders aren’t so sure the company can support a higher valuation. Then, the rising price trend hits resistance, sputters, and falls. At some lower prices, traders think the company can support a higher price than its trading for. So, the downward trend loses momentum, hits a level of support, and starts rising.

What is Swing Trading

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What Is Crypto Swing Trading? 4 Cryptocurrency Swing Trading Strategies Explained

To do this, most swing traders will form a stop-loss strategy. Fibonacci retracements are an extremely common base for a swing trading strategy because they help identify levels of support What is Swing Trading and resistance. But swing traders don’t necessarily have this restriction as the duration of a swing trade is relative to the timeframe of the trend, which can vary significantly.

What is Swing Trading

So, while the trade duration could be as short as 30 minutes, or even less, it could also last for longer than a day. Apart from Step 1, this is the most important piece of the entire process. Think of drawing key support https://www.bigshotrading.info/blog/top-10-rules-for-successful-trading/ and resistance levels as building the foundation for your house. It’s impossible to identify favorable swing trades without them. Before we show some examples using swing trades, let’s define the two types of levels.

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