Swing trading is a common type of speculation aiming to capture price fluctuations in a short to medium time frame, typically between a couple of days and several months. Swing trades can both use fundamental or technical analysis to capitalize on these opportunities. This strategy is common among beginners to financial markets as the time frame suits most average traders. Swing trades come in all types and are present in all financial markets, forex, stocks, and cryptocurrencies.
This article covers the basic concepts of swing trading, the good, the bad, and everything in-between.
Swing trade is classified as a type of trading in financial markets where participants long or short in order to speculate on price movements. These trades pan out over a time frame of a couple of weeks to several months, depending on the market conditions. It is rarer to have swing trades that only last a couple of days, but it happens with crypto market volatility.
Swing trading comes in all sorts of forms; some traders aim to capture moves in volatile markets, such as low-cap stock and cryptocurrencies; While others trade less volatile markets such as commodities and blue-chip stocks. The common theme here is that speculators identify where an asset's price is likely to move, then they exercise a position in the market to capture the profit put on the table. Typically, swing traders utilize higher time frames, including but not limited to: 4HR, 8HR, Daily, Weekly, Monthly. These strategies usually work best in trending markets. It allows traders to capture overall trends, but this is not the end all be all. Many traders have a plethora of different strategies that work in select market conditions.
This is the holy grail question that, unfortunately, no trader has a definite answer to. The beautiful thing about financial markets is that participants develop an edge using a plethora of techniques. Typical swing traders utilize technical analysis heavily as well as some fundamental analysis. Swing Traders adopt Risk:Reward (R:R) ratios and other analysis techniques to define their risk and anticipate the profits that will be made.
This idea of R:R is coupled with things such as candlestick chart patterns, support and resistance levels, technical indicators, and even price action. This series of trading toolkits will build out a catalog of all of these concepts, helping mold beginner traders – hopefully, you are reading this when this article is built out with a plethora of hyperlinks; for now, please make due!
A key concept here is that there are hundreds if not thousands of edges to be captured in financial markets, but there is definitely not free lunch. A very basic strategy to outline is that of a trend following strategy. In this scenario, users will utilize trend lines, follow technical market structure, buy on pullbacks, and sell on rips. This is just one core way of swing trading among breakout trading, range trading, and other standard practices. Within these strategies, there lies limitless possibilities for capturing an edge in markets.
--Time Efficient
--Captures the bulk of market swings
--Rely on concrete factors such as TA
--Overnight risk is assumed
--Large exposure to markets results in substantial risjk in market reversals
--Miss out on the macro trends
Most people have heard of the glamour of an overinflated life style of day traders, or at least that's how it's portrayed. Day traders aim to capture short-term price fluctuations, typically intra-day, while swing traders look for larger multi-day moves. Day trading requires much more management, demanding real-time concentration and collectiveness. To keep it simple, day traders hold positions for no more than a day, while swing traders hold their positions from days to months.
When swing trading, participants must account for the unpredictability that comes with overnight risk, in equities and traditional markets, this can be seen in gap ups and gap downs, for crypto, this is just general overnight volatility. This results in different position sizing for each trader, as day traders must use larger position sizes to profit off smaller fluctuations, and vice versa for swing traders, smaller positions to catch larger moves.
These trading types also call for different styles; day traders typically exclusively rely on technical analysis. Swing traders, on the other hand, can incorporate both fundamental and technical analysis. Part of a swing trader's edge may be that the high probability of the underlying asset being higher in the next six months due to fundamental reasons, which gives them an edge in going long a majority of the time.
Swing traders rely on multiple days worth of market structure to trade common patterns or trends. The most common strategies revolve on moving average crossovers, cup-and-handle patterns, flags, pennants, and a plethora of other technical aspects.
These patterns individually do not mean much, but they can provide traders with an edge when coupled with a concrete strategy and plan. A key thing to understand in trading is that it is a probabilities game, and patterns fail all the time; this is why its key to adopt a risk management system, typically seen in R:R. The underlying goal all traders strive for is a positive expectancy.
This is a swing trade that was taken on GRT at the week of writing. The key thing to notice here is the confluence of multiple aspects of technical analysis that support the R:R tool's (traders) thesis. This trade leverages trend following, traditional chart patterns, R:R, and support and resistance levels.
As displayed in this example, this swing trade was completed in less than a couple of days. This trade was swift as crypto markets experience tremendous volatility. As previously stated, this is not always the case that trades can be anywhere from a day to multiple months.
Swing trading is an excellent place for beginner traders to start. This is due to multiple reasons such as smaller position requirements, time efficiency, and it's arguably less stressful. There is no one way to trade in financial markets but this article covers the swing trading basket. It is now up to the individual trader to hammer in their edge through studying markets. Finding an edge is not re-inventing the wheel but more of connecting the puzzle pieces to find a strategy that suits you and the current market conditions. Trading is not easy, but studying these materials will show improvement.
For those looking to get started trading, here are my referral links to exchanges I prefer (You will also get a 5% discount on trading fees) 😊
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Tesla has decided to suspend the acceptance of Bitcoin as a form of payment, with concerns about trasnaction mining being the primary cause of the decision. The CEO of Tesla, Elon Musk, took to Twitter on Wednesday to drop the new development. According to him, the need to suspend customers' use of Bitcoin to purchase Tesla's vehicles was because of environmental concerns. He said in the release:
"We are in search of other cryptocurrencies that make less use of BTC's energy/transaction."
The use of fossil fuels is reaching appalling numbers for BTC mining, and Tesla is looking to use other cryptocurrencies that utilize less than 1% of what Bitcoin consumes. However, Tesla plans to continue using BTC as soon as mining becomes sustainable, and will not attempt to sell their BTC holdings.
The decision to accept Bitcoin as a form of payment was issued back in March. Mining Bitcoin can come with a lot of extensive processes. The top digital asset is created when two complex machines compete to solve complex mathematical puzzles. This process requires a large number of fossil fuels, particularly coal, to generate electricity.
Data obtained from the University of Cambridge and the International Energy Agency shows that at the present rate, Bitcoin mining consumes a similar amount of energy to that of the Netherlands in 2019 annually. Before Tesla accepted Bitcoin as a form of payment in March, the vehicle company purchased BTC worth $1.5 billion in February. This move increased the adoption of cryptocurrencies by different industries as demand for BTC rose by 20% after the decision.
However, the recent developments may lead to a decline in BTC's adoption. Although it may be short-term, given that Tesla intends to continue accepting Bitcoin immediately the energy consumption is sustainable, the suspension has reduced the appeal of the coin for many.
A senior marketing analyst at OANDA, Edward Moya, praised Elon Musk's decision, stating:
"The environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market."
Head of research, Broker Pepperstone, disclosed that Elon Musk's decision is a massive blow to Bitcoin. However, it explains the frailties of the top cryptocurrency.
Speaking on the environmental impact of the most significant cryptocurrency asset, Moya was quick to point out the ignorance of individuals regarding the energy consumption of Bitcoin. He said:
"Over the past couple of months, many disregarded the news that Bitcoin uses more electricity than Norway and Argentina."
Weston also spoke about the environmental impact of Bitcoin. In his words:
"Tesla has an image of being environmentally friendly, but Bitcoin is the opposite of that."
Bitcoin, as well as other crypto assets, have a promising future, but Musk (and Tesla by extension) have made it clear this future will not hamper clean technology. Whether this is based on environmental concern or savvy progressive business positioning remains to be seen, but BTC has seen negative consequences regardless of the reason.
Bitcoin proponents have argued that other financial systems make use of huge amounts of energy with their millions of computers and employees in offices that are fully air-conditioned. Although this is partially true, Musk's decision has been welcomed by most influential personalities in the financial world. The CEO has been a strong supporter of cryptocurrencies, which seems to indicate that this decision was truly birthed from environmental concerns. As crypto develops, it has become increasingly clear that the associated physical hardware must continue to improve as well.
The bull market has been trending for nearly one year, starting late last year. Uniswap and PancakeSwap continue at their record-breaking pace as the total market continues reaching a new height with innovations and new ideas. Let’s dive into why these exchanges have seen so much success recently, starting with their host chains.
Typical of the bull market, the market has witnessed a new all-time high across major cryptocurrencies. The total market cap will cross a whopping $2 Trillion in just this year. Alongside the growth of the market is a key factor responsible - the introduction of many new users bringing fresh capital.
Check out the following important metrics on BSC and Ethereum. These leading chains have played a pivotal role in crypto ecosystems blooming during this market run.
Reaching a peak of 152 Million distinct addresses yesterday on May 12 and a record 228,094 daily increase, Ethereum has seen tremendous success recently. The uptrend slope graph signifies a growing number of new wallet address popping up on the Ethereum chain.
The BSC also reached a new height of around 72 Million unique addresses with more than 500,000 in daily increase - double that of the Ethereum chain.
The expansion of the unique addresses explains the daily transaction chart of both chains looking very similar - and ready to reach new heights. Two exchanges will be responsible for a significant part of these growths; Uniswap and PancakeSwap.
These two exchanges, born out of different chains, define the way we swap, provide liquidity and interact with the decentralized nature of blockchains. Both of the DEX and AMM services will see continued growth as they jockey for position with the host of exchanges crawling out of the woodwork across both chains.
Obtaining the following statistics from the Dex Ranking platform Debank gives a closer look at both DEXes.
The total transaction of 2.47 million carried out on both DEX services in the last 24hrs places PancakeSwap ahead of Uniswap (V1, V2, and V3) with a whopping $2.5 billion in Volume, with 2,135,910 total transactions carried out.
Uniswap on the other hand saw $2.4 billion in volume, only a slight difference with PancakeSwap volume, but had a significantly lower number of 24hr users and total transactions.
The reason for this is not overly complex; PancakeSwap leverages on the far cheaper and lower fees of the BSC network, which have continued to attract more users and usage. In fact, at the height of the congestion in recent times, the total number of transactions still hasn’t reduced, even despite the now-high fees and failed transactions.
What has been intriguing, without a doubt, is the fact that Uniswap remains the king of DeFi despite its low turnout in the daily chart. Uniswap takes the lead of all other DEXes with a $21 billion market capitalization and $1.6 billion overall 24hr volume.
Compared to PancakeSwap, which has $5 Billion in Market Cap and $744 million overall daily volume less, Uniswap remains supreme. PancakeSwap has struggled to climb up the ladder in the DeFi zone, currently sitting at just the 5th position.
Uniswap is the world-leading DEX and AMM service on the Ethereum chain. Its significance rose to new heights as it played a major role in the DeFi bull run, wherein most DeFi tokens seek their first listings.
Despite the recent market sell-off, its native token UNI has continued to do well, currently sitting at the $37 mark and a Total Value Locked (TVL) of $8 Billion. The platform is presently in its LP migration phase to its newly launched V3.
Following closely on the heels of Uniswap is the number one Dex on the BSC chain. PancakeSwap, the darling of the BSC network, has continued to soar, leveraging on the cheap fees and fast transactions.
Like its counterpart on the Ethereum chain, its native token CAKE has continued to do well, currently sitting on the $30 mark while its TVL is above $9 Billion, a value significantly higher than that of Uniswap with over $1 Billion. The platform, which is also in its V2 phase and LP migration, aims to do more and make more records.
There is no doubt that the Ethereum chain is the current royalty of DeFi and the infrastructure ecosystem. Many popular chains are an extension of the Ethereum chain, using the Ethereum Virtual Machine (EVM), or have been forked from the chain. These chains include Solana Fantom and even the BSC, which has seen more success than many other chains. Yet despite Ethereum’s (and by extension Uniswap’s) lead in total volume, the BSC is seeing a surge of growth fueled by PancakeSwap. It will be very interesting to see how these trends play out once the bull run of the market has come to a close.
Swing trading is an excellent place for beginner traders to start. This is due to multiple reasons such as smaller position requirements, time efficiency, and it's arguably less stressful.
Swing trading is a common type of speculation aiming to capture price fluctuations in a short to medium time frame, typically between a couple of days and several months. Swing trades can both use fundamental or technical analysis to capitalize on these opportunities. This strategy is common among beginners to financial markets as the time frame suits most average traders. Swing trades come in all types and are present in all financial markets, forex, stocks, and cryptocurrencies.
This article covers the basic concepts of swing trading, the good, the bad, and everything in-between.
Swing trade is classified as a type of trading in financial markets where participants long or short in order to speculate on price movements. These trades pan out over a time frame of a couple of weeks to several months, depending on the market conditions. It is rarer to have swing trades that only last a couple of days, but it happens with crypto market volatility.
Swing trading comes in all sorts of forms; some traders aim to capture moves in volatile markets, such as low-cap stock and cryptocurrencies; While others trade less volatile markets such as commodities and blue-chip stocks. The common theme here is that speculators identify where an asset's price is likely to move, then they exercise a position in the market to capture the profit put on the table. Typically, swing traders utilize higher time frames, including but not limited to: 4HR, 8HR, Daily, Weekly, Monthly. These strategies usually work best in trending markets. It allows traders to capture overall trends, but this is not the end all be all. Many traders have a plethora of different strategies that work in select market conditions.
This is the holy grail question that, unfortunately, no trader has a definite answer to. The beautiful thing about financial markets is that participants develop an edge using a plethora of techniques. Typical swing traders utilize technical analysis heavily as well as some fundamental analysis. Swing Traders adopt Risk:Reward (R:R) ratios and other analysis techniques to define their risk and anticipate the profits that will be made.
This idea of R:R is coupled with things such as candlestick chart patterns, support and resistance levels, technical indicators, and even price action. This series of trading toolkits will build out a catalog of all of these concepts, helping mold beginner traders – hopefully, you are reading this when this article is built out with a plethora of hyperlinks; for now, please make due!
A key concept here is that there are hundreds if not thousands of edges to be captured in financial markets, but there is definitely not free lunch. A very basic strategy to outline is that of a trend following strategy. In this scenario, users will utilize trend lines, follow technical market structure, buy on pullbacks, and sell on rips. This is just one core way of swing trading among breakout trading, range trading, and other standard practices. Within these strategies, there lies limitless possibilities for capturing an edge in markets.
--Time Efficient
--Captures the bulk of market swings
--Rely on concrete factors such as TA
--Overnight risk is assumed
--Large exposure to markets results in substantial risjk in market reversals
--Miss out on the macro trends
Most people have heard of the glamour of an overinflated life style of day traders, or at least that's how it's portrayed. Day traders aim to capture short-term price fluctuations, typically intra-day, while swing traders look for larger multi-day moves. Day trading requires much more management, demanding real-time concentration and collectiveness. To keep it simple, day traders hold positions for no more than a day, while swing traders hold their positions from days to months.
When swing trading, participants must account for the unpredictability that comes with overnight risk, in equities and traditional markets, this can be seen in gap ups and gap downs, for crypto, this is just general overnight volatility. This results in different position sizing for each trader, as day traders must use larger position sizes to profit off smaller fluctuations, and vice versa for swing traders, smaller positions to catch larger moves.
These trading types also call for different styles; day traders typically exclusively rely on technical analysis. Swing traders, on the other hand, can incorporate both fundamental and technical analysis. Part of a swing trader's edge may be that the high probability of the underlying asset being higher in the next six months due to fundamental reasons, which gives them an edge in going long a majority of the time.
Swing traders rely on multiple days worth of market structure to trade common patterns or trends. The most common strategies revolve on moving average crossovers, cup-and-handle patterns, flags, pennants, and a plethora of other technical aspects.
These patterns individually do not mean much, but they can provide traders with an edge when coupled with a concrete strategy and plan. A key thing to understand in trading is that it is a probabilities game, and patterns fail all the time; this is why its key to adopt a risk management system, typically seen in R:R. The underlying goal all traders strive for is a positive expectancy.
This is a swing trade that was taken on GRT at the week of writing. The key thing to notice here is the confluence of multiple aspects of technical analysis that support the R:R tool's (traders) thesis. This trade leverages trend following, traditional chart patterns, R:R, and support and resistance levels.
As displayed in this example, this swing trade was completed in less than a couple of days. This trade was swift as crypto markets experience tremendous volatility. As previously stated, this is not always the case that trades can be anywhere from a day to multiple months.
Swing trading is an excellent place for beginner traders to start. This is due to multiple reasons such as smaller position requirements, time efficiency, and it's arguably less stressful. There is no one way to trade in financial markets but this article covers the swing trading basket. It is now up to the individual trader to hammer in their edge through studying markets. Finding an edge is not re-inventing the wheel but more of connecting the puzzle pieces to find a strategy that suits you and the current market conditions. Trading is not easy, but studying these materials will show improvement.
For those looking to get started trading, here are my referral links to exchanges I prefer (You will also get a 5% discount on trading fees) 😊
