There are various cryptocurrency trading strategies: you can trade via day trading, swing trading, and long-term trading.

The key differences

The key difference between cryptocurrency trading strategies is the holding time for positions. When you are day trading crypto, you are buying and selling the cryptocurrency on the same day whereas swing trading involves holding the investment for a certain time-span before selling it. Time can range anywhere from a week to a few months. Long-term cryptocurrency trading refers to holding on to your investment for even longer durations. 

Another major difference between swing trading and day trading crypto is which trade indicators to look at before trading. Day trading requires proficiency in technical skills and the ability to read charts and candlesticks with expertise. Swing trading requires a combination of technical and fundamental skills. It also requires the trader to have an idea about the company’s growth and future prospects.

Position Sizing

Position size is a vital part of your cryptocurrency trading strategy, primarily because it is directly related to your potential profit/loss and because it plays an important role in your risk management. When you are day trading crypto, you can trade on margin which helps you deal with less capital at a larger scale. This can help make more profits, but it also exposes you to a bigger risk. In swing trading, you can’t trade on margin and it requires full capital to trade.

Another difference between the two is that a trader can be short on certain cryptocurrencies when day trading, which means selling a stock at a high price at first to buy it back later at a lower price. This is not possible when swinging trading cryptocurrency.

Day trading positions are squared off by the broker you are trading through directly whereas in swing trading the trader has the liberty to square off his position whenever he wants.

Risk associated with the different trading strategies

One critical aspect that traders should consider is the risk level for each type of trade. If you are day trading crypto, you can take advantage of leverage and will take on heavy positions to benefit from minor moves in the token. However, this is a double-edged sword as heavy positions can lead to losses if proper risk management steps are not taken. This is why traders not looking to take on a higher level of risk should stay away from day trading as minor movements cause the p/l to change significantly. It is also often said that day trading is one of the toughest aspects of trading due to daily volatility which is somewhat nullified on higher timeframes.

Different strategies suit different traders

Day trading and swing trading both have their pros and cons, but they have a common approach to making money on price volatility (The only things that differ are the timeframes and targeted price delta). Doing it manually is quite an exhausting process. Some traders stare at charts days and nights, trying to catch every little price movement. 

They are different strategies that suit different traders. If you are new to cryptocurrency trading, our advice is to focus on swing trading. When you have learned more about how the market works, you can get into day trading, since this strategy requires significantly more knowledge to make successful investments.

Here at CoinPanel, we are all about making lives easier and allowing our users to enjoy things happening outside the trading terminal while ensuring their trades will be automated and properly executed. Soon we are going to release new and very simple automation – Ping-Pong which will benefit swing traders, day traders, and even intra-day traders. Stay tuned, and subscribe to make sure that you don’t miss any updates