Should You Do Day Trading or Swing Trading on Crypto?
People buy and sell cryptocurrency in different ways, and there are advantages and disadvantages to putting yourself into a particular category as a trader. If you’ve never tried to trade cryptocurrency or you’re not sure what kind of trading position you should adopt, then hopefully this look at swing trading and day trading will help you decide what might be right for you.
What Are the Trading Positions?
There are a number of different trading positions you could fit into, but the two major positions are day trading and swing trading.
Day traders will watch the crypto tokens (or stocks or other financial assets) on an hourly basis or even a minute-to-minute basis. They’re always keeping a couple tabs open on their device and setting alerts so they know when the price changes on an asset that they’re watching. Even when they’re at work or sleeping, their device may still be getting updates and alerting them if a change happens.
Swing traders are not as concerned about what happens each moment with the coins they are monitoring. Instead, they are concerned much more with major positional changes over days and weeks. They’re looking at larger shifts in the trends and taking advantage of those. They will likely check in on their desired asset once a day, but usually not more than that. This way, they can go about their life and not be quite so concerned about what’s happening every minute with each asset.
Who Makes the Bigger Profit?
Day traders are constantly trading, looking for small changes to take advantage of. They have greater chance of making a profit than a swing trader does because they’re always ready to jump on the opportunities that present themselves. However, this type of trading position requires a schedule that’s very flexible and open to watching the tokens for long periods of time each day.
Swing traders are less likely to make as much money as day traders are, but their individual trades tend to be larger than those of the day traders. They’re looking for major shifts, so they’ll make a large investment when those shifts happen, whereas day traders will make numerous small investments and trades.
In the end, the two positions don’t exactly even out, but you have to consider that day trading is more of a time investment.
How Each Position Affects Your Life
You don’t want to just look at how much money each position makes to determine which one is right for you. You also have to look at the impact it has on your life. Day trading is a huge time investment, and it can be difficult to make time for social activities, time with your family, or even certain kinds of jobs when you’re a dedicated day trader. “There may be periods of volatile market activity where you don’t even have time to do house chores and may need to hire a professional cleaning service and order in instead of making food” suggests Ann from NYC House Cleaners.
Swing traders have a lot more flexibility in their schedule and can make the time for trading when it’s convenient for them. They don’t have to carve out as much time in their schedule, and they can be more present with their family and friends than a day trader would be. Day traders tend to be constantly distracted since they’re always watching the market, making it more difficult for them to have strong, continuous relationships.
Your trading schedule will definitely affect your social life and your interactions between the people you work for, work with, and spend time with. For someone who has a family or who wants to have a productive social life, day trading might not be a very good option. It’s the kind of trading position that’s typically reserved for people who don’t have a lot of family ties and who are working hard on building a portfolio and earning profits early on in their career.
Which Does the Market Favor?
The cryptocurrency market tends to be incredibly volatile. That gives day traders a lot of opportunities to stay active and make good use of their time spent monitoring various tokens. However, some tokens won’t move for long periods of time, which means that day traders will have to diversify their portfolio. They will need to be watching a number of cryptocurrency tokens at the same time in order to make those minute-to-minute and hour-to-hour trades that they thrive off of.
Swing traders have a lot more leniency in this area, as they can choose one or two tokens to watch and check in on them occasionally. They can wait to make their move and develop trades until the market moves and the particular asset they are watching starts to go bullish or bearish.
Often, multiple cryptocurrency tokens will move quickly at the same time. This is because major tokens like Bitcoin and Ethereum pull the rest of the market along, causing a ripple effect throughout the other lower ranking tokens. This means that day traders can find themselves having to quickly make trades across multiple cryptocurrency tokens.
The market can work well for either trading position, which is why there are a large number of people who adopt one or the other position. However, if you find that one position isn’t working for your schedule or peace of mind, you may want to change over to a different position and see how it works for you. Not everybody is suited for day trading, and then not everybody has the patience for swing trading.
If you’re still not sure which position might be right for you, you can do some test trading and see how that goes. A lot of trading platforms will allow you to start with practice trades, if that’s what you’d like to do. This is a great way to start, if you are dipping your toes into the cryptocurrency market for the first time.