Crypto Academy Week 15- Homework Post for Professor @yohan2on on Swing Trading
hello friends of steemit today I will present my homework which I chose to do our friend @yohan2on I hope you like it ..
created for @lucascenteno
Swing Trading:
When you are new to swing trading, it is highly recommended to start from the basics to gain a level of experience. You have to know some necessary definitions.
Trading consists of buying and selling assets in order to make a profit. In swing trading, the profits to be made will be cryptocurrencies. Therefore, it means the purchase and sale of digital assets.
Swing trading consists of buying and selling crypto assets that have been in constant flux in the financial ecosystem. It is a style of trading that consists of applying investment strategies to obtain small profits, where market movements or oscillations are taken advantage of when open operations occur in short-term trends of a certain value. The earnings are generally not very high, but solid. It requires a lot of discipline to avoid possible losses and ensure the profits obtained, for this a stop-loss will be used.
Since we know the basics, we can delve a little deeper into the subject. The following recommendations should be taken into account to carefully analyze and stay safe in the market:
We must have a clear understanding of the financial objectives to organize the operations and strategies that we must apply, according to the specific requirements that we want in the world of finance. This will help us meet the goal and operate more effectively.
Trading is a constant financial activity. Therefore, it is necessary to know that there are certain risks. Because of that, it is advisable to operate only with a small investment that you can afford to lose, as operating with large funds could incentivize you to make very hasty emotional decisions that could hurt your potential profits. In no way can we overlook the risks of losing funds when talking about swing trading crypto.
Another way to reduce the risk is to use the Stop-loss, since there is the possibility of losses. To make a profit, the goal should be to minimize losses. This can be achieved thanks to the magnificent tool known as stop-loss, which is what will allow you to keep losses under control.
Crypto markets never sleep. We should consider carrying out night operations in a more reduced way. During the night it would be very useful to use a stop loss for night operations that helps to mitigate the risks, at the same time as protecting the funds, that is, limiting the risks during the night.
It is of utmost importance to keep an eye on the trends of the market leader in the crypto space (Bitcoin). Since many assets tend to be affected by their movements. By taking into account the activity of Bitcoin, we could make decisions that benefit us to obtain profits or reduce losses.
WHY CHOOSE CRYPTOCURRENCY SWING TRADING?
Because it is a tool that allows you to obtain more benefits when the price change is greater, however the intraday price change is usually small, and that is why daily investors prefer to carry out margin operations. By increasing the volume of trade it allows to speculate the possible intraday price changes that are smaller to increase profits or decrease losses if things go wrong. We must also consider that the price range and the change do not mean that there will always be profits. Significant changes can be big losses if the direction we take was not anticipated. That's why you need to use trading tools and keep a close eye on price trends. It is absolutely necessary to observe the market all the time, in order to make the right decision when we are trading.
SWING TRADING BENEFITS:
It is easy to automate. Swing trading is easy to learn, using candlesticks, trading bots, and expert advisor software. These make it easy to run multiple operations quickly and in large quantities that could be managed manually. Of course, you must start small and learn the strategies that will help you face the difficulties of trading.
Allows unlimited options. During cryptocurrency exchange, there are no limitations. This allows you to trade and profit from the various altcoins on various exchanges in a short time, in hours or even minutes. Quite the opposite of the traditional stock market, which is very difficult to swing trades due to the time it takes to complete a trade.
It is similar to trading in securities. During oscillating trading in cryptocurrencies some of the skills that are applied in making a profit in the stock market are necessary. With the difference, that the periods are shorter.
SWING TRADING RISKS:
Like any investment in the cryptocurrency ecosystem, there will be times when you can make money sometimes and lose money at other times. You must always keep that in mind when starting to trade and avoid operating with large margins or leverage.
Beginners could lose everything in no time if they use more leverage than they should in the wrong way. Therefore, it is best to limit the amount of funds you bet on each trade. This could avoid financial ruin. You should use tools that help and protect you from large losses, such as the Stop-loss trading option.
Time is the constant to be able to generate profits. There is no other option than to continuously observe how the markets move hourly and act instantly, as it is a live trade. It is the only way to reduce losses or make a profit, as there is high volatility in the cryptocurrency market.
Swing trading on the BTC / USDT trading pair.
As we already know, swings traders are those traders who operate daily in the market, as they can also do so in weeks or months, after having carried out an analysis of the fluctuations. I will start trading with BTC / USDT trading pairs, where I will identify trends and determine entry and exit.
What is your entry and exit strategy?
The first thing we have to bear in mind is that we must know well the market trend, know its operation well. This could define the direction of the market. As an entry and exit strategy for my trade, I will apply a systematic trend following so that it allows me to manage the actions during the trade. We must minimize the risks to make a good entry into an operation, carry out operations that generate a high probability of favorable movements.
Multiple time frame analysis:
The frame analysis that I will use will be the weekly chart, the daily chart and the 4-hour chart. Since they will allow me to know the fluctuations that have occurred in the market and its trend, to know when to enter and exit, and thus be able to identify if there are similarities or differences between the time period of the assets. On the other hand, it is to know that each business analysis requires a specific business time frame. In the weekly chart we will obtain the general fluctuations of the market. In the daily chart we will observe the trends and in the 4 hour chart we will be able to observe the entry and exit points.
To know the fluctuations that occur in the market more broadly, each candle will be represented by one week.
In this daily chart we are going to identify the trends. We will observe the market movements that occurred in days (each candle will represent one day) and weeks.
Candlestick analysis and use of other relevant supporting indicators for your trading decision:
Making a review of several previous months through the weekly candle, I was able to select the historical low and the historical maximum that were fluctuating at the time. Managing a historic low of $ 38,895.15 on May 20, 2021 and a historic high of $ 61,489.24 on April 20, 2021.
In this chart that represents one day we will see if there was any change in the trend line. An uptrend was executed, but a correction was generated. This change could have occurred due to a break in the trend line, so we must place areas of resistance that can serve as support.
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Now I will enter a trade based on the 4 hour chart, which may take longer to execute this trade, it could last several hours, maybe days or weeks, everything will depend on the analysis. Although tedious, this strategy pays off big. We must ensure that the 4 hour trend is the same as that of the 1 hour chart. We should not perform any operations if the trends are different
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We must consider the trend, if it goes up in an uptrend, we must move the stop loss manually below each minimum that is valid above. Otherwise, if the trend is a downtrend, we must move the stop loss above each lower high. As the trend in the chart has changed, we must place the stop-loss at the lowest lows that are higher below the Currenct price. We will have the manual stop loss at $ 35509.74.
As the graph shows, an investment in V is generated in the trend, sometimes the previous trend is reversed, which will require support to enter a trade. That is why we will use MACD, which will help us to verify the momentum and the crossing of the signal line. This will show us if there is more impulse to buy.
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Trade management (stop loss, trailing stop and take profit settings):
We must understand that there is not a total certainty of obtaining profits in the market, many times losses will occur. But, we could avoid or decrease losses by properly using the stop / loss. This will help us to buy in BTC as long as it is above $ 41,043.61, I will make a profit at $ 42,091.71 and a stop loss of $ 35,450.41.
Conclution:
We must apply a trading strategy that suits our financial objectives. For this, it is crucial to know which one is best for us when making an investment, to constantly evolve through the analysis and experiences acquired in trading. Knowing how to limit the risk of loss to ensure profits
CC:
@yohan2on
Hi @lucascenteno
Thanks for participating in the Steemit Crypto Academy
Feedback
No clear trading plan. You lacked the knowledge on Technical analysis which you could use in your demonstration of Swing trading. Just talking about trendlines was not enough. You were so wordy in your introduction yet this was more of a practical task.
Homework task
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