Crypto Academy Week 15 - Homework Post for Professor @yohan2on

This is Week 15 of Steemit Crypto Academy and I'm writing Homework Task for Professor @yohan2on

Swing Trading 

Swing trading is one of the cryptocurrency trading techniques, which is used for both a small period to mid-range time period. If we compare Swing trading to day trading then it is a lot less stressful. Because day traders do multiple trades in minutes which is why it is quite hectic and stressful. Whereas Swing traders have to wait for days and weeks sometimes to take profit or to hit stop-loss.

Swing traders do not focus much on the charts. They just simply look at the trends, make decisions, set their limits and wait for their time. Swing traders start analyzing trends from bigger time frame like Monthly, weekly and then slowly come towards short time frames like 1 hour and 4 hours to decide when they can make an entry. Swing traders usually make profit with short term swings in the market.

Swing Trading Plan

The plan for any swing trader is very simple. It is a technique used by crypto traders who are new to the game. In this trading technique, you need to keep a small profit goal of about 10% which is not a big win in the context of trading but the time factor is very important. These trades last 5 to 10 days at the most. So you are basically doing 3 to 4  trades in a month and the profits you gain add up to a substantial amount. So as a swing trader you need to 

• Start slow 
• Aim small 
• Learn the skill
• Do 3 to 4 trades a month 

Asset Pair

For this particular Task, I have selected the ETH coin for analysis and explanation using the graphs. The reason behind selecting ETH for the analysis is that recently the market of ETH has been very volatile. Eth has recently risen to $4k and this is why it has been a lucrative investment option for certain traders out there.

In the ETH price chart, first of all we draw resistance and support then set up a stop buy command keeping in view the bearish tendency of the price market. Stop buy command is set up at the point we predict that the trend reversal will occur. and according to our expectation, we will make a profit.

Entry-Exit Strategy 

In any business, if you want to make money. You need to follow this one simple strategy, that buy low and sell high.

I have used my knowledge of Swing trading and marked my entry-exit points below in Candle stick chart explanation that when I will make an entry and when I will exit from the trade.

We do setup a stop-loss order to overcome our loss and exit from the trade. We can set the profit limit to take profit from the trade and exit. And Entry-Exit is all depends on our Time frame analysis which is mention below.

Multiple time frame analysis

Analyzing multiple time ranges is the process of viewing the same currency pair in different time ranges. Generally, a longer time frame is used to establish a long-term trend, while a shorter time frame is used to determine the ideal market entry. The time frame charts that are usually used are Candle Stick analysis

• 1-hour chart
• 4-hour chart 
• 24-hours or 1 Day Chart 
• Weekly Chart
• Monthly Chart

I have explained all the time frames in Candle Stick analysis that in which time frame the trend of ETH is going high or low.

Candle Stick analysis

Take a look at the ETH Candle bars price chart. Looking at the previous history and market trends, I can analyze that the ETH will rise again.

In the previous 1 hour, Downtrend

In 4 Hours, Downtrend

In 24 Hours, Uptrend

In Weekly Chart, Downtrend

In Monthly Chart, Uptrend

So, the price of ETH in last 1 and 4 hour has been decreased and most probably will increase from this spot as in 24 hours it is in Uptrend.

So, I am buying at $2559, Setting a stop-loss of last low $2100 and taking first profit at $2800 and second profit at $2950.

Trade management 

The orders used in trade management are used in graph explanation; they include Stop loss, trailing stop, and take profit. 

Stop Loss

It is an order that when implemented on a trade, sells whatever you are holding if the price of the stock goes down from the set limit. In the example, the stop loss is set to $2100

Trailing Stop

Trailing stop is almost same like Stop loss. In Stop loss we set a limit which is fixed and never changed until we change it. But in Trailing Stop, If the price is in uptrend, the trailing stop value will also increase with the percentage we set. It is used to increase the efficiency of Stop-loss

For example,

ETH Buy Price: $2559

Trailing Amount: $200

The effective Stop loss value will be: $2359 and if the price of ETH will increase and reach to $2700 then the effective stop-loss value will become $2500 as the trailing amount was $200. But on the other hand, Stop loss value will not decrease and will remain at $2359 if it start downtrend from the initial buying value of $2559. Or if the downtrend starts after touching $2700 then still it's stop loss value will not decrease from $2500.

Take Profit

Take profit order is just like stop-loss order. In this, we set a price above the purchased price and when this price is reached, the holdings are automatically sold. In the Example Take profit is set at $2800 and  $2950.

Conclusion 

Swing trading is a relatively easier trading technique.it is usually used by beginners. It is suitable for short and medium-time trades as trades can last up to 5 to 10 days usually. Swing traders use this trading type to get a small number of profits usually 10%. It is important to have a good price chart reading ability in order to do swing trading.