Happy New Year to everyone!
I hope you managed to say goodbye to the past year in a fantastic atmosphere and are entering the new year full of energy, happiness, and enthusiasm for the future. Many of you have set goals for the new year. One of my objectives is to learn day trading and swing trading in the cryptocurrency market and to share my experience through this blog.
Wish me luck as I dive into the world of cryptocurrencies and trading!
Day Trading vs. Swing Trading
Trading in financial markets is often categorized into two main approaches: day trading and swing trading. Both strategies have distinct characteristics
Day Trading
- Time Horizon: Short-term, within a single trading day. Very high frequency (multiple trades per day)
- Focus: Taking advntage of small day price changes.
- Best Strategies: Scalping and momentum trading.
- Profit Target: Small gains per trade (0.5%-1%).
- Studies suggest that only about 10% of day traders consistantly make profits over the long term.
Swing Trading
- Time Horizon: Medium-term, from days to weeks.
- Focus: Identifying longer-term trends and price swings.
- Best Strategies: Trend following and reversal trading.
- Profit Target: Larger gains per trade (5%-20%).
- Estimates suggest that 20-30% of swing traders may achieve consistant profitability
Both methods require strong discipline and effective risk management.
Risk management in trading
The success rate across all strategies ranges between 40-70%. For new or undisciplined traders success rates often fall below 30%.
If the success rate is round 50% is it even possible to actually earn money? The answer is yes. The secret lies in setting a proper take profit / stop loss ratio.
Take profit (TP) is when you close your trade once the price reaches your target. You secure earned profit that satisfies you.
Take Profit Example:
If you buy Ethereum at $3,600 and set a TP at $3,700, your trade closes automatically at $3,700, securing your $100 profit.
Stop Loss (SL) is when you agree that when the price falls to a certain level, you close the position. This limits the loss to a minimum, preventing you from losing too much.
Stop Loss Example:
If you buy Bitcoin at $95,000 and place an SL at $93,000, the position closes at $93,000, limiting your loss to $2,000
By setting a TP/SL ratio of 1:3, you ensure that even with a 30% success rate, you can achieve profitability over time. This approach is a key element of a successful trading.
Now imagine that we open 3 transactions for $1000, with TP at 10 % ($100) and SL at 3% ($30). Our success rate is 30%. This is what happens:
1. Transaction for $1000 – we lose $30
2. Transaction for $1000 – we lose $30
3. Transaction for $1000 – finally we win $100
We have just earned $40.
Why Choose Cryptocurrencies for Day Trading and Swing Trading?
Trading in the cryptocurrency market offers unique advantages that make it appealing to both novice and experienced traders. Cryptocurrency market is still relatively new in comparison to the regular stock market and has distinct advantages.
- High Volatility: Significant price changes create opportunities for larger profits.
- 24/7 Market Access: Trade anytime, as crypto markets never close.
- Low Barriers to Entry: Start trading with fractional amounts and minimal investment.
- Diverse Opportunities: There are thousands of cryptocurrencies available, offering exposure to different projects, industries, and innovations.
- Growing Industry: The cryptocurrency industry is expanding rapidly, offering long-term potential
My Learning Plan for Day Trading and Swing Trading on cryptocurrencies market
To achieve my goal of mastering cryptocurrency day trading and swing trading I have asked Chat GPT to create a structured learning plan for me. I have also asked book and Udemy courses recommendations. I will follow this list in the order—starting with the fundamentals (beginner-friendly) and gradually moving into more advanced materials (technical analysis, algorithmic trading, and bot creation).
Step 1: Learn the Basics
- Books:
- Cryptocurrency Investing for Dummies by Kiana Danial
- Mastering Bitcoin by Andreas M. Antonopoulos
- Courses:
- Day Trading Cryptocurrency with Technical Analysis (Udemy)
Step 2: Master Intermediate-Level Analysis
- Books:
- The Crypto Trader by Glen Goodman
- Technical Analysis of the Financial Markets by John J. Murphy
- Courses:
- Cryptocurrency Trading: Technical Analysis Masterclass (Udemy)
Step 3: Advance to Algorithmic Trading
- Books:
- Python for Algorithmic Trading by Yves Hilpisch
- Algorithmic Trading: Winning Strategies by Ernie Chan
- Courses:
- Algorithmic Cryptocurrency Trading with Python (Udemy)
4. Supplement with Practice
Mix teory with practice. Start trading with demo accounts. Then move to small live trades to test your strategies.
5. Keep a Journal
Document your reading notes, key takeaways, and how each resource informs your real or simulated trading decisions.
Final Thoughts on Cryptocurrency Day Trading and Swing Trading
Both day trading and swing trading offer lucrative opportunities for disciplined traders. By mastering strategies, managing risk, and staying informed, success is within reach. Whether you’re a beginner or looking to refine your skills, the cryptocurrency market has something for everyone.
Let me know If you find these recommendations helpful.
Do you think it is possible to learn day or swing trading (in the cryptocurrencies market) in a reasonable time span? I am aiming towards one year. In this time I would like to start making small but regular profits from trading.
Please share If you have any tips / recommendations that can help me achieve my goal.