Swing Trading vs. Scalping in Crypto: Which Is Better?

Swing Trading and Scalping are two trading types which investors frequently use to interact with the stock market. But can these tactics apply to trading cryptocurrency too?

In our opinion, swing trading and scalping can be used to trade crypto, but only in certain situations and by individuals who are willing to accept the risk. Keep reading to learn more about trading cryptocurrencies.

What is Swing Trading?

Swing trading is a trading strategy where investors buy and hold a certain cryptocurrency because they’ve heard rumors (or seen markers) indicating a price swing may be coming. They buy and sell to take advantage of these price swings.

While swing traders definitely need a full suite of investing tools, it is a bit more laid back than scalping. Swing traders often buy and hold cryptocurrencies for periods spanning a day or more, but typically for less than a year. This is what sets them apart from long term investors.

Swing traders can use tools like stop-loss orders, as well as market limit orders to continue trading when they are away from their computer. While transaction fees are a concern for swing traders, they are usually looking for larger price swings than scalpers so they cut into their profits less.

The longer a swing trader holds a position, the riskier it becomes. Therefore, most swing traders only hold positions for about a week when trading cryptocurrency.

What is Scalping?

Scalping is one of the most intense types of day trading and it often must be done by someone who is a full time investor. Scalpers have a hard time leaving their computer, and typically must constantly monitor markets and make trades with a split second of notice.

Scalpers are trading to take advantage of very small price swings, and when they open a position, they rarely hold it for longer than a day. Scalping, unlike swing trading, has very thin margins and therefore scalpers must consider the platforms they use very carefully otherwise transaction fees can consume all their profits.

Scalpers will hold positions for as little as seconds, and will keep a position for a maximum of a day. Because of the transaction confirmation times on certain blockchains, (Such as Bitcoin), scalpers must be careful using this tactic to trade cryptocurrency.

Unlike swing trading, scalpers don’t spend a lot of time looking at charts as this could eat into their trading time. Rather, they just choose a cryptocurrency and go for it. Like we mentioned above, this makes choosing the right platform essential, as large transaction fees will eat into the profits scalpers are trading for.

Is Scalping Easier than Swing Trading?

Honestly, we think scalping is harder, and more difficult that swing trading. This is because scalpers must go on a feeling rather than data, and if a position doesn’t go their way in 15 minutes, they may cash out at a loss just so they can try another. Scalping is extremely unpredictable and risky, but many try it because of its low barrier to entry.

In our opinion, it is better to take the time to learn about the markets and to engage in swing trading, as it is more likely to turn a profit long term. Obviously, it is still risky, but when you have days and weeks to make a decision, the pressure is often lower per trade. Plus, because you aren’t making split-second decisions we find it easier to avoid making a mistake.

What is Day Trading?

Day trading is somewhere between scalping and swing trading. As we mentioned above, swing traders can close positions in a single day, but typically they hold their trades for a few days or weeks. While they almost always close trades sooner than a month, this is far longer than day traders.

Crypto day traders typically hold their positions for a day, hence the name day trading, though they do occasionally open a position for a few days. Generally, the maximum period of holding a position to be called a day trader is a week.

This is still more lenient than scalping, where it is assumed that all positions will be closed in a single day, some within minutes, or even seconds, of opening them. Scamping involves a large number of transactions, while day trading usually calls for a few trades per day. With swing trading, you may go a few days without submitting a single transaction.

Day trading is the most well-known type of trading, though it still carries a lot of risk.

What Type of Crypto Trading is Most Profitable?

Crypto trading is a highly variable and risky activity. We honestly don’t recommend any type of short-term trading when it comes to cryptocurrency because there is just no way to predict where the market will go. Rather, we recommend long-term holding, which allows you to use dollar-cost averaging to lower your risk long term.

Of course, long-term crypto investing isn’t risk free, and it won’t make you a millionaire today (or this year) but it is by far the lowest-risk strategy available.

Can You Make a Living Swing Trading or Scalping?

It is possible to make a living with scalping, but we don’t recommend it for those living in expensive areas. Scalping is very risky, and you will only earn pennies with each trade, making it difficult to make enough to maintain a high standard of living. It is also a very high-stress lifestyle.

Swing trading crypto, on the other hand, is much easier to make a living out of, but it can take some time before you take home a large enough profit to consider it income. Therefore, we don’t recommend anyone wanting to become a crypto trader to quit their day job just yet.

In fact, if you are looking to make a career in crypto trading, it is best to start with swing trading which you can do on a part-time basis alongside your full-time or part-time job. Then, once the profits start rolling in, you can decide if you make enough to quit working.