What is volatility and how is it different from daily trading?
What is volatility or oscillation trading and how is it different from other types of trades? If you are somewhat familiar with the world of cryptocurrencies, you must have heard of trading by now. Trade, or trading in financial markets, is the way in which a person tries to take advantage of price fluctuations in an asset to make a profit. In short, trading is the art of buying at the lowest price and selling at the highest price.
But in practice, the world of trading is not that simple and has its own complexities; Especially in the brand new cryptocurrencies market. Cryptocurrencies trading is not limited to one type and method and includes different types. One of the most important trading methods is oscillating trading.
Swing Trading is a common trading strategy that can be ideal for novice traders. This method makes it easier for traders to operate in the market due to its controllable time horizons. Oscillating traders are active in most financial markets such as Forex, stocks and cryptocurrencies, but is oscillating trading the right strategy for you? In other words, is volatility more suitable for you or daily trading?
What is volatile trading?
Fluctuating trading is a trading strategy in which price changes are considered in a short to medium period of time. In fact, the goal of volatile trading is to profit from price fluctuations that occur over days to weeks.
Oscillating trading performs best when there is a strong market trend. Now, if this strong trend persists for longer periods of time, the trading opportunities for volatile traders will double and they will have more time to take advantage of these fluctuations.
In contrast, this type of trading is more difficult in emerging markets and volatile markets. It is natural that in a market that is not moving in a certain direction and is constantly fluctuating, predicting price changes and making a profit from them is not an easy task.
How Do Traders Profit By Swinging?
As mentioned, the goal of volatile traders is to take advantage of price fluctuations that occur over days to weeks. Thus, volatile traders maintain their positions for a longer period of time than daily traders; But their behavior is not the same as that of investors who bought it for the purpose of long-term retention of capital.
Oscillating traders usually use technical analysis; But not necessarily as much as daily traders. Because fundamental events may occur within a few weeks, volatile traders can also use fundamental analysis in their trading context.
However, it is very common to analyze price behavior, use candlestick charts, identify support and resistance levels, and use technical indicators to determine when to start a trade. Some of the most common indicators used by volatile traders are: Moving Averages, RSI, Bollinger Band and Fibonacci retracement tool.
Fluctuating traders usually consider medium or long time intervals to perform their analysis. This is because an uptrend or downtrend is really strong when it is confirmed over a long period of time. Of course, this does not mean that volatile traders do not pay attention to shorter time periods. These traders may also use shorter time intervals, such as hourly timeframes, to find exact entry / exit points.
It can be said that the most important time frame for volatile trading is the daily chart; But do not forget that the trading strategies of different traders can be completely different from each other. Keep in mind that what we have said here are not immutable rules; It is just a common example.
Differences in volatility and daily trading
The goal of daily traders is to take advantage of short-term price changes; But volatile traders are looking for bigger changes. Day trading is a more dynamic strategy than volatile trading. Traders monitor the market regularly on a daily basis and do not leave their positions open for more than a day.
Conversely, volatile traders can take a more passive approach. They can observe their situations less; Because their goal is to take advantage of price changes that occur over a longer period of time. Because volatile traders deal with larger price changes, they are also more profitable and can make a significant profit with just a few successful trades.
Traders use almost only technical analysis on a daily basis; Oscillating traders, on the other hand, typically use a combination of technical analysis and fundamental analysis. (Although the first priority of these traders is technical analysis) At the other end of the spectrum are investors who may not consider technical criteria at all and make their investments based only on fundamental analysis.
As you can see, day-to-day trading is at two ends of the spectrum, one with technical analysis and shorter time intervals, and the other with a combination of technical and fundamental analysis and longer time periods. Where do you imagine yourself in this spectrum?
You must first find your strengths and then choose the style of trading that best suits your strengths. Some people prefer to get into situations quickly and get out of them quickly and not worry about their trading position being open during sleep. Others, on the other hand, prefer to have more time to examine the details of their trading plans and their possible outcomes and then make decisions. Which of these categories do you belong to?
Answering these questions can help you find the strategy that best fits your personality and goals.
Of course, you are not going to limit yourself to a particular strategy from the beginning and you can try different strategies. We also suggest that you try a few trial trades and check the results before starting the main trade.
How to start cryptocurrency fluctuations?
Oscillating trading can be an ideal way to start trading. Longer intervals This method allows you to make your decisions more calmly and monitor them more closely.
If you are new to the world of trading, you can use the articles in the investment training and trading section of fxcomfort. In these articles, you will become fully acquainted with strategies, methods, terms, and types of technical and fundamental analysis; But if you are confident in your knowledge, you can start a trial trading in a Binance Exchange test called Binance Futures. This way, you can test your trading skills without risking your money. Once you feel ready, you can choose one of the cryptocurrency exchanges and start trading there.
There are several online platforms for trading cryptocurrencies; But in the meantime, the Binance ecosystem is one of the best. Binance supports quarterly and no maturity futures, margin trades, leverage tokens, hundreds of currency pairs and many more; Many of them can be ideal for volatile traders and provide them with good opportunities.
Swing trading is a common trading strategy in both the stock market and the cryptocurrencies market. Oscillating traders usually hold their position for a few days to a few weeks, depending on the details of each trade.
The easiest way to find out which oscillating trading is right for you or daily trading is to try both and see which one best fits your trading style. It is also a good idea to read about some of the principles of risk management (including stop loss) and trading positioning methods before you start.
What is volatility and how is it different from daily trading?