This post is for those people who are brand new to altcoin trading.
It’s not easy making consistent profits by trading cryptocoins. It takes discipline and a gameplan to achieve success consistently. Lots of things can go wrong when you’re trading coins. When they do, you’re left holding the bag.
There are no rules that work every time when it comes time to trading, but here are a few conceps to keep in mind when trading because they’re unique to this arena.
Be Careful About Panic Selling And Buying
When a coin price starts rising generally the same thing happens. Lots of Tweets about the coin moving are made. The ANN thread is filled with excited comments and euphoria about the coin’s prospects seems to hit a fever pitch. At this point many people get swept up by the emotions and jump in.
The trouble is, the pump has already been pre-arranged and those who are now selling most likely have bought early. Whether you’re excited or not you still have to check the Order Book to make sure you’re getting in at a reasonable price.
Keep in minds, coins don’t trade in a straight line. Generally you can set an order that’s below the current bid and it will get filled.
Remember that many altcoin market participants are day traders who are trading solely based on daily price fluctuation. They have enough capital that they can earn substantial amounts by trading between the Bid and Ask prices. These guys are always working so make sure to adjust your strategy to consider what they’re doing.
If You Buy During A Pump Sell During That Pump
Let’s say you did purchase a coin during what appears to be a big pump upwards.
If you didn’t do a ton of research and you got in and you’re now realizing a decent gain, it probably pays for you to take profits. You can sell some or all of your coins.
Generally the pump will fall over at some point as whales take their profits. When they do, you can pick up more for cheap and hope for the next wave of trading action. Taking profits is always a good idea and protects your trading capital better than any other tactic. If you jumped in and things went your way, take the money!
When Volume Dries Up Price Tends To Follow
Always watch the volume. When BTC moves into a coin the price tends to rise. When you see volume dry up, it’s a strong indicator that whales have lost interest and are moving on to another coin.
Once volume dries up it could be a long time until enough BTC returns to this particular alt to push the price higher.
Traders are constantly moving around from coin to coin. They generally accumulate when the prices are low and sell after they’ve pumped the coin to a higher price. They then rinse and repeat.
If you plan on making money trading you have to be aware of where each coin is during a pump cycle.
Big Returns Take Longer Than Most People Think
Experienced day traders might be able to earn a high return each day, provided they have enough capital. For everyone else, though, it’s probably better to assume that altcoin trades will take several weeks to pan out.
In particular, you must pay attention to the total coin count and to the PoS phase. Coins that are on PoW are not as attractive to whales because miners and multipools will dump whenever they want. This means the whale has a harder time calculating returns and loses control to unseen parties. Whales are patient and understand it might take some time get their return. They accumulate when the miners and multipools dump and then they tend to pump once a large enough share of the coins are under their control.
PoW/PoS hybrids have become extremely popular because they reduce much of the guesswork that whales used to have to deal with. They can easily calculate market cap potential while taking a position that could represent a large percentage of the total coins. Once they’ve accumulated that position its relatively simple for them to organize a pump that won’t have too many surprises. As the price rises, they sell. Since they already have large stakes of BTC they aren’t as pressed as the smaller market participants who tend to get emotional and dump from fear of losing money.
Patience is important. There’s always the risk that the coin may plummet in value because of something negative, but the biggest returns for many traders are made because they were willing to hold and accumulate during the down periods.
Right now these basic guidelines could help you avoid a big loss or help you get a good gain. Altcoins are traded primarily on momentum, but they shift directions quickly. Enter one trade at a time and see it through to the end. Don’t beat yourself up for not buying at the all-time low or selling at the all-time high. Nobody does that every time!
Thanks for stopping by and good luck with your trading. Please feel free to leave any comments you have below.