3 Altcoin Investing Strategies for Maximum Profit
Investing in altcoins is very risky and can hurt your wallet if you are not careful but it can also give you unbelievable returns. I wanted to go over a couple of strategies you can use when entering into altcoins.
First, I want to show you an image that represents Bitcoin as well as all the altcoins since their inception that started with a $250,000 market cap.
Image Credit: Woodbull.
The orange line above represents Bitcoin and the mess of blue, green and other lines represents altcoins. You can see why altcoins are not a long-term hold strategy for most.
Here are the three strategies to use if you are going to try and beat bitcoin in the long term.
Invest in an altcoin during the ICO in order to get coins for as cheap as possible. Try and get in a presale or buy early in the ICO to get bonus tokens. To get in ICO presales you have too usually invest around $50,000 minimum. Right when the coin hits the exchange watch to see if it immediately spikes. If it does, sell when you have made what you feel comfortable making. I usually sell at 100% – 300% profit. There is a good chance that the coin will not spike when it hits the exchange. If you had gotten the coin at the presale price then you will still make a profit of 50% – 100% depending on the deal you got. When you are using this strategy, I would suggest buying into a few coins and not putting all your cash into just one. If you have $10,000 to invest then you could put $1,000 in 10 of them or $2,000 in 5. That way you are hedging your risk.
Wait for a coin to hit the exchange and buy it when does its initial dip. You will most likely get it cheaper than anyone from the ICO sale. The reason a lot of these coins dip when they hit exchanges is because presale buyers and those that received free coins for helping market the ICO are dumping coins on the market. This may skew the actual market cap of the company. When analyzing altcoins make sure to look at Coinmarketcap.com and compare the market cap of the new altcoin to existing ones. You can get an idea of what the coin market cap should be based on other established coins.
Let the altcoin hit the exchange and watch it through its initial spike and dip. Analyze the charts and see how it starts to move against chart indicators such as MACD, Signal and basic technical charting. See if any candle chart patterns form that will give you an idea of its direction. Watch the volume to see if it is increasing or falling. Continuously judge the market cap against other coins to determine if the coin is over or undervalued. For this strategy you can also do a lot more research because this is more of a longer term method (not necessarily long term or buy and hold). Check the company website for updates on their roadmap as this will affect the coin price, sometimes drastically. There is a saying in the trading world that says: “Buy the rumor, sell the news”. This has proven to be very true when trading altcoins. A lot of investors know the actual news won’t make as big of an impact as some might think but the rumor of big news usually makes the price spike.
Strategies 1 & 2 are a lot more risky than the 3rd as you can take a little time to figure out if a coin will make it past the initial market launch stage. However, coins have been known to jump 10x – 100x very quickly and you could miss out on those opportunities if you wait too long. Pick a strategy that you are most comfortable with.
More altcoin trading advice to come soon from CryptoDayTrader.
Featured image courtesy of Shutterstock.