Top 3 Ways to Crush Day Trading and Swing Trading Altcoins
*Disclaimer – I am not a financial advisor. Invest and trade at your own risk. The following is my opinion.
Crypto Day Trading and Swing Trading can be extremely profitable and there are certain things to look for in order to succeed.
As Sir Francis Bacon said, “Knowledge itself is power”. I wanted to talk about 3 things that will prepare you to take advantage of this incredible new gold rush opportunity. If you missed out on the gold rush and dot com boom now is your chance to get in early to make incredible gains in cryptocurrencies.
As a start of this series I wanted to first talk about information gathering, basic charting and some day/swing trading basics.
Day trading is described as buying and selling a coin with 24 hours. Swing trading can be defined as buying and selling coins over the course 2 – 6 days up to a couple weeks. A few of my trades are executed within minutes. Here are the 3 things I would suggest that will give you an edge in day trading altcoins. Altcoins are any coin that is “alternative to bitcoin” as bitcoin was the first cryptocurrency. Most if not all altcoins are affected by the rise and fall of bitcoin. I want to talk about 3 ways to holistically look at crypto day trading. This will be the beginning of a series on day trading altcoins. Here we go:
1. Research Coins
When researching altcoins it helps to first learn about the coins in general. While you can look at a chart and technically analyze it to make a decision to buy/sell it helps to get more information to maximize your profit. Go to one of the exchanges such as Binance.com or Bittrex.com. These are the exchanges where users can trade altcoins for bitcoin, Ethereum or USDT (which is no to be confused with USD). Go down the list of coins and further read about each one. Here are the most common places to do research on altcoins. Of course, each coin should have a website with a whitepaper that will tell you more about the use of the coin, and the technology backing it as well as the development roadmap the coin is following. Pay attention to this roadmap as it will usually call out specific dates the coin will hit major milestones. These milestones can vary from ‘creating a wallet’, ‘launching product on blockchain mainnet’, etc. The reason to pay attention to these is because it usually affects the price negatively or positively depending on how the community behind the coin interprets the achievement.
When you see a major rise or fall of a coin it means there was some sort of news behind it. Now the trick is to try and get in on the information as early as possibly to be part of the rise or avoid the fall. I know this sounds obvious but a lot of day traders just look at a coin chart and think they can determine where its going based on technical analysis alone. Places to research coins:
- Bitcointalk.org – A forum where most coins post something called an ANN which just refers to a post where coins make announcements.
- Steemit.com – This is a slightly newer website which is actually backed by a coin itself and is where a lot of people involved in cryptocurrency research and trading post information. The better the information the more the author is compensated so authors try and provide something of value.
- Medium.com – This website is where coins do a lot of their PR as well as those lucky individuals that are part of the coin affiliate program post on here as well. The same can be said for Steemit.
- Reddit.com – While reddit has a lot of information on altcoins this website seems a little more biased. Sometimes this is where people like to go to spread false news, rumors, etc.
- Cointelegraph.com – You can find general cryptocurrency news related to the cryptocurrency as a whole. The website also helps with general coin analysis.
- Coinmarketcap.com – This is a great resource that has tons of data on all coins as well as cryptocurrency marketcap, volume and coin exchange information. Coinmarketcap also has a lot of historical coin data to help you analyze coin movement.
- Cryptocompare.com – This website has “almost” real-time coin data in that the coin prices update every few seconds. This website has very detailed information regarding coins including historical data.
- CryptoDayTrader.io – This is my website where I give a list of coins and show the percentage a coin has moved up or down in the past 10 minutes in order to determine when the best time to enter a coin during the day. I am also adding more day trading features that will be released in the upcoming weeks.
Tip: Use all the resources above but keep in mind that each website and author have their own agenda and reason behind posting content. Some is based on providing valuable content to readers so that they come back and some may just be trying to pump up or trash a coin. Get research data from as many places as possible and look for commonalities and this will help you discern what is valuable information.
Tip: Find YouTubers that talk about the type coins or cryptocurrency content you are interested in. While there are a lot of biased opinions and people getting paid to endorse certain coins and ICOs you can still accumulate an amazing amount of knowledge from YouTubers as most provide some sort of valuable data in order to gain and retain subscribers. Again, take from the videos nuggets of information that will expand your knowledge but don’t blindly follow advice.
One main concept to understand is that all coins are tied to bitcoin. When bitcoin is up, altcoins are usually down and vice versa. Why? Because a lot of traders invest in altcoins in order to outperform bitcoin as they rise and fall a lot faster, however, bitcoin is where they store their profits (for the most part). Bitcoin is used as a wealth store and is the main source of volume for altcoins. Ethereum is an up and coming trading pair but bitcoin has way more trading volume making it easier to trade larger amounts of cash when using bitcoin as the trading pair along with the altcoin. Traders invest in altcoins and USDT when bitcoin is falling so not only do they get the percentage gains from the altcoin movement but also get to trade back into bitcoin when it is at a lower price and in so doing enhance their gains.
2. Have a Strategy
When looking at an altcoin to trade determine a couple of things beforehand.
– First, determine the best entry or buy price based on your research and try to get in at the lowest point possible for the day. You can do this by looking at a day chart and by comparing the previous day open and close coin cost. While this is not 100% bulletproof you can get a feel for how high or low a coin will fall based on past data. Don’t buy when a coin is at its all-time high unless you are convinced this coin will just continue to skyrocket.
– Don’t get too greedy – In traditional trading day traders would be incredibly happy with 1% – 2% gains in a day or even a week. In altcoins the volatility is so high that it is not uncommon for you to make 30% gains in a week. (This is not saying you will but it is possible). If you see a coin rising a falling between 5% and 15% most days, set a sell to get out around 7 – 10% and don’t try and catch it at the top every time. If you try and catch a coin at the top too often, you will find yourself stuck in a trade that will make you wait longer to sell or never recover.
– Determine your level of risk – In other words, analyze the coin and try and determine its day range on average and try and pick a reasonable sell position if it falls below a certain point. It is just as important to determine and set stop losses as it is to set a sell at the gain you are trying to achieve.
3. Analyze the Charts
If you are going to day trade or swing trade then you have to at least know the basics of chart analysis. You can also use some of the really helpful chart indicators that help you determine the direction of a coin such as MACD (Moving Average Convergence Divergence), EMA (Exponential Moving Average) and a few others. I will go over these in detail in the next post of this day trading series. Of course, no one can predict for sure which way a coin will move but based on technical chart analysis you can make a better-informed decision based on the statistical probability that a coin will move based on the analysis. This along with all the other research will give you a better chance of making a smart decision.
** As part of every post I will give you my picks at the moment to trade. Trade at your own risk as this is not financial advice and I am not a financial advisor. All of my coin picks use BTC as part of the trading pair as it is more volume and easier to trade than using ETH in my opinion.
CryptoDayTrader.io Top Altcoin Picks (for day and swing trading). As I write more about day trading I will go into why I choose certain coins so you can see a little more behind the curtain. I will also do some basic chart analysis:
Top 3 coins of the week
- Groestlcoin (GRS)
- 0x (ZRX)
- EOS (EOS)
Featured image courtesy of Shutterstock.