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Top 3 Ways to Crush Day Trading and Swing Trading Altcoins

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*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. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 43 rated postsKent Hamilton - ICO Analyst on Hacked and Founder of CryptoDayTrader.io - ICO Insider Info




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Education

Understanding the Lightning Network: Where We Stand

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The scaling of bitcoin’s network has long been a source of strife among supporters and detractors alike. As the network gained momentum over the last few years, users have seen both the transaction fees and wait times increase significantly.

Other cryptocurrencies have spawned based on this weakness, but bitcoin’s development community is hard at work on the scalability problem. The most promising project at the moment is the Lightning Network.

The Shortcomings of Bitcoin

Bitcoin’s original promise of being able to create a trustless network that enabled immutable financial transactions is still true to this day. With the implementation of SegWit on August 24th, 2017, it was hoped that the issues could be solved by finding a roundabout way to increase the block size. However, the protocol has not been widely adopted, and as such, a new solution is required.

This is where the need for the Lightning Network arose from, and it has been in development since 2015. The simplest way to understand the network is that it helps manage bitcoin transactions without executing them directly on the Bitcoin blockchain.

The Basics of the Technology

The core idea behind the Lightning Network is that you can create small “bidirectional payment channels” that act as a running tab between two accounts. The smart contracts determine how much is owed to who, but none of this is stored directly on the blockchain until a payment is rendered. Basically, it is a running tab system that allows for microtransactions. Allocations are made between parties off-blockchain, with all the confidence of performing commerce on-blockchain.

Multi-signature wallets are the connecting force that acts as a running tab in a safety deposit box for the two parties. Their cryptocurrency sits in the wallet and is debited and credited according to the pre-existing agreement.

The result is that all of the different payment channels connect multi-sig wallets to create a network of two-party ledger entries. This means you don’t need to have a wallet between every duo that wishes to do transfer money. The connections can occur across a network of users with the same effect.

The Benefits of Lightning

The most salient benefit of the Lightning Network are the faster payments at a lower cost. The presence of instant payments will increase the usability of the entire network, and the smart contracts used will still be secure enough to prevent tampering.

As we mentioned before, the Bitcoin network was previously limited by its lack of scalability, so on a meta-level, the lightning network is enabling the network to continue its expansion.

The presence of the Lightning Network will also enable cross blockchain transactions (also known as atomic swaps), even with heterogeneous blockchain consensus rules. The enablement of these instant transactions between blockchains will eliminate the need for third party custodians and change the way the networks interact.

Where We Are Now

In order for Bitcoin to be a viable payment option in the future, something like the lightning network is absolutely essential. Scaling requires the ability for small payments to be made quickly, otherwise it will never be feasible to make everyday purchases like coffee or lunch with bitcoin.

Looking at all the potential benefits listed above, it is clear that the lightning network will have a drastic effect not only on the Bitcoin network, but the entire cryptocurrency ecosystem. As such, the protocol is not only being developed for the Bitcoin network, but many other of the top cryptocurrencies (Litecoin, Stellar, zcash, Ethereum, and Ripple). The test results are starting to come in, however, none of the implementations are ready for launch yet. Lightning Labs has released a beta version, but before this technology can change the industry, a lot more work must be done.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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What is Proof of Stake?

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Newbies to the cryptocurrency space often struggle to understand how the mining mechanism works. The idea of having a cryptographic algorithm that mints new coins to reward those who help maintain the blockchain isn’t exactly a natural one, and a long explanation is usually required.

But once this group understands how the traditional proof of work theorem functions, they often find out that there are algorithms different than the one implemented by Satoshi in the beginning.

Where Proof of Work Falls Short

News stories keep surfacing about the growing energy requirements of networks using proof of work algorithms. The enforced scarcity of coins means that as more miners join the network, the amount of computation required continues to increase. Not only is this not sustainable in the future, but it also prices out smaller mining pools that don’t have the capital required, leaving a market structure similar to the oligopoly of the banking industry.

Additionally, from an economic standpoint, the proof of work theorem is vulnerable to the tragedy of the commons. This is an economic scenario where users are incentivized to act in accordance with what is best for them, rather than what is best for the group. Profitability on mining coins like Bitcoin will begin to fall, and that will drive miners out of the market, hurting the whole network.

Proof of Stake as an Alternative

So if proof of work rewards you for the amount of work you do, proof of stake will reward you for the amount of coins you hold. You will mine coins in proportion to the amount you hold, which is much like the traditional interest rate structure.

Our previously described tragedy of the commons issue is solved, because people now have reason to continue holding the coin and are rewarded for it. Additionally, the centralization risks are minimized, as those with the most mining power or capital are no longer in control.

51% attacks are hardly a worry on the Bitcoin network, because you’d need to gain access to more than 51% of the computing power of the network. However, with PoS there is an even smaller risk because of how expensive it would be to buy 51% of a coin, only to devalue it.

Many Cryptocurrencies Using It

Since the incentives are different, proof of stake algorithms essentially change the entire structure of the market for a cryptocurrency. The fact you can earn coins just by holding cryptocurrency would be very appealing as an alternative to using tons of electricity.

Dash, or digital cash, may be the best known cryptocurrency using PoS, but NEO, PIVX, and many more are currently using it. The incentives change when you use these coins, because of all the additional benefits of just holding them. Often the only way to gain this interest is by joining a masternode or having a significant amount of coins yourself, but it is still something worth looking into.

Finally, we are finally starting to see larger cryptocurrencies like Ethereum considering a move to a hybrid algorithm that uses proof of stake as well, it is clear the consensus method will finally get tested at scale.

The Risks of PoS

As with any solution, there are risks involved with the potential implementation of proof of stake algorithms. The biggest risk inherent in a proof of stake system is that the bad actors aren’t pruned out in the same way as with a proof of work system. They can continue to collect “interest” while they vote for “invalid” blocks, and not be harmed in any way. For the proof of stake system to work, this problem will eventually need to be solved, but at the same time, it shows a lot of potential.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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How to Convert Your Cryptocurrency Back to Fiat Currency

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It is possible that at some point in your cryptocurrency investing journey, you feel the need to sell off some of your crypto. Most of the time, this means you are just converting it back into the USD of cryptocurrency, bitcoin, but you could also be trying to get your money out of cryptocurrency entirely.

If your goal is to convert back into fiat currency, then there are a few paths you can take. As you might remember when you were first putting your money into cryptocurrency, it isn’t nearly as simple as using a regular brokerage account, but it is getting easier.

Simplest Possible Method

This sort of goes without saying, but if you did acquire your cryptocurrency on an exchange that allows for fiat deposits, you are likely going to be able to convert your money back into fiat with that same exchange. Exchanges known to do this are Gemini, Coinbase, Kraken, and Coinmama, although there are many others that do and it is worth checking yourself.

Exchanges are generally motivated to increase their revenue, and as a result, they tend to have fees set for withdrawal. Not only does this make them money when you withdraw your money, but it also makes it more likely you will keep your money in the exchange and continue trade it, which will also make them more money.

The final thing you should realize here are that the exchanges may put actual limits on the amount you can withdraw or the time period you must wait before withdrawing. Both of these serve to the same effect as high withdrawal fees, and help them control their liquidity in a way very similar to a bank.

Using Services and Vendors

It is possible you have already moved your money to a separate hardware or software wallet, in which case, it might not make sense to move it back to an exchange, just to pay fees on the withdrawal. There are other ways of getting your cryptocurrency back into fiat, and some of them work out to be quite a bit cheaper.

In fact, websites like LocalBitcoins.com make it possible you to actually sell your cryptocurrency at a premium because of the extra effort. LocalBitcoins does take a fee, but it still works out quite nicely for the seller in the end.

Another option you may find appealing is using your money to directly pay for goods or services. There are an increasing amount of companies that accept cryptocurrency, and this saves you a lot of hassle, as it is working very similarly to LocalBitcoins.com. You are bartering with each other rather than have a third party act as market maker, and the costs are reduced as a result.

Similar to this is the idea of using your cryptocurrency to purchase a prepaid debit card. Services like Monaco and Tenx are making this easier than ever, and it minimized the number of times your money needs to change hands before it is spent.

What to Do About Your Altcoins

If you are trying to convert your altcoins back into cryptocurrency, you will have one extra step. Since most altcoins transact on a different exchange than those that convert into fiat, you will need to sell your altcoin for a more well-known cryptocurrency, and then convert it to fiat.

Generally, users choose to do this using Ethereum, because of the significantly lower network fee. You would sell your altcoin for Ethereum, transfer that Ethereum to your fiat exchange, and then sell back to your fiat currency.

No matter why you’re choosing to convert your crypto back to fiat, it is even nice to know how you would if you were in a pinch or were worried about potential crashes. The best way to think of it is having an escape plan, just in case.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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