Today we will discuss our method for trading altcoins. This method has served us for 5 years. We will explore:
📈 Specific platforms to use
🔥 Technical Analysis Strategies
💎 How to Analyse Market Sentiment
🧘♂️ Risk Management/Trading Psychology.
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Here’s 5 things you need to know about the crypto markets today:
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📈 How To Successfully Trade Altcoins
Disclaimer: This is not financial advice, purely for educational purposes. Backtest the strategies and use them to create your own strategies.
Step 1: Find an exchange you like.
It is essential to find one singular exchange you trust and are comfortable navigating. You will be relying on the exchange’s functionality, responsiveness, features and importantly, their security.
You want to get comfortable with the assets on the exchange. You will notice patterns and correlations between assets that are much harder to pick up when your attention is scattered.
There are many crypto exchanges and a lot of these exchanges are thriving: Coinbase, Binance, Kraken and crypto.com to name a few.
Our preferred exchange is FTX. There are many reasons for this:
A wide range of altcoins
Constant innovation and updates
Extra perks such as lending features.
Whatever exchange you have will have filters...
Step 2: How to Find the right coins to trade
Do not filter by % daily change.
When browsing assets, set your filter as ‘24 Hour Volume’. The higher the better. This will give an indication of how much interest there is in the asset and how liquid the market is. Liquidity is extremely important, regardless of what position size you are trading and particularly as your position size gets bigger. Make sure you spend ample time looking at the lists.
🚩 COMMON MISTAKE: too much focus on the charts in isolation.
Once you have arranged by volume, you can pursue two strategies:
1️⃣ Trend Following
“It’s too late, the asset has already pumped”... “You’re about 17 days late”... “Top signal”... This is what a large number of people responded when we tweeted the above.
Trends tend to overextend in crypto. That means, when you see a standout winner in terms of:
24 hour volume (big % changes)
The charts have broken local highs and entered a breakout
Market sentiment is aligned (more on identifying this later)
You can essentially follow that trend and profit. SOL is a good and recent example of this. Assuming continuation of the trend once a breakout is identified is profitable. You will, of course, need to test your own methods for identifying breakouts but you can abandon the ‘it’s too late’ mentality.
This strategy is technically easy but emotionally very difficult.
RookieXBT 🧲 @RookieXBTI’m usually never early when putting $ into something You don’t have to be early to make money Being able to acknowledge that and not count something out because “you’re not early” or because “so many got in before me” is a super power i.e NFT’s, RUNE, NFD?
2️⃣ Reversal Plays
The key difference with reversal plays are that they rely heavily on predicting the next big narrative. The technical side is again not hugely difficult, just identifying an asset trending sideways and lagging behind the overall market.
Tip: Crossing moving averages are a great way to identify a neutral trend.
Now to spot market sentiment one of our favorite tools would be consider creating a list of your favourite accounts on Twitter. There are tons of accounts we love in the space but here are a few to get you started TraderSZ, RookieXBT, Devchart, NFTeddy, Joseph Young, Sam Trabucco, Altcoin Sherpa, Koroush AK, Bryce, Charles Read, Payne, Bitcoin Jack, Zhi Ko, Mr. Anderson, Cantering Clark, Cryptunez, TheCryptoDog, Roy Blackstone and Scott Melker.
You can spend hours everyday looking at multiple news sites or you can subscribe to our newsletter for free. Link here. We send 6 concise crypto reports a week. Making sure you receive everything you need to know to build wealth.
Outside of Twitter, you can find excellent market sentiment feeds across YouTube, Discord, Telegram, Podcasts and more. Find one you like. For instance, YouTube suits the more visually inclined and Discord allows you to directly engage with others!
Step 3: Trading Psychology and Risk Management
Every investment decision you make carries risk. Know the risks and importantly know your own risk tolerance before you make any decisions. Consider a game of poker, different people are willing to play with different hands. Perhaps you would fold if you held two pairs, others would raise. Trading is similar. People view the risks and worthwhileness of those risks differently.
Further, your strategies are only as good as your own mindset and ability to execute it. Master your trading psychology. Your profit journey begins and ends with your own mind and thought processes. Know when you are emotional and avoid making important decisions until you are back to being logical.
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🖼 Punks Snapped Up
Which payment company has bought the NFT “CryptoPunk 7610”?
💰 Quids In?
For maximum impact, please read this section in a British accent.
In October last year PayPal launched a cryptocurrency service for U.S. account holders to buy, hodl and sell four major coins including Bitcoin. Since then the service was expanded to their mobile wallet, Venmo and now this week PayPal have announced a UK offering. Blimey! So what’s the deal guvnor?
For as little as a quid, UK account holders can buy, hodl and sell too. But similar to one of those funds or index thingies, you don't actually own it, can't transfer it to another wallet, and certainly can’t buy a cuppa tea with it without selling it first. That’s a bit rubbish…
It’s for personal accounts only (none of that funny business) and you have to verify your identity – don’t they know who you are?!
They’re using Paxos again as their trading services partner – they’re more regulated than Del Boy, as PayPal wanna stay on the right side of the Financial Conduct Authority (FCA).
There's a couple of cheeky fees though: a transaction fee based on the amount, and a spread charge, where they bump up or down the exchange rate for a nice little earner. The rate you see already has the spread charge in it, innit. All in all it works out similar to Coinbase, but check out the exact fees here.
So why bother? Well if you’re already a UK PayPal user you might be chuffed that there’s now an easy-peasy way to gain exposure to crypto, with it acting as a potentially lower-risk on- and off-ramp compared to other exchanges that the FCA has their eye on. But check our exhaustive guide first though, as Paypal can sell your crypto assets if you have a negative balance for some reason, and that might be a price you don’t wanna Pay Mate. Cheers.
Yesterday Visa announced that they had bought a CryptoPunk and have entered the world of NFT’s. CryptoPunk 7610 was bought for more than $150,000. Visa’s Head of Crypto, Cuy Sheffield stated "We felt that CryptoPunks would be a great addition to our collection of artefacts that can chart and celebrate the past, present, and future of commerce,".
This purchase sparked a whopping 90 CryptoPunks to be bought up within an hour of the Visa purchase. The cost of the Punk’s bought were anywhere between $180,000 and $917,000 each.
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Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.