How to make money trading altcoins?
Don’t be intimidated by digital currencies being both IT and finance. Getting started trading cryptocurrencies is easy. You don’t need to be an expert. Even today, you can make money online with a little smart investment and luck. Also, you don’t need to buy bitcoin, given its exorbitant price. There are thousands of altcoins you can decently benefit from. But how to make money with altcoins?
While many people use cryptocurrencies to make purchases, it is increasingly being talked about as a form of trading and investment. Entire websites are devoted to tracking the value of cryptocurrency market assets, such as the Binance or Coinbase platforms. Here is a quick overview of the main ways to make money with cryptocurrencies.
What are altcoins? What is altcoins trading?
First, let’s clarify the term altcoin. Altcoins are all crypto coins that are an alternative to BTC since Bitcoin is the king cryptocurrency. Therefore they are a sort of alternative cryptocurrencies.
Altcoin trading is buying and selling assets through a cryptocurrency exchange platform. It is also possible to bet on the price movements of an asset via CFD contracts. As most trading platforms offer various derivative products and trading tools suitable for all trader profiles, it is now easier to get started.
The basic principle of altcoins trading is like any trading. Indeed, the goal will be to make a profit. To start trading, you must open an account with a broker. Also, you trade manually or use automated tools that perform trades on your behalf.
It should be emphasized that cryptocurrencies are highly speculative and volatile. Also, you will surely be confronted with price variations. You will therefore have to master, or at least understand, the operation of risk management tools to limit losses.
By mastering risk management tools, you can, for example, deploy stop-loss orders on each transaction and thus limit your losses. Also, remember to manage your bankroll so that you always know what you are getting into and when to stop so as not to lose everything.
Finally, we need to make a distinction between investment and trading. If an investment in crypto-currencies is generally done over the long term, trading is done over a short time, rarely days or weeks. The most common investment strategies are hodl strategy, lump sum investing, and using crypto saving accounts. Now let’s look at how to make money trading altcoins and the best coins to choose from.
How to make money trading altcoins?
Crypto-trading operation is quite simple, but some strategies can be complicated for beginners. This section will review the basics of how altcoins trading works. This is from the placing and order to choosing altcoin pairs.
When you open your crypto trading account at a broker, you can start your trading adventure. By trading crypto-assets, you can speculate on pairs, like in Forex. In other words, two pairs of assets, two pairs of currencies, or even a combination of the two. Most brokers offer crypto/currency pairs in particular. On some interfaces, it is only possible to trade against stablecoins. Generally, when you trade in pairs, you open long and short positions of two pairs. It’s a market-neutral strategy in trading.
Once you have chosen the pair to trade, placing an order is next. Start by placing a market order. This will allow you to place your trade instantly and at the best price.
This should help familiarize you with the markets, and you can then place a limit order, which is an order at a level better than the current market price. In this way, you will be able to specify the exact price at which you want your order to be executed.
Proven altcoins trading strategies
Before you even start trading, you need to come up with a strategy to follow. If you don’t have one, it would be like jumping into the water without a buoy. The markets are indeed likely to evolve, and as we know, crypto-currencies are more volatile than other assets. Here are, according to our opinion, the best strategies to follow to start crypto-trading.
Day-trading
Surely you have already heard the term Day trading? It is a specific short-term trading strategy that allows you to open and close positions over a 24-hour period. In other words, it involves buying an asset to resell a few hours later. Since it is possible to chain orders more frequently, it is easy to accumulate gains.
Note that as the profit margins to be achieved are tight, stop-loss, and take-profit orders appear very important here. It is also worth remembering that to perform in day trading, you have to take time to analyze price trends, curves, and forecasts for the target cryptocurrency.
“Buy the dip”
The concept of “Buy the dip” is paired with the world of trading, and in its most basic definition, it means: Buying on the dip. When the price of a financial asset falls, many traders take the opportunity to buy it at a lower price. They then hope to rebound with a future price increase.
Of course, there is no guarantee that an investor choosing to buy on the downside will make a profit. Indeed, it is not because the price is low that the asset becomes interesting and can subsequently become profitable. It is necessary to analyze the curves and trends over the last few months to ensure that the fall precedes a possible rise.
The Importance of Stop Loss Order
The other strategy that more experienced traders most often use is stop loss. The order allows, in particular, to automatically stop trade and, thus, to stop the losses at the price level indicated when you deployed the order. We can thus say that a stop-loss order makes it possible to set a limit that cannot be exceeded. Thus, there is a risk of losses in the event of a price drop.
To effectively manage risk, it is recommended to put a stop loss as soon as the position is opened. Thus, if the asset price does not follow an upward curve, you can limit losses more easily.
The Importance of Take Profit Order
Generally used with the stop loss, the take profit allows you to close a position when the asset’s price reaches the predefined level in the event of a gain. More concretely, the investor does not have to analyze or follow the curves since the order is executed automatically as soon as the market allows it.
Note that the Take Profit order is often set when making the trade. The position will then close automatically as soon as the asset’s price reaches the desired level. In any case, it is imperative to determine the level of profit based on reliable data and not on an arbitrary value.
Manage your Balance
Knowing how to properly manage your bankroll is imperative in cryptocurrency trading. Note that the balance here corresponds to the maximum amount of money you can risk losing on a transaction. The amount is determined as a percentage of the current account balance.
There is no point in having around fifty crypto-currencies in the portfolio. Holding 5 to 10 of them, but with a high yield, already allows you to reduce the risks optimally.
What are the best altcoins for trading, and how to find them?
There are currently over 20,000 altcoins in circulation, and the market is worth over $924.01B. Therefore, choosing to invest in digital assets seems attractive, if only to grab a small part of the millions of gains experienced traders make. The question is: how to choose between these thousands of altcoins? To choose the best altcoins for your trades, you need to analyze the market and the most important features of your altcoins trading pairs. Till you find your lucky altcoin, here is the list of some of the best altcoins for trading:
- Bitcoin Cash
- Dogecoin
- Ripple
- Cardano
- Ethereum
- Polygon
- Solana
- Lucky Block
- Decentraland
Many investors are looking for new cryptocurrencies for the “next Bitcoin” that could make them rich. But this is in vain: Today, thousands of cryptocurrencies are in circulation. Searching among them for the next Bitcoin is like looking for a needle in a haystack and will waste a huge amount of time. It would be wiser to carefully choose a few altcoins and invest a small amount in each to increase your chances of finding a cryptocurrency that will skyrocket.
But to successfully unearth the nuggets among the new cryptocurrencies, it is essential to analyze the projects of the team that founded it and its viability. To do so, the best way is to check Coinmarketcap’s website.
How to make money trading altcoins – Conclusion
Some of the most important steps when stepping into the world of altcoins trading is choosing a reputable exchange, good trading assets/cryptocurrencies, and, if you want to auto trade, an auto trading tool with a high success rate. In this article, we have just scratched the surface so you can see your possibilities.
Now you have a clue what altcoin trading stands for. But we suggest educating yourself more on the crypto market and the specific day trading strategies. All that you can find in the educational section of our website. Practicing using a demo trading account is also highly recommended if you are just starting. Finally, start small with a meager investment and increase your deposits once you feel fully confident and your demo trading starts giving results.