Altcoin Trading Basics

The Basics of Altcoin Trading. I feel somewhat preposterous to write about this. This field is so young that nobody really is an expert. There is no standard “How To Trade Altcoins”, yet.

Technically, this is FOREX (foreign exchange) trading, but it is very different. FOREX traders act on a very stable market, where prices change less 1% a day. They heavily use leverage/margin trading for profit. In contrast, the altcoin market is very volatile. Spikes of 1000% happen every week. We do not need margin trading here nor is it even available at the exchanges. Also, altcoin exchanges are very primitive compared to USD/EUR brokers and liquidity is very low.

So what basic knowledge can you acquire for altcoin trading?

Risk Management

You can learn risk management from the FOREX traders. The principles are the same. It basically boils down to

  1. Only invest something like 2% of your budget. You might lose it a few times in a row due to bad luck. If you had invested 30% three times and lost it, you have to make 1000% profit with the rest to break even.
  2. Invest money you can lose. You want to keep the emotions out, so losing money should not affect you.
  3. Keep the losses small. This sounds easy, but is actually hard. Accept a loss before it gets too big. Accepting that you were wrong is emotionally hard.
  4. Keep in mind how much you risk vs profit. Do not risk a lot of money for a potential 1% profit. At first you are unable to estimate the risk, so be extra careful until you have some experience.
  5. Diversify. Especially once you have a bigger budget. Split your money up and invest in everything with potential. Sometimes you will lose, sometimes you win. If your strategy was right, you will win more than you lose over time.

Tools of Trade

There are some tools and technologies, which are simply necessities. So a serious trader has to learn a few things.

  • Learn reading charts. At least those candlesticks. No need to bother with advanced stuff like “resistance bands”. For altcoins this is not applicable. Look into this when you  want to trade BTC/USD or BTC/EUR.
  • Learn the differences between the exchanges, so you can make an informed decision which ones you want to use and how much money you want to risk leaving there. For example, Cryptsy has good liquidity, while Cryptorush has lots of smaller coins.
  • Learn some technical details like what Kimoto’s Gravity Well means and its implications. What is premining? What does block halving mean?

Reflect

Thought plus Action - The Ingredients of SuccessKeep learning. As there are no experts here, every girl must learn by herself. So take the time to reflect your last actions. Here are some questions to think about:

  • Did I do it right, although I lost money?
  • Did I do something wrong, although it was profitable?
  • What unreasonable things did I do?
  • Where my decisions rational or did I rationalize my emotional decisions?
  • What skills should I acquire to improve?

Documenting your actions helps tremendously for reflection. Make screenshots. Write down your reasons for each action. Read the old stuff sometimes. What would you do differently today?

Calm Down

Does all that sound like a lot of work? Well, altcoin trading is a way to get rich quickly, but it is not easy. Take it easy. I am here to help you. One of the big contributions of this blog here is to chop information mountains into small blocks and present them in easily digestible bites.

Advertisements

26 comments

  1. Pingback: What Is Worse Than Being at Risk? – CountingPips (blog) | Forex Trading Markets Zine
  2. Pingback: Range Trading Basics – DailyFX | Forex Trading Markets Zine
  3. Pingback: Why You Should Be Happy That Bank of America’s Trading Revenues Are Down – Motley Fool | Forex Trading Markets Zine
  4. Pingback: Ad-lured investors suffer for not taking ‘stock’ of situation – Arab News | Forex Trading Markets Zine
  5. Pingback: Scalpers Prepare for the Next EURUSD Breakout – DailyFX | Forex Trading Markets Zine
  6. Pingback: EURGBP Downtrend Momentum Increases | Forex Trading Markets Zine
  7. Pingback: Investor decidophobia and how straddling the market with options can help – iNVEZZ | Forex Trading Markets Zine
  8. Pingback: Lucy & Trading Forex Successfully – What You Can Learn From Lucy – Seeking Alpha (registration) | Forex Trading Markets Zine
  9. sbenter

    It also seemed to open one of altcoin exchange.

    In fact, it can be said that the current best bittrex altcoin exchange.
    If they close the door to many altcoin exchange was on the start up only
    Boyeojulji really expect any appearance of CCnex where ever is going to be interested in marketing.
    These are the first teaser site now seems that you are driving.
    If you register as an e-mail to share Open Event giving up the lottery 10btc.

    I should do that only 5000 people in a hurry to go …

    They are very impressive from the start that it would launch a teaser site
    And it seems to have seen the teaser photo exchange sites are very beautiful.

    I wrote a nerve with a lot of design ever since entering the eye symbol.

    Most places do not care about the design have to be well prepared.

    contact us also look for articles about and got aspirations.

    If you ought to use all means open. What they do open the exchange?

    Teaser Site ADD – http://www.ccnex.com

  10. Pingback: Economics Basics | Forex Trading Markets Zine
  11. Pingback: Interview with Jay Norris, Director of Trading University – DailyForex.com (blog) | Forex Trading Markets Zine
  12. Pingback: Times When Demo Trading is a Good Idea – CountingPips | Forex Trading Markets Zine
  13. Pingback: Is This Business As Usual? – Investing.com | Forex Trading Markets Zine
  14. Pingback: Commodities Corner: Part 1 – Laying the Ground with the Basics – Forex Magnates | Forex Trading Markets Zine
  15. Pingback: Forex Analysis Guide – FX Empire | Forex Trading Markets Zine
  16. Pingback: Timeless Secrets of Warren Buffett’s Mentor – CountingPips (blog) | Forex Trading Markets Zine
  17. Pingback: Gold Above $1205 as Dollar’s Recovery Wanes – Rapid News Network | Forex Trading Markets Zine
  18. Pingback: The Spread – FX Empire | Forex Trading Markets Zine
  19. Pingback: Looking for a Top Forex Education? Look No Further Than HY Markets! – ForexMinute.com | Forex Trading Markets Zine
  20. Pingback: Forex experts to need special certificates in Russia – LeapRate | Forex Trading Markets Zine

Give some feedback

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s