Altcoin flipping can be a highly rewarding way to make money online. By now, if you have already read the “Tutorial – Altcoin Flipping : Making Money Online Via Trading Cryptocurrencies”, you should by now know how to create accounts on cryptocurrency exchanges and fund them with bitcoins. Throughout this tutorial, I will present you with some useful tips that can help you make good profits via altcoin flipping.
Dividing your capital into trading lots:
Whatever the amount of your capital, I recommend dividing them into five equal trading lots. So, if your capital equals one bitcoin, you will divide them into five equal trading lots; 0.2 bitcoin each. My strategy is to use 4 lots to buy 4 different coins and leave the fifth lot to use whenever good trade entry points emerge in the future. For example, a capital of 0.5 BTC would be divided into five 0.1 trading lots as follows:
a. 0.1 BTC for buying ethereum ETH
b. 0.1 BTC for buying monero XMR
c. 0.1 BTC for buying gamecredits GAME
d. 0.1 BTC for buying ripple XPR
e. 0.1 BTC trading lot left for good trade entry points in the future.
Picking Up Coins To trade:
The great thing about crypto is that whatever the size of your capital is, you can find coins whose prices are suitable for you to trade and make profits. However, the size of your capital will highly determine which coins you can trade for profit. Let me give you an example, if your capital is worth only 0.1 BTC, it won’t be logic to trade ethereum whose price now is around 0.04 BTC, as you will only be able to buy no more than 2.5 ethereum coins with all your capital. For a capital that is worth between 0.1 and 0.2 BTC, I recommend focusing more on coins whose prices are below 100,000 satoshis. I will give you an example of a portfolio that is worth 0.1 BTC, given the current altcoin market prices:
a. 0.02 BTC for buying ripple (XPR = 0.00002836 BTC).
b. 0.02 BTC for buying synero (AMP = 0.00009400 BTC).
c. 0.02 BTC for buying golem (GNT = 0.00006955 BTC).
d. 0.02 BTC for buying lisk (LSK = 0.000028282 BTC).
e. 0.02 BTC left for buying coins when good trade entry points emerge.
Now, let me show you an example of a portfolio of coins for a capital which is worth 2 BTC:
a. 0.4 BTC for buying ethereum (ETH = 0.0406 BTC).
b. 0.4 BTC for buying monero (XMR = 0.017 BTC).
c. 0.4 BTC for buying ethereum classic (ETC = 0.0022 BTC).
d. 0.4 BTC for buying factom (FCT = 0.00556 BTC).
e. 0.4 BTC left for buying coins when good trade entry points emerge.
For more a riskier trading approach, if your capital is greater than 0.5 BTC, you can use the 5th trading lot for buying cheap coins, or coins worth less than 50,000 satoshis. I usually divide my 5th trading lot into 4-5 equal sub-trading lots and use them to speculate on coins such as ripple, synero AMP, steem, dogecoin, golem, gridcoin, bitshares, stratis, pinkcoin and others. The list is changeable and depends on many things. So, to pick good coins to flip, I rely on the following (and you should also do so):
1. Trading volume on Poloniex:
Like I mentioned in the previous tutorial, most of my altcoin flipping, i.e. cryptocurrency trading, take place on Poloniex. So, I keep an eye on the trading volume on Poloniex, because in most cases, coins with the highest trading volume, represent good profit opportunities, especially when you know when to jump in, i.e. buy ,and when to jump out, i.e. sell. On the “Exchange” page on poloniex, you will be presented with a table that includes all coins available for trading along with their daily trading volume and 24 hour percentage of price change. As shown on the below screenshot, if you press on the column labeled “volume”, the coins will be arranged according to their 24 hour trading volume in a descending order.
2. Newly introduced coins on Poloniex:
When a new coin market is opened on Poloniex, it usually witnesses very high trading volumes and extreme volatility the few days following establishment of the market. New coins usually represent good profit opportunities, especially if you know when to jump in and when to jump out. Last January, PascalCoin PASC was added to the list coins available for trading on Poloniex. As shown on the below screenshot, I managed to make more than 200% profit via speculating over PASC during approximately 48 hours.
Although new market openings can be profitable, they are also usually associated with extremely high levels of volatility, so you have to know when to buy and when to sell. High volatility usually occurs during the first two weeks following opening the market on Poloniex. After this period, price somehow stabilizes and the real market value of the coin prevails.
3. Following the news:
Following cryptocurrency related news is crucial when it comes to picking profitable altcoins. I mainly follow the news of crypto via going through the following almost every day:
a. Bitcoin news networks such as Deepdotweb.com, Coindesk and others.
b. Bitcointalk.org especially for finding promising ICOs and other yet-to-be-launched altcoins.
c- Mainstream coverage of news related to bitcoin, and cryptocurrency in general, are important events that can be followed by awesome price surges.
You can never estimate the “power ” of the news. Let me give you an example; last February some of the world’s biggest tech and financial companies, including Microsoft, JP Morgan, Intel and others, announced forming an alliance to develop new technology to simplify how enterprises can utilize Etherum’s blockchain. This was followed by a bullish rally that led to around 100% price gains, so traders who had been following the news, managed to make some good profits via riding this bullish wave.
4. Coin adoptions by marketplaces on Tor and other Darknets:
It is inarguable that Tor’s marketplaces are the main platforms for usage of cryptocurrencies as currencies, rather than investment assets, or speculation instruments. Accordingly, new market adoptions of cryptocurrencies can take the prices of these coins to the moon. For example, the recent adoption of some deep web marketplaces, including AlphaBay, Oasis and others, of Monero as an accepted payment method, was followed by a bullish wave that took Monero’s price to its all time high 0.02434 BTC ( around $24.9) last March.
Finding Good Trade Entry and Exit Points:
Although technical analysis is not that reliable on most cryptocurrencies, mainly due to low trading volumes, sometimes some signals can be very useful in picking up good entry and exit points for your trades.
Let me explain to you how I do this by showing you my Gridcoin Research GRC trades during the past month. The following table shows my GRCBTC trades during the past month.
Note that I have been riding GRC’s bullish wave all during the past month. In other words, I have been repeatedly buying low, holding for a few days and then selling GRC for profit. Now, let’s take a look at the 1 day GRCBTC chart from Poloniex on Tradingview.com (Look at the below chart)
Important Note: When viewing the charts for the purpose of applying technical analysis techniques, it is better to use Tradingview.com, as the site enables you to use indicators and oscillators. You can view the chart of any coin traded on Poloniex on Tradingview.com.
I relied on some candlestick chart signals to find good entry points to buy in and exit points to sell off. As shown on the above chart, the “hammer” candlestick represented a good bullish signal. Also, long downwards shadows of candlesticks represented good buying signals to me too, especially that they denote strong downwards support by the market’s bulls. The long upwards shadow (marked by the ellipse on the above chart) represents a strong resistance level that signals a reversal of the upwards price rise, so one should consider selling his/her coins and exiting an open trade.
Let me illustrate to you how I use technical analysis, by showing you my Synero AMP trades during the past few months. The below table shows my AMPBTC trades on Poloniex during the past few months. If you may notice, I have been buying low, then selling high since January, 2017. As such, price rose from 5,199 satoshis to 10,549 satoshis at the time of writing of this tutorial during the past 4 months.
Now, let’s take a look at the AMPBTC 1 day chart from Poloniex on Tradingview.com (look at the below chart). I also used technical analysis to find good entry and exit points. The below chart shows several good candlestick chart signals. The “hammer” represents a good buying signal as reflected by the strong support by the market’s bulls. Also, long upwards candlestick shadows are good selling signals as they reflect strong resistance points.
For using technical analysis and candlestick chart analysis for altcoin flipping, I recommend the following:
1. Always use Tradingview.com for viewing your charts, as it gives you the ability to plot moving averages, Fibonacci retracements…etc; execute indicators such as William’s Alligator indicator, MACD indicator…etc; and formulate oscillators such as Heikin-Ashi oscillator, Adaptive Ergodic oscillator…etc.
2. Use Fibonacci retracements whenever possible. Plot your Fib retracements between the low and high on the 1 day chart along a period of 3-4 months. The resulting retracement levels will help you find good entry and exit points for your trades. Let’s apply this in practice:
To plot Fibonacci retracements on a chart on Tradingview.com, you have to click on the icon marked by 4 horizontal line on the list of tools on the left side of the page, as shown on the below screenshot. A group of options will pop up for you to choose from. Click on the “Fib Retracement” option. Now, you have to use your mouse to click on two points on the chart, which will represent the high and low of your Fibonacci retracement.
The below chart shows the 1 day Bitshares/Bitcoin BTSBTC from Poloniex on Tradingview.com. I plotted the Fibonacci retracements between the low recorded on February 27 (166 satoshis)and the high recorded on April 2 (1298 satoshis).
Fib retracement levels can point you to important resistance and support levels. Usually a bullish rally will be hurdled when it faces a FIb retracement, as occurred on the BTSBTC chart when price reached the 598 satoshi price mark which corresponded to the 61.8% Fib retracement level. Also, the 76.4% Fib retracement level (433 satoshis) represented a strong support level that prevented further price drop.
3. Look for candlestick chart signals such as hammers, shooting stars, bullish engulfing pattern, piercing pattern, bullish haramis, long upwards or downwards candlestick shadows and morning star. Investopedia contains a simple guide about these signals and others.
Exploiting price variation across various exchanges:
Like we explained in the previous tutorial, it is better to set up trading accounts at more than one cryptocurrency exchange. I recommend creating accounts on Poloniex, Bittrex and Hitbtc. Occasionally, price can vary slightly across different exchanges, for a brief period, before equilibrium ensues. This usually happens during high rates of price rise or drop. For example, Dogecoin price occasionally differs between Poloniex and Hitbtc, especially that Dogecoin’s trading volume on Hitbtc is usually much lower than that of Poloniex. As such, I sometimes buy Dogecoin low on Poloniex, to sell it for a higher price on Hitbtc.
This winds up our altcoin flipping (cryptocurrency trading) tutorial. In the end, I have to emphasize that cryptocurrency trading represents a highly risky investment, so always trade only the amount you afford to lose, especially in the beginning until you accumulate enough experience to invest larger amounts. To be a successful altcoin flipper, you have to engage yourself in a continuous process of learning, practice and experimentation.
If you have any questions regarding altcoin flipping, or cryptocurrency in general, post them in the comments below and I will be more than glad to answer them.