Where do we start?
So you’re probably here because you want to be a crypto millionaire and have heard of all the massive gains made by your colleague Dave’s nocturnal ventures into the world of cryptocurrency trading. Dave convinced you to change some of your hard earned money into Bitcoin and you have now successfully transferred it to an exchange and are now confronted with the confusing decision of which coins you should invest in.
Where do you start? You are probably looking at candle charts and order books for the first time and seeing some coins being reported with 73% gains and others nursing -51% losses and wondering which is the best to buy, what will turn your 0.01 Bitcoin into 100 Bitcoins the quickest?
Do you invest in coins that have dropped in the hope they rebound back up or do you invest in coins that are ‘mooning’ (that’s slang for ‘rising’ derived by the lambo children that you will no doubt encounter whilst researching, which leads me to my next point…)?
The answer… Before you dive in, spend a little time and research the coin you are thinking of investing in, check their website, what features the coin has and what solution it is trying to provide or problem it is trying to solve, if any!?
Have a look if they have published who their development team is, if this is hidden or you cant find out who the developers are then that usually means it’s shady. Watch out for coins that are a direct ripoff of another more popular currency and a word added to the name like ‘Dark’ or ‘Gold’ falsely symbolizing some sort of affinity to encourage adoption. Have a read of a coins whitepaper and or roadmap, check their Twitter, search Reddit and maybe join their Telegram or Discord (group chat platforms) and get a feel for their communities and knowledge of any upcoming news or events for the project. This information can help you decide if the price is moving in a direction that can be attributed to previous or upcoming news from the projects development team.
Investment Strategy? All well and good you are thoroughly convinced the project is legit, it ticks more boxes in your investment strategy over the other coins you’ve researched and you want to take the plunge but is it the right time? Will you be buying in at a high and the price drops down as soon as you buy? Or will it rise and earn you that down-payment for a Mitsubishi Colt? You are staring at the trading pair on your screen for the coin you’ve chosen, you can see your funds are available and the buy box is tempting you to put in your order and execute but there’s candles, graphs, lines, clouds, waves, Fibonacci, RSI and a world of technical indicators that claim to work out when to buy and when to sell. I would tell you to also spend a little time and research a couple of these indicators, this will open up the door for you to learn more about Technical Analysis and you can then decide if it is useful to you and your trading strategy.
Or you may decide its all a bit of mumbo jumbo and decide to press on with nothing more then your own ‘Jedi’ skills and use the force (which is strong within you).
Whatever method you choose, you’ve decided the buy price for the amount of coins you want and have executed. You can see your order bouncing up and down in the order book until it fills or the market price moves away from you. You may decide to cancel your order and set yourself a new target buy price or wait it out to see if the momentum turns and your order gets filled. Your order has finally filled and you are now the proud new owner of X amount of ‘Altcoin’.
What next? Well if your strategy is short term trades, make a small gain quickly and sell it and move on to another coin, you may decide to set a sell order now and sit and wait for it to trigger, this would mean you don’t need to remove the coins from the exchange.
If you intend to ‘Hodl’ (‘hold’ spelt wrong by accident and adopted by the crypto community to mean ‘hold’), then you might want to consider moving your alternate currency to a private wallet and not keep it on the exchange. The coin might have its own wallet that you’ve downloaded or you have a multi purpose wallet which accepts your new currency, my advice is to transfer a small amount first to test the process before transferring the whole amount, if you have doubts or questions about the process of setting up your wallet then visit the Telegram or Discord for the currencies and ask your question. You will find that most communities are very supportive to adopters of their currencies and can guide you through setting up and using their wallets.
You have now safely stored your alternative coin until the day comes when you decide to move it back to an exchange and sell it. In the meanwhile, you can track it’s minute by minute price movements simply by using an app like Blockfolio or Delta and show off your own 1300% gains to your colleague Dave, next time you see him by the water cooler 😉