To make money trading altcoins you need to know how to trade in general. Trading cryptocurrencies profitably is difficult for several reasons and when you start it’s not obvious why it’s so hard to earn money.
In this article, I will teach you effective ways on how to start making money with cryptocurrency trading and help you see the market from the other side.
I will also include the best exchanges to trade crypto.
The best start is a good platform with the right tools and low fees to help you out.
You need to start with the basics and that’s exactly what we are going to do.
I will give you simple but effective tips on how you can overcome your bad habits and how to learn new real trading skills.
This post is for you who are serious about trading altcoins for profits and is not only after a quick win.
Read through the whole article to learn how to remove your mistakes and how to implement new tips.
We will start with the mistakes.
Most difficult altcoin trading aspects to overcome
- Risk of losing money
- Losing money
- Human emotions
- Lack of market knowledge
You can’t try to overcome all of them at the same time, that will create chaos and you will literally explode.
Try to take one at a time and slowly work your way through them.
This is not a get-rich-quick way of trading altcoins.
New altcoin trading skills you will learn
- How to handle losses
- Why losses matter
- How to control your human emotions
- “Secrets” to understand the market movements
- Real trading skills
The reason why I’ve pointed out these aspects is that they are the fundamental building blocks of a good trader.
If you don’t know these basic skills, you will not be able to trade day trade or swing trade cryptocurrency profitably.
Let’s start with a crypto exchange comparison for the best exchange to make money trading altcoins.
Why these exchanges are good for making money with altcoin trading
These platforms have everything need when you start.
They are safe, have a lot of functionalities, leverage options, option to short altcoins, and a good reputation.
And best of all, they have a lot of cryptocurrencies to trade so you will never run out of opportunities in the market.
That’s very important because if you are going to be an active trader you need to have a big pool of coins to choose from.
The same coin will not be able to give you setups every day of the week.
You need to actively look for setups in different markets.
The same goes for you who want to be an altcoin swing trader.
The more cryptocurrencies you have to choose from, the more options to swing trade there will be.
Guide to trading Altcoins
Let’s start to break down all the skills you need to learn to start making money while trading altcoins.
- Risk of losing money
- How to handle losing money
This aspect of learning how to trade is one of the hardest.
It’s very difficult for a new trader to understand why it’s important to learn how to handle losses.
Losses are a part of the game.
That’s the short answer.
But why is it like this?
Well, first off, I’m going to tell you about the best traders in the world and what their track record looks like.
The best traders on Wall Street have about a 50-50 win ratio.
That means that they win half of their trades.
But if you think about it from the other side, they are going to lose on half of their trades.
How can that be profitable?
Here is the point.
When you lose, you lose small and when you win, you win big.
This is how professionals make money trading altcoins.
It’s very easy to say but it’s a different story to actually pull off.
Are you looking to become a skilled crypto trader?
Check out our detailed crypto trading guides in our educational center.
You will learn new strategies and how to read charts in real-time.
Limit your losses
What you need to do first is to limit your losses.
This is the first step.
If you can achieve this, you have done half of the work.
The mindset you need to apply is to understand what big losses will do to your account.
We all know what would happen if we kept having big losses every week.
It would destroy our track record and our capital eventually.
By keeping your losses small you will never suffer a huge drawdown and you will stay alive as a trader.
You can do this two ways:
- Smaller positions sizes
- Tighter stop loss
This is completely up to your own preference.
None can tell you what you prefer until you try it out.
Some traders like huge position size with very tight stop losses.
This will require that you try your setups many times before you can either make a profitable trade or until you stop trying and wait for another setup.
With a smaller position size, you can enjoy a wider stop loss and you will not get stopped out as frequently.
The wins will be somewhat smaller when you make a profitable trade, but it will be easier for you to actually win.
You need to test out for yourself to see what works best.
For me, I use smaller position sizes with a little wider stop loss.
It creates less stress and I don’t need to focus on the entry that much.
When I see a setup, I can enter when the market is going my way with more wiggle room to my stop loss.
To learn more about stop losses, read our guide on cryptocurrency exchanges with stop loss.
How to handle trading losses
The way you should think about your losses is a little bit weird if you are a beginner trader.
Before I mentioned that the best traders on Wall Street are having a 50-50 win ratio.
Some traders can have a higher win ratio, but this is the average.
So, you are faced with the reality that your altcoin trading will fail 50% of the time.
50% of the time you have to watch the market hit your stop loss and there is nothing you can do about it.
You can either try to force these numbers to be better (but they won’t be).
Or, you can accept this and learn how to deal with it.
The following sentence is going to teach you how to see your trades before you have entered.
You should have a curious approach to every trade and ask your self, I wonder if this will be a winner or a loser.
When you get to this point and feel comfortable with it, you will become more disconnected from the outcome of your trades.
That’s very good.
You stop focusing on the actual profit or loss of the trade and focus on planning the trade instead.
The best part is.
For every trade that is a loser, you will be one trade closer to a winner.
That’s how the actual probabilities work.
Human emotions in altcoin trading
It’s completely normal to feel excited or afraid of trade.
It happens to everyone.
But at one point you need to realize that you have to take control over your feelings.
What I mean by that is very straightforward.
Don’t make any decisions when you are affected by an emotion.
If you can accomplish that, you will improve your track records incredibly fast, starting today.
When even you feel like you need to take a trade because you have a feeling about the market you need to watch out.
Your trade ideas should always come from careful analysis of the market.
There needs to be some kind of understanding of the market behind your entry and exit plans.
You might enter the market because you can see strong positivity and the market is getting close to a breakpoint on the chart.
That’s a good idea because it’s based on fundamental research.
However, if you just “feel” like the market “should” be going down because it’s too high, you are in dangerous water.
This is a subjective thought, created by emotions.
So, you can see how this last trading idea wasn’t very good and it didn’t have much analysis behind it.
It was simply a human emotion telling the trader to act.
Get rid of that and you will improve a lot.
The same goes for when something unexpected happens and you either feel very excited or very scared.
This is not a time to make a decision.
The trick is to realize that you are going to make a decision based on emotions, then stop yourself.
I usually leave the computer and take a break.
You can try that too.
Market knowledge in altcoin trading
The cryptocurrency market is very volatile.
This creates a lot of problems for new traders because they are not prepared for the swing in their trade capital.
The market can move 20-40% in a few days and that might harm a trader.
Most new traders start with too big position sizes and get hurt badly when the market takes a turn.
This is very normal and it’s the human emotion greed that is making you want more and more.
You can either keep trying this method or cut your position size by 50-75% and trade more calmly.
What will happen is that you are not going to stop yourself out as fast due to fluctuations.
Also, you will be able to hold on to the position for a longer time, and by doing that you will grow your profits more.
If you were trading big positions you would most likely close the position out as soon as you made 2-5% because you are afraid of losing it.
The best part about trading with a smaller positions size is:
You learn how to hold on to position for future larger trades.
Exactly, when you trade smaller, you learn how the market behaves because you are in the trade and you are focused on the market.
When your account size grows, your position size will grow with it.
Eventually, you are going to trade with bigger position size and you will be able to take the fluctuations because you have learned how to read the crypto market.
Start small and grow.
Altcoin trading strategy
I’m going to teach you one altcoin trading strategy that will work if you can implement it well.
It’s called follow the market.
It sounds easy but it can be very difficult to do when you are faced with real trading decisions.
What I mean when I say follow the market is very straight forward and you can do this will every altcoin.
Only trade when the altcoin has started to move up.
Most new cryptocurrency traders try to catch a bottom by buying very undervalued coins and hope that it will turn around and make a 1000% gain over the next few days.
This is a big mistake.
Most altcoins are going to stay undervalued forever.
That’s because they are not going to make it big thanks to the competition.
Some tokens will start moving and make great moves.
These are the coins you want to aim for.
The trick is to pick the coin that has already started to move.
This is difficult to do because the market is trading higher.
Most traders prefer to buy cheap coins instead of trading with a high probability setup.
You can either learn this and implement this in your altcoin strategy book or keep struggling with cheap coins.
It’s more profitable to trade a coin that has shown signs of positivity and interest from other traders than to trade a very cheap but dead coin.
You don’t need to buy the bottom, you need to buy positive movement.
If you can grasp this concept of trading, you will become a better altcoin trader today.
How do you make money trading Altcoins?
To make money trading altcoins you need to understand how the cryptocurrency market behaves.
It is mainly driven by human emotions and feedback loops.
You might understand how human emotions are affecting the market.
When prices start to rise, traders get excited and start buying more aggressively.
That’s basic market understanding.
But what is a feed back loop in the cryptocurrency market.
A feedback loop is something that is feeding on itself.
Let me explain.
When a coin or the market, in general, is in a trading range, it’s not very exciting.
Nothing is going on except the movements inside the range.
What a feedback loop will do is it will create a snowball effect.
When the market steps outside the range, either above or below, it will alarm other traders and they will join the party.
When they join the buying or selling, even more traders will join, and so on.
This will continue in one direction until it is no longer sustainable.
Traders will keep buying until there are no buyers left.
What will then happen is pretty straightforward.
The market will start slowing down and there might be a big seller penetrating the market.
When the market slows down, traders become less inclined to keep buying.
Eventually, the market is completely dry on the upside and the market starts turning down and starts a new feedback loop on the downside.
The same cycle will repeat on the downside.
Here is something to think about when you see the market from this point of view.
The stronger the feed back loop, the more aggressive buying or selling the market will experience.
A strong positive feedback loop consists of many excited buyers and few sellers.
A strong negative feedback loop consists of many scared sellers and few buyers.
So, to make money trading altcoins you need to find coins with a positive feedback loop.
When you do you need to place bets and keep a tight stop loss.
Is Crypto trading profitable?
Yes, crypto trading can be very profitable if you do it the right way.
If you have read the whole article you will have a couple of new tools to bring.
You need to give it time and start small.
The biggest mistake new traders do is to take on too big a position because they want to make a lot of money fast.
The faster you can realize that altcoin trading is not a get-rich-quick thing, the faster you will start to make more consistent profits.
I would recommend trying one of the crypto exchanges mentioned above to get a good starting point.
Also, you will not be eaten up by large fees.
The most important skill you can learn to make money trading altcoins is to control your emotions and not act out on impulsive decisions.
Also, keeping your losses small and trying many times will take you a long way.
If you start small you will learn how to hold your positions longer and this will build up your stamina against market fluctuations.
Feel free to come back to this article to refresh some key skills.
To make money trading altcoins you need to be prepared and you need to have the right tools.
In this article, you will learn how to deal with the most basic but most important trading mistakes.
You will also learn some of the key skills to take your account to the next level.
Also, check the comparison table to pick the best exchange for your style of trading.
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