What you need to know about Altcoin Trading
If you’ve bought Bitcoin as an investment, there are two ways to go forward: either hold them and watch as the price rises, or exchange Bitcoin with other altcoins. While the former may have a long term advantage (Bitcoin has risen more than 400% from October 2016), the process is lengthy and may not yield enough rewards in the short term. Instead, altcoin trading can offer some brilliant returns in a very short period – I’ve had profits of nearly 50% a week on some lucky occasions.
Understanding Altcoin Trading
Altcoin (or Alternate Coin) is a generic term for any cryptocurrency other than Bitcoin. Many of these currencies are still at infancy and likely to have a tremendous growth in price over the next few months. Others, like Ethereum for example, have already established themselves as being powerful currencies like Bitcoin. Altcoin trading involves exchanging one coin for another, to obtain daily or weekly profits. In very simple terms, you must buy an altcoin when it is cheap and sell when its price is high. How do you determine whether an altcoin is going to fall or rise? Well, it involves speculation. An analysis of the cryptocurrency graph can reveal its future trend. Also, don’t hesitate to look up speculations online, though you must be warned that not all speculations are correct.
But how do you exchange Bitcoin for altcoins? This is where exchanges come in. A cryptocurrency exchange is a website where you can buy or sell altcoins for Bitcoin. You have to place an ‘order’ to buy or sell a specific amount of a coin for a specified price. Once someone is ready to sell/buy the coin at your price, your coins will automatically be sold (your order will be filled). This may sound a bit confusing at first, but trust me, once you start trading, all of this will make sense.
Risks of Cryptocurrency Trading
Most Bitcoin holders know that it is a volatile currency. Altcoins are more volatile than Bitcoin and can lose big parts of their value in a matter of seconds. I’m not trying to scare you, but that is the risk you must be willing to take. Recently, Bitcoin crashed nearly 20% in one day. Bitcoin is an established currency, so it can recover from a big price fall. The same cannot be said for all altcoins. A destabilization could be catastrophic to some. I encourage all readers to carefully evaluate the risks and the chances before they start trading. Prices can go down for a few days and rise back up later, so it is not the best strategy to sell your coins when their price is low (even if the trend may suggest a further drop in prices, analyze whether it is worth selling you coins at a loss).
Therefore, with a bit of caution, you can turn altcoin trading into a profitable business which yields considerable short term and long term profits. However, be aware that there is no guarantee for trading profits and you should never risk more than you’re comfortable losing.
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