Using multiple exchanges for alternate trading (BTC/USD and ALT-BTC)

I love cryptocurrencies because they're very volatile, and volatility is a great tool for day trading and short-term profits. Of course, many people are complaining about cryptos' volatility, which makes them not suitable for long-term holding, but when it comes to trading, it may generate good profits in short time.

image from globaltrendtraders.com

Investment Allocation

Total investment will be allocated as follows:

• half of the total investment will be used to buy 50% Fiat (USD or EUR) and 50% BTC , using an exchange like Kraken
• the other half will be used to keep BTCs available for ALTcoins buying on another exchange like Poloniex

BTC/USD moving sideways

There are moments when BTC/USD (or BTC/EUR, depending on what Fiat you use in your country) is just oscillating, not really going up or down, so it's not really profitable trading this pair:

• all the earnings will be quite low (0.5%) and will be vanished by the trading fees
• price will move quite slowly, so you will have to wait for hours for a consistent price variation

In this situation, will be interesting to trade other ALTcoins on Poloniex: the BTC's small oscillation will not prevent other cryptos from having bullish trends (on the contrary, when BTC is very bullish, all minor crytptocoins tend to go down).

BTC/USD bullish

In this situation, you need to stay away from ALTcoins, because a strong BTC bullish trends usually means a strong drop of all the other coins (yes, there are a few exception to this rule, but be very careful).
But this is a great moment to trade BTC/USD:

• when BTC starts to rise, but it with USD and wait, then sell BTC again when it has gone up enough
• at the end of the trading, you will have again 50% BTC and 50% USD, to be ready to trade again next time

BTC/USD bearish

In this scenario you can trade on both sides:

• Kraken -> buy USD with BTC and sell them back when BTC drops
• Poloniex -> buy some ALTcoin which is gaining value and sell it when uptrend finishes

Some important considerations

Currently BTC is less volatile than other ALTs, so most of the time it will be oscillating without strong price variations. There will be only some special moments when it moves strongly. So, normally, daytrading will more frequently happen on Poloniex, trading altcoins with BTC.

Use charts to trade better

I recommend TradingView, which requires registration but has a free version.
With it you will be able to see candles updated every second (which is already good) and you will be able to add your indicators on the chart. For real-time price you can still use the exchange charts.
You will also have your customized watchlist, to check all the coins you need with a simple click.

Set up your take profit / stop loss levels

Using TradingView you will have a really useful tool to set up your take profit and stop loss levels. Avoid trading when the price oscillation is tiny (less than 1%). Be careful when volatility is very high, risk is very high too!

Conclusions

I hope my strategy was clear enough, leave your feedback and follow me @andrew0