Q1 2018 has put the cryptocurrency market in a major correction phase, leaving a lot of us hodling very heavy bags. I look at this as a blessing in disguise, as it sent me back to the drawing board to really learn what the F I was doing. Here is my strategy to beat a bear-ish market.
Analyze portfolio and see what coins are down the most.
I tested many portfolio management sites and apps, concluding http://cryptocompare.com is the best hands down.
Analyze volume of coins on exchange.
If a coin has decent volume (400 BTC or more), that is a good indicator it can make some decent gains.
Search for upcoming events.
In crypto, buy the hype, sell the news has never been truer. If you’re a swing-trader, this is a great indication to guesstimate when pumps and dumps will happen. Unfortunately, no coins, and none of us are immune to falling victim of this. If you are simply a long-term hodler, you don’t need to mind this too much. I like using http://coinmarketcal.com for my event information, as you can sign-up to receive email updates whenever coins list new events. The public also up-votes the legitimacy of these events, so you know if you are being scammed or not. When announcements are made about a month in advance, I generally start to see action picking up about 2 weeks before and I look for my buy-in around there. I then sell about 2-3 days before the event announcement so I don’t get stuck in the big dump ahead. Sure the coin might pump a bit more, but I got stuck in that nightmare one too many times and it’s not worth the risk for me. I’ve found platform releases, rebrands, wallet releases, and airdrops get the most action on a coin. Meet-ups don’t do much.
Look up market cap on perspectives.
http://coinmarketcap.com is the big daddy site that everyone goes to, although it’s legitimacy has been questioned in recent weeks. Many claim it’s extremely manipulated, and this wouldn’t surprise me at all. I personally take MC with a grain of salt, and do not chase low MC coins as many others do. Honestly, the low MC chase is a sucker’s game, unless you are a long-term hodler. I have seen larger MC coins have just as good gains as any smaller coins. The ideology behind low MC coins is that it takes less money to pump a coin 1x, 2x etc. but with all this market manipulation it does not hold true too often.
Look into the coin and it’s real world application.
If I don’t believe in the tech, I don’t trade it. I wouldn’t ever want to be stuck with a coin I don’t believe in. Many day-traders and swing-traders don’t even know what a coin does, as long as the indicators point their way, but I cannot personally come to terms with this as I have been dumped on and stuck garbage coins I ended up regretting (ahem.. $HSHARE).
Perform Technical Analysis on perspectives.
The indicators I find the most useful are Fibonacci retracements, Ichimoku cloud (settings of 20/30/120/30), RSI, OBV, and Bollinger bands. If I spot coin in it’s correction phase, hovering around it’s bottom (.236 fib level) with technical indicators showing future movement, I put in a limit buy. If a coin looks like it’s at it’s bottom and moving, I put in a market buy. *Pro-tip: higher timeframes give more definitive indicators.
I highly suggest anyone and everyone trading cryptocurrency to learn some in depth technical analysis before you trade a dime. It leaves me dumbfounded to think people are out there chasing red and green candlesticks. These are the people that get dumped on and taken advantage of the most in big market swings. You need to be able to predict future movements with somewhat accuracy, otherwise you’re going to get rekt.
If possible, cost-average current holdings.
If you are not familiar with cost averaging, it is essentially laddering your buys.
Average Cost per coin = Total purchase costs (you can look in exchange history to make this easier) ÷ total number of coins owned
Per the example below, I placed a buy on Substratum for 810.5 coins at .00007500 satoshi, then 5,848 at .00005060 satoshi.
Total purchase costs (810.5 x .00007500 = .0607875) + (5848 x .00005060 = .2959088) = .3566963
Total number of coins (810.5 + 5,848 = 6,658.5)
.3566963 ÷ 6658.5 = .00005357 (Average cost per coin)
Now your break-even sell price is .00005357
This is a great way to get yourself out of some big holes you may have gotten yourself into.
Q2 looks to be shaping up nicely as expected. Let’s hope for another epic bull-season ahead!
Happy hunting x
- JK
P.S. if you have any good additions to this list, please leave your suggestions in the comments. I’m always looking for new tools in my arsenal :)