900% profit in Crypto's - Our very basic Cryptocurrency trading strategy
by Nicholas Black
I wanted to take a moment to show you guys how my friends and I pick the cryptos we invest in. I was asked about a recent post that I had ($1,700 - $18,000 in 5 weeks! ) and I wanted to explain what goes into my trading decisions. We also actively mine (GPU and ASIC). We had a few people asking us how we evaluate the coins we purchase, how long do you hold them, etc.
I have a background in Precious Metals investing, as I worked and still consult in the PM Refining business where I used to do a fair amount of physical refining, and hedging to protect our physical precious metal supply with short-term futures contracts through the COMEX.
Crypto Trading Strategy
- Market Cap: Under 1 billion is the sweet spot, for new issues. Beyond that, the market may be too mature for giant runs.
- Total money supply: As in, how many coins are there total? (Bitcoin - 16.4ish million, Litecoin - 57.7ish million, etc.) Ideally we would rather be involved in a coin that has a fixed supply so that it can't be devalued. However, if the company/coin's contribution/business/platform/idea is solid, then we would still consider investing in it.
- Daily Volume: Over 25 million to be safe. It's a big risk when you're trading anything with anemic volume. If you have to get out, you're often stuck with huge bid/ask spreads. Additionally, low liquidity or trading volume leaves opportunities for people to bully around and manipulate the market. (yes, lots of people will argue that there are opportunities on some of the lower volume coins and issues, and that's true, but this is just how we try and be objective about what we purchase).
- Engineering/Management Team: Are they tech guys (yes), or are they finance guys (be careful)? You want a good team behind the project. Look and see if people have fled the management or programing team recently. If they have, did they take founder coins with them? This could be a sign of trouble ahead.
- Did the founder gift themselves HUGE amounts of coin? If you look at situations like Ripple, you'll see why this kind of question is important. The founders of a new issue coin should NOT BE KEEPING more than 5 - 10% of the total coin issuance. If they are keeping the coins then it had better be to prevent other investors from manipulating the price of the coin. If the founders are GIFTING themselves billions of coins...this is a huge RED FLAG! Do we own Ripple - Yes. Did we ride it up from less than a $0.03 to over $0.40 and then sell 50% of it... oh, yes we did. We're sitting on the house's money at this point. We took the 'winnings' and bought STORJ (SJCX), ETH and BTC.
- Can they Print more coins into existence? What we don't like is a coin that has the potential to be printed (coined) indefinitely. Unfortunately, besides Bitcoin, Litecoin and a handful of other crypto's, most of these coins can be printed at will. That means, Just like the FED, they can try to control the currency by issuing additional coins. This, obviously, creates a de-valuing scenario that plays out whenever they want it too, and that is an uncomfortable position to be in.
- Does the coin have a valuable UTILITY that can't easily be copied or 'FORKED'? What we mean when we say this is that we are looking for coins that, if not a store of value, what is 'SPECIAL' about this crypto that can't easily be duplicated.
- Are there other seasoned investors and VC/ANGEL investors that are buying into the coin's proposition? We mean, are other people, who are much smarter than us, buying into the coin or the business, or both? If not, that's probably a good sign to stay away.
- When do we sell? We typically sell off 1/3 of a new position when it's done a 3x (300% gain). We take our money off the table and look for other places to put it. Investing is risky, so we enter a trade looking to get our original investment back out. This keeps us from getting emotional.
I hope this helps. I'm sure I've forgotten something, so just ask me and I'll try and put together an answer that makes sense. And please, LIKE, FOLLOW and I'll definitely FOLLOWBACK.:) - Nick