One key difference between penny stocks and alternative digital currency is that the former may take years to realize a profit, whereas the cryptocurrency world is very fast paced indeed. Retail penny stock traders may be able to pick out companies with potential and then only check back on them every few months — in fact from one month to the next there may be little or no new information to use for re-evaluating your position.
In cryptocurrency this would not be a good idea at all. You should only get involved in a market like this is if you are ready and willing to spend a lot of time at your computer, regularly checking on price movements and the latest news, and changing your positions accordingly.
Understanding and Analyzing the Altcoin Markets There are two main ways to understand the altcoin markets, forecast the future direction of price movements and therefore pick good investments: Fundamental analysis attempts to determine the real value of something in order to determine whether it is undervalued or overvalued.
When it comes to trading altcoins this is more difficult, because they are generally very early in their development — so their value reflects potential future success rather than their current position. To a great extent you must rely on estimating the potential size of the market in the future and the chances that this potential will be fulfilled. Technical analysis uses price and volume data, and seeks to find patterns and indicators which can be used to forecast the future direction of price movement.
For more information about how this works as well as the latest analysis for both Bitcoin and some of the top altcoins please take a look at our page on technical analysis for Bitcoin. Alternatively, you can use prediction markets such as KoCurrency to find insights on the direction that popular altcoins are heading.
Cryptocurrency markets are highly news driven. If you want to make money trading altcoins, therefore, you really need to make sure that you keep yourself up to date about the latest news and developments, both for the coins you are trading and for the industry as a whole. This section is not a comprehensive guide by any means, but should give you a few ideas to get you started making money as an altcoin trader.
Getting in on the Ground Floor Most coins will start off at a low price, and rise in value if they are successful. Of course this is not always the case, especially for ICO coins which may start off at a quite high valuation, depending on the structure and success of the ICO.
But, nevertheless, it is usually true to say that the largest profits to be made often come from seeing the potential of a newer coin early on, before anyone else, and then riding the wave of success as other traders and users jump on-board. It is also true, however, that these very early days are the most risky time to invest in something.