Before I start with advanced topics, I want to share as much basic knowledge as possible. In this article, you will be learning about Altcoins. Questions like what are altcoins, why are they famous, what is altcoin trading, etc will be answered in this article.
I will be keeping this article quite simple and short.
- 1 What are Altcoins?
- 2 How to Find Altcoins?
- 3 Can Anyone Buy Altcoins?
- 4 How to Buy/Sell or Trade Altcoins?
- 5 Altcoin Trading and Types
- 6 How to Sell Altcoins and Book Profits
- 7 Simple Altcoin Trading Tips to Get Started
What are Altcoins?
In simple words,
Any Cryptocurrency Other Than Bitcoin is an Altcoin
We all know that Bitcoin is the father of cryptocurrencies and is still the most valued cryptocurrency.
So, why Altcoins?
Well, Bitcoin cannot solve every problem and has many limitations. For example, Bitcoin Transactions are very SLOW. Sometimes it even takes 2-4 hours for 1 transaction to be completed.
It’s not that big of a problem now, but if Bitcoin becomes mainstream, this issue will certainly cause problems.
Anyways, considering speed and many other issues, Altcoins started coming in the picture.
Some good Altcoins are:
- ETH (Etherium)
- XLM (Stellar Lumens)
- LTC (Litecoin)
- ADA (Cardano)
And many more.
Every Altcoin has its own solution to a given problem. I cannot start explaining any altcoin in this post, but if you are interested, you can visit the official websites of any altcoin to read their whitepaper (Contains Every Detail of the coin).
Anyways, I hope you understood what are altcoins.
Let’s move further.
Why is Everyone Talking about Altcoins?
A good question. Right??
Well, to be frank. Most of the players (or investors or traders) in cryptocurrency are focused ONLY towards making money. They don’t care much about the technology and the change it can bring.
Even you and I don’t care much about it. C’mon, be honest !!!!
So, that’s exactly why altcoins came into the bigger picture.
If you check up the charts of different altcoins compared to Bitcoin, you can clearly see that Altcoins are winning by a big margin. I mean, the Value (rate/price) of altcoins increased by a big number!!
For example, an Altcoin named XVG (Verge) increased from $0.000019 to $0.14 from 1st January to 31st December.
That means if someone invested $100 in XVG, he would have got 100/0.00019 = 5263157 XVG Coins. By 31st December, his $100 investment would have turned into 5263157 (x) $0.14 = $736841.
Over 73000% Gain in a year.
Yes, you can read the number again. And yes, you can calculate the whole thing by yourself.
This is just an example. Verge was the top gainer of 2017!! (Btw, I am holding Verge Coins this year).
Not only Verge, if you check 1-year trend of Altcoins, you will see many coins with such gains.
So, Altcoins are clear winners in terms of Percentage Gain and that is one of the main reasons behind everyone talking about it.
Before I talk more about Altcoins, it’s important for you to get familiar with some terms.
Terms you Must Know before Trading Altcoins
There are many terms that you will come across while trading Altcoins or while using exchanges. Here are those important terms that you must know before starting trading.
- Address: Address is similar to your Home Address or your ID number or your car’s number plate. You are assigned a unique address where you can store your altcoins or BTC. Every coin has a different address.
In simple words, if you join an exchange, you will be assigned a BTC Address to hold bitcoin or send/receive bitcoins. In a similar manner, you will be assigned an address for each coin that you wish to buy/sell, hold or trade.
- Market Cap: Also known as Market Capitalization. It is the total value of the coins. Calculated by multiplying the price of the coin with the total number of that particular coin released in the market.
It can help you understand the value of an altcoin.
- Circulating Supply: The number of coins that are circulating in the market.
You can check the supply of any altcoin on CoinmarketCap.
- Max Supply: Number of Total Coins that will exist in the currencies lifetime.
Maximum Supply of Bitcoin is 21 Million. That means, only 21 Million Bitcoin exists.
- Wallet: A digital Wallet to hold cryptocurrencies.
- FIAT Currency: The paper currency that has been legalized by the government.
Example: Indian Ruppe, US Dollar, etc.
- Whale: Someone who possesses a majority percentage of a cryptocurrency.
In simple words, someone who holds a very big percentage of any particular altcoin/cryptocurrency.
- Whitepaper: A document describing the protocol and technology of a particular coin in detail.
- Bearish: A downward trend (Falling coin in terms of value).
- Bullish: An upward trend (opposite of Bearish).
- HODL: It simply recommends HOLD. That is, “do not sell, Hold the coin”.
- ATH: It means “All Time High” value.
- Moon / To The Moon: This refers to a crypto’s upward momentum as it keeps climbing in price, as in, “The price of this coin will one day go to the moon!”
- DYOR: Stands for “Do Your Own Research”.
- REKT: This is a misspelling of “wrecked”.
This term refers to a trader or investor who is utterly ruined and destroyed with losses from the current downfall of a price.
- Pump and Dump: Acquiring Coins at a low rate and then increasing the rates by doing various activities publically, followed by selling the coins at the achieved higher value.
You can understand Pump and Dump with examples here.
- Fear, Uncertainty, and Despair (FUD): It refers to the negative talk and news around a particular coin. Due to this, prices of a coin can go very low.
FUD is usually created by traders (or whales sometimes) to bring down the value of a coin.
- Fear of Missing Out (FOMO): It refers to the Fear of not being part of something (such as a big rise in the value of an altcoin) that others are experiencing.
Whenever a coin’s value starts increasing at a steady rate, more and more people start investing in it just because of FOMO. This further increases the value of the coin. However, the value may fall/correct later.
- Order Book: An order Book is a list of Orders for a particular altcoin or Bitcoin. It contains all Buy and Sell Orders that are yet to be processed.
You can see order book on every trading exchange.
- Open Orders: Your orders that are yet to be processed can be seen under this category on any exchange.
- Market Order: A market order is an order that gets processed immediately at the market rate.
- Limit Order: A limit order is an order placed to buy or sell a coin at a specified price/value
- Stop Order (a buy-stop or stop-loss): You can set a stop order to sell the coin automatically once the coin reaches a particular limit. As soon as your order is triggered, it will be processed.
Let me explain with an example,
Suppose I bought a coin at 0.00010000 and the price crosses 0.00015000. I can place a stop order at 0.00012000 to sell my coins. Now, if the value reaches 0.00012000, my coins will be sold automatically. I can also place such order to prevent losses.
I hope you got the point. I will be writing a detailed article on how to uses Limit or Stop orders easily.
So basically, these are some terms that you must be knowing!!
There are many other terms that I will be writing about very soon. Till then make sure to get familiar with all the terms mentioned above.
Now the question is, Can Anyone buy Altcoins? How to find Altcoins and more importantly How to Buy and Trade Altcoins?
How to Find Altcoins?
There are over 400 Altcoins (or even more) in the market right now. You can find details about them on various sites like Gecko or CoinMarketCap.
To find new and interesting Altcoins, you will have to research a lot. You can find interesting news and stuff about Altcoins on various Social networking sites, Messaging Platforms or websites but it is always recommended to research yourself.
By researching about a coin you can understand more about the coin and its technology. Moreover, it can give you the confidence to HODL (Hold) that coin.
I will be writing a detailed article on How to Find Good and Profitable Altcoins very soon. .
Now comes the question, Can Anyone Buy Altcoin? If yes, How to Buy/Sell or Trade Coins?
Can Anyone Buy Altcoins?
Anyone can buy Altcoins. Some sites offer you to buy Altcoins directly from FIAT Currency while most of the exchanges allow you to buy altcoins using Bitcoin or Ethereum.
How to Buy/Sell or Trade Altcoins?
Cryptocurrency Exchanges are sites that list various coins on their website. A user can buy/sell or Trade the coins in an exchange.
You cannot find all coins in a single exchange!!!
Yes, you cannot. And that’s why it is recommended to signup on every trusted exchange.
A coin doesn’t get listed on all the exchanges at the same time. If it’s a good coin, its good to pick it up before it gets listed on some bigger exchanges.
The exchanges that I use to trade altcoins are:
Every exchange pretty much has a similar interface. So it won’t be difficult for you to understand them.
Usually, you cannot buy altcoins directly from FIAT Currency (Normal Currency like USD, INR etc).
You can either buy using BTC or by using ETH (Ethereum, an altcoin itself).
So, whenever you want to trade or buy some altcoins, you will have to first transfer BTC to the exchange.
And to buy BTC, there are many sites. You can buy BTC from Zebpay, Koinex, Coinbase, etc.
Once you have BTC in your exchange accounts, you can open any AltCoin Pair with BTC and buy it.
Here’s a snap from Binance Exchange.
So that’s how it works.
Altcoin Trading and Types
Well, investors and traders do various types of altcoin trading to book huge profits.
- Day Trading
- Swing Trading
- Long-Term Trading
In Day Trading, traders trade their coins throughout the day. They buy in dips and sell at higher rates on the same day itself.
Day Trading is not an easy task as it requires a good understanding of the fundamentals of trading along with a good knowledge of altcoins.
Swing Trading, on the other hand, can last 2-6 days. Usually, traders follow regular patterns in the charts and trade accordingly.
While the last form Long-Term Trading is quite easy. With a pace and past records of crypto, one can easily identify the growth of the industry.
Almost every coin grew by a good margin over a long interval. Some coins did 100%, while some coins got a 10000% increase in value throughout the course of a year.
With the same ideology, many traders buy various coins and hold them for a year.
This way it becomes easier for them. However, this requires a lot of patience and control over emotions.
How to Sell Altcoins and Book Profits
Selling Altcoins is as simple as buying them.
Altcoins, as I said before are usually paired with BTC or ETH. So you can sell altcoins for them.
Once you sell your altcoins, you will get BTC (or ETH depending on the pair you picked). You can transfer that BTC to any local exchange to convert them into FIAT currency.
So it’s pretty much straightforward.
I will be writing a detailed step by step guide on how to buy and sell altcoins on various exchanges. It will help you understand better.
But for now, these basics are enough for you.
Simple Altcoin Trading Tips to Get Started
Before you start, here are some tips that can be helpful for you.
- While Trading Altcoins, look for the values of the coin in Satoshis.
- Have patience while trading. Don’t get scared by dips. Dips of 30-40% is not a big deal in crypto.
- Never Sell at a loss.
- Do not blindly Buy any coin without research.
- Book profits regularly. (Though this is a personal preference)
- Join Every Trusted Exchange. You never know when you need them.
- Do not fall for Ponzi Schemes. (Bitconnect was one such scheme that just got shut down)
- Follow the ideology of Holding coins for easy returns.
- Try to diversify your portfolio.
- Track your investment and portfolio using Tracking Apps or Excel Sheets.
- Start using Limit Order and Stop Order features for better trades.
If you follow these tips, you will stay away from making the mistakes that I made.
Altcoin Trading is such a big topic that no one can write about it completely in a single article. For now, as a newbie, this article is good enough for you to get started.
And lastly, Always make sure to Do Your Own Research before buying any altcoin.