People usually think that in order to start trading Cryptocurrencies they need a large capital. In this series, I’ll be doing what I will call a 10 mBTC challenge. The goal of this challenge is to show that you can profit from trading Cryptocurrencies even with a minimum starting investment. I’ll be following a set of guidelines while doing this challenge which I’ll discuss later.
Note: Trading cryptocurrency is very risky due to the volatility of the market. Only invest what you can afford to lose.
Below are some guidelines that I’ll be using in this challenge:
- The coin or token that I’ll invest in must be part of coinmarketcap’s top 100.
- The coin or token that I’ll invest in must be in coinmarketcal’s list of events.
- Bittrex will be the only trading platform that I will use. Optional trading platforms will be suggested.
- A shared google sheet will keep track of all my buy and sell orders.
- Screenshots from Blockfolio and Bittrex will be shared in blog posts to show updates.
- At least one trade per week will be done.
Event Driven Trading
The cryptocurrency market is a very volatile market. Coins can go from +50% to -20% in a matter of hours. Unlike what most traders do, I won’t be using Technical Analysis for this challenge. I’ll use what I call an Event Driven Trade which I have been using successfully in the past. In my experience in crypto, buy the rumor sell the news works most of the time as long as you set a good entry point and an exit point. I’ll give an example on how I usually do my trades.
I’ll be using Einsteinium ($EMC2) in this example. In the last week of November, I checked coinmarketcal’s list of events and saw that $EMC2 was going to have two events. One event involves a coin burn and the another event involves what they pegged as a mind blowing announcement. I bought some coins at 8100 sats (0.00008100 BTC). I later sold the coins before the coin burn event at 13709 sats (0.00013709 BTC). That’s almost a 70% profit just from one event alone. I later bought some coins again at 8500 sats (0.00008500 BTC) at one of the dips after the coin burn event in anticipation for their mind blowing announcement. A day before the announcement, I sold the coins at 12119 sats (0.00012119 BTC). That’s almost a 43% profit. Later it turned out the mind blowing announcement was a flop and $EMC2’s price went downhill from there.
Assessing a Coin to Invest or Trade
Traders often use Technical Analysis prior to buying or selling a coin. Since I only started learning how to read charts, I always fall back on reading and checking the fundamentals of the coin I’m going to invest in or trade.
For coins that I will hold for long period of time, I prefer reading their white paper first to check if their idea is good and if there are use cases to it in the real world. I also follow their official twitter account and subscribe to their subreddits. Registering on their slack or discord channels is also a good way to interact with the community and the dev team. Finally, I also check the activity in their respective Github repositories. If I’m satisfied with all of these things then I invest on the coin.
However I normally don’t do all those stuff when choosing a coin to trade. I participate in telegram channels from time to time and check recommended coins by some groups. More often that not though I skip them since most of the suggested coins are just pump and dumps and I don’t want to get caught during the dump. What worked for me in the long run is looking out for events or updates from a coin and assess them to see if it will positively impact the price of the coin.
Let’s go back to my example on $EMC2. The first event was a coin burn event. Events like these usually help increase a coins price simply because of the law of supply and demand. Most of the time, coin burn events increase the price of the coin days before the date itself because traders will automatically assume that lower supply often leads to a higher price.
Ethereum Classic ($ETC) for example showed a price increase in the days following the announcement of capping their market supply. Some people thought that it might still go up and still bought in a few days leading to the fork but the price didn’t budge. This is because most people already bought in early anticipating that some folks will buy in late. This is why it is very important to keep yourself updated with news and updates in Crypto as much as possible.
Now let’s get on with our first trade for this 10 mBTC challenge! I consulted coinmarketcal again to see which coins or tokens will have an event in the first few days of the year. I came up with the following high level list:
- Monday, January 1, 2018: $ARDR, $PAY, $XRB, $EXP, $POT
- Tuesday, January 2, 2018: $ETN, $TRG
- Wednesday, January 3, 2018: $QTUM
- Friday, January 5, 2018: $ADA, $GNT, $BTC
- Sunday, January 7, 2018: $TRX
- Monday, January 8, 2018: $XLM, $NEO, $EDG
- Tuesday, January 9, 2018: $POWR, $TRIG
As you can see there are a lot of events and coins to choose from and I had to narrow down my selection. I removed $ADA, and $XLM because I’m a long term investor of these 2 coins and won’t be trading them anytime soon. I even try to buy in more during dips to accumulate more units. Some events were not really noteworthy to me like Bitcoin’s Peer Summit and Neo’s meetup. I also have invested a small amount on $EDG early this week in anticipation of their registration event so that’s also out of the equation.
This narrows the list quite a bit. Now let’s see which have some real world use cases. $PAY seems good but it’s too late for me to invest on it. $GNT’s Blender rendering sounds nice but I don’t think folks need shared processing right now for Blender. $POWR has a good use case but the event doesn’t seem to fit its use. Finally we have $TRIG with two events: an AMA and new exchange listing.
Given the choices above, I ended up choosing and investing my 10 mBTC on $TRIG. One of the reasons is that $TRIG has two events within a week of each other. This historically helps price go up simply because of the hype on succeeding events.
The AMA event may not seem like a big deal but it will help early investors and speculative traders learn more about the tech and concept behind the token. This can lead to more money pouring in as AMA’s usually end up like advertising stints. The AMA for Masternode setup for $TRIG helps satisfy early investors by providing updates on the development updates and shows that their is progress being done on the token’s roadmap.
Being listed in an additional exchange also always help pump up the price of a coin or token. This is because it makes $TRIG accessible to other investors and traders. Take note that as of writing, $TRIG is only traded in Binance (TRIG/BTC, TRIG/ETH, TRIG/BNB) and Bittrex (TRIG/BTC). With Bittrex limiting new registrations, new folks joining are only left with Binance to invest and trade with. Adding an a new exchange will surely help bring in more money to the token.
Details of the First Trade
As I said earlier, I’ll keep everything transparent so folks can see the progress of what I’m doing. Below are some screenshots to show the details of my first trade for the year:
Bittrex Order History:
Blockfoliio Screenshot prior to posting: