How to Use Penny Stock Analysis to Trade Altcoins | Altcoin …
Altcoins are the volatile little brothers of Bitcoin in our NEW “digital currency” space.
These tradable currencies are ALSO in my opinion, a distant cousin (trading wise) of micro-cap or penny stocks (which fluctuate very similarly in value).
Altcoins and penny stocks, both have prices which are subject to manipulatory “pump and dump” groups, email newsletter promotions and drops, 100 – 1000% price gains, and even faster price drops.
Closely monitoring the price gains and falls, as well as these “behind the scenes” pump and dump groups is a VERY important strategy to trade these assets!
Traders should closely follow newsletters (my favorite is the Sykes newsletter here), social media (like Twitter and Facebook), and “other chart indicators” to get a better idea of how and which altcoin or micro-cap stock prices will be moving that current day.
(*Wanna follow my trades? …I talk about how i win and lose. Step 1) Follow me on Twitter @altcoinforums Step 2) Subscribe to the AltcoinNewsletter HERE.
Factors the Can Move Altcoin and Penny Stock Prices
Here is a List of Factors that can move Altcoin and Micro-Cap Stocks Prices:
1) Behind the Scenes Bid Manipulation
2) Social Media Hype (Twitter, Reddit 1,2), IRC #coinmarkets), Forums)
3) Negative Company or Financial News
4) Pump and Dump Groups
5) Overall Trader Market Sentiment
6) Company “Buy Out” or Aquisition News (in the altcoin world this would refer to development teams)
How Long Should You Hold Altcoins or Penny Stocks?
Since prices can move up and down so rapidly (due to the low prices and small markets), microcap stocks and altcoins are also usually held for a much shorter period of time, when compared to traditional “high value stocks”.
This is where i believe alot of the confusion or “bad sentiment” comes when the subject of penny stocks comes up. You will LOSE MONEY if you trade them like high-value stocks!
Successful altcoin or “micro-cap” stock traders usually DO NOT “buy and hold” their low-value penny stocks (or alts) over the long-term…
Day traders re-sell these investments over periods of minutes or hours (sometimes multiple times). Hence the name “day-trader”! Daytrading volatile assets is a completely different, compared to the long-term buy and hold strategy.
Prices in these markets can be difficult to judge over a period longer than a 1- day to 1 week. SO, It is EASY to lose money if you aren’t in and out quick.
(*Wanna follow my trades? …I talk about how i win and lose. Step 1) Follow me on Twitter @altcoinforums Step 2) Subscribe to the AltcoinNewsletter HERE.
How to Trade Penny Stocks vs. Altcoins
The trading volume of small market, pink sheet, OTCBB stocks, or penny stocks has increased steadily since the early 1990′s, but these are very small markets by their nature…
Traders of penny stocks or altcoins make fast “buys/sells” using technical analysis, social media news, and even insider information. Inexpensive, small market “penny stocks” and altcoins can experience gains up to 1000%, BUT the trick NOT to trade them like high-value stocks. They can lose value just as fast because there are about 5 new altcoin emerging daily…
Penny stocks and altcoins have a short “self life”.
Altcoins are being created at a rate of about 5 per day. This means that their value is uncertain at best! They may rise in value 300%, only to drop by half the next day!
Many traders make money with altcoins by researching them early, then making purchases before they hit an exchange and rise in value. This is a common strategy which allows you to buy , then re-sell quickly.
A coin will often hit an exchange, experience a large price gain, then steadily decline over time as new coins hit the exchanges. You can buy and sell these price fluctuations, but be careful as the coin hits its general price decline once traders lose interest!
Where to Research Hot Penny Stocks vs. Altcoins
The researching of new altcoins includes using resources from Twitter, IRC chat (#coinmarkets), Bitcointalk (the altcoin section) and other forums, and digital currency sub-reddits (1,2). Penny stock research includes twitter, newsletter emails (the Timothy Sykes penny stock newsletter and blog), financial news websites, and sub-reddits (1,2)
Here’s how to research which penny stocks/altcoins or the current week:
1) Follow Large Penny Stock Newsletter Pumps – novice traders are the targets of meny penny stock newsletters! You’ve just got to be smarter and know what the overall goal of the newsletter is.
Some newsletters want leave you as the “bag-holder” of their worthless stock. BUT, if you know they use these newsletters to pump stock prices, you can use this knowledge to buy and sell-out for a quick profit.
For this reason, you should sign up to multiple newsletters, JUST to see what stocks they are promoting. If you know what you are doing you can ride and exit these manipulated penny stocks to quick gains.
If you want a penny stock newsletter that provides in-depth educational videos, technical analysis (TA), company research, as well as profitable entry/exit points for your trades, check out the Sykes newsletter here.
2) Watching News Reports – sometimes, a company with a low priced stock will get press on the financial news. News resources like MarketWatch or CNBC may be a source to find out about acquired companies with low prices stocks. Acquisition news of “small market companies”, can lead to large gains. Remember to “buy on the rumor”, and “sell on the news”!
3) Technical Analysis – some traders believe that technical analysis (or TA) does not quite work due to the manipulated nature of penny stocks…BUT…
I believe that in some instances Technical Analysis can be especially helpful to establish a “price channel” or “range”. It can also help you predict trends, reversals, as well as entry and exit points.
Penny Stock Technical Analysis Applied to Altcoins
Buying Breakouts – Some penny stock gurus recommend entering into a micro-cap stock if you see it breaking out of its current “price channel” with significant trading volume. This can often be the start of a new price range that you can buy into or an indicator that a pump is in effect.
Check out the video below on how to buy “breakouts”:
Following the Pumps – Since penny stocks or ALTS are quite vulnerable to price manipulation, we can use this to knowledge to ride the gains for profit.
Check out the video below for some tips on how to target “price pumps” in order to profit on penny stocks and altcoins:
Using Technical Analysis Indictors – There are a few indicators that you can use to help predict “trends and reversals” in penny stock or altcoin charts. A couple indicators i like to use is the MACD (mean average convergence divergence) and the RSI (relative strength index).
The video below provides some tips to help you understand how to use the MACD to provide you with good entry points:
Here is another video which explains how to use the RSI (relative strength index to trade penny stocks) :
(*Wanna follow my trades? …I talk about how i win and lose. Step 1) Follow me on Twitter @altcoinforums Step 2) Subscribe to the AltcoinNewsletter HERE.
Penny Stock Gurus to Watch
One of the few penny stock gurus that i like to follow is Timothy Sykes (here’s a link to his newsletter and blog).
Sykes provides many good videos and “technical analysis” for the penny stock market. Which there isn’t really alot of at the moment.
Sykes makes videos showing traders how to find price “breakouts”, using indicators like the MACD and RSI, as well as showing you how to follow newsletters to find “pumps” before the mainstream catches on.
I also like how Sykes has been on shows like CNBC and has a reputation to protect, so he is alot less likely to use his reach to manipulate stock prices. HE also is known for turning $12,000 into $4,000,000.
Here are a few things Sykes talks about in his newsletters – Stock picks, swing trading tips, Technical Analysis advice for penny stocks, discussion of useful penny stock, indicators, as well as indicators to help you find good “entry and exit points”.
Be WARY of micro cap or altcoin trading gurus that recommend a particular stock or altcoin. Most (but not all) will have ulterior motives, just to pump up the price. I like Timothy Sykes because he focuses more on trading techniques, instead of promoting a particular stock.
Good luck with your trading this week. Contact me on twitter @altcoinforums if you wanna talk trading
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How to Use Penny Stock Analysis to Trade Altcoins | Altcoin …
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