Trading MicroCap Cryptocurrencies
A “Must Watch” Video 👀
Apologies for the somewhat low effort post but I’ve been swamped with something big I’m working on behind the scenes and honestly, this video has so much amazing insight packed into it that there’s no point writing about it when you can just watch this.
****NOTE: Trading MicroCap cryptocurrencies is EXTREMELY risky, you have been warned!!
Here are the key takeaways (most got for all trading, not just micro caps):
You won’t get rich trading Bitcoin
The Top 25 coins won’t make you rich because your gains are limited. Think about it, if Bitcoin is at $50k and you’re hoping it’s gonna go up to $100k that’s only a 2x gain, whereas you can get 5–15x gains in MicroCaps.
Can work with lower capital
The gains are greater so you can grow smaller amounts of money faster. And even though people say they are riskier, even the major coins have 30–50% drops. Then take gains and re-enter at the lower capital amount again— don’t keep doubling down. Whereas big coins you need to have more capital in them longer which increases your market exposure.
Most people trading in crypto are idiots
Meaning they don’t have a lot of financial education. They just bought in low, got lucky, and have massive gains. But they don’t have the knowledge or have learned the lessons to then manage that money.
Don’t trade emotionally
People gravitate towards ideas that make them feel good, not ideas that are right. That’s why people push their diamond hands mentality onto others, because they want other to hold. If others sell, then they actually have to think and make decisions, which is difficult. Whereas diamond handing is easier and take no effort. For most people, “Pressing the BUY button is easier, SELLING is the hard part.” Their plan is to diamond hands it forever. Hodling might work for the top 25 cryptos but it’s stupid in MicroCaps. There is no altruism in holding and there is no disloyalty in selling. The #1 goal in crypto is SUVIVAL and leaving with more money than you came with!
You’re not trading the company, you’re trading investors opinions
People push the idea that Selling means you’re disloyal to the company and don’t believe in crypto in general. But that’s not the case. Most of the MicroCaps are pre-revenue, they aren’t generating any money yet, and don’t have any real world application. You’re not trading the companies or tech, you’re trading the narrative and human opinions. The price has nothing to do with the business, but rather what people think about the business. Need to figure out what people are thinking and predict what they are going to do. It’s all about reading the humans, not the products.
Be okay with Selling
Keep your targets realistic. You don’t always have to hold til “the moon.” In fact, in MicroCaps that’s a terrible idea. You have to pay attention and be able to make moves quickly. And you have to be okay selling the next Bitcoin in order to move that into the next position. It’s better to take a 10x and sell that to buy the next 10x than to hold that initial 10x for another 3x. Even if the coin 2x after you exit, be okay with it. The name of the game is SURVIVAL. Exit in stages, take profits during each pump and Dollar Cost Average on your way out. Usually you want to exit when there’s only potential for 2–3x gain left in the tank. Take that money out and move it over to a smaller coin (remember to set profits aside). You want to consistently hit a home run, but it doesn’t have to be the best home run of all time.
Focus on ONE niche of the market
Pick one area of interest and watch that like a hawk until you know it like the back of your hand.. That way you’ll know all the latest products, tech etc… because you want to know what the other investors and VCs in the space are going to think about and which companies they are going to FOMO into. Learn the behavior of its market and the investors trading it, this way you’ll be able to recognize its movement patterns. So choose a sector where your strengths lie to give you that extra edge. “Focus on one door in a crowded mall of doors and see everything that comes through it.” Don’t try to spread yourself thing learning every sector.
For example, here’s the list of Top Gaming Cryptos which he talks about in the video:
Less Risky if you just Read the Overall Market
The MicroCaps always trail Bitcoin. Think of Bitcoin as “The Wind” for the crypto space. When it takes off or begins to dive, everything else will follow. This is one reason* he doesn’t swing trade bitcoin- it’s hard to get ahead of it, you’re always behind (though you can use the chart analysis I’ve show for stocks and apply that to crypto charts as well). The top 20 cryptos follow Bitcoin but usually move within 40mins-1hr of Bitcoins moves whereas the MicroCaps might be even a day or more later giving you ample time for exits and entries.
Buy in Waves
Which is another way of saying Swing Trading. You don’t want long-term hold or diamond hands these coins. When Bitcoin starts to crash you know to exit your MicroCaps. Use Bitcoin to signal your entries (Stage 1 breakouts) and exits (Stage 4 declines). Then wait for the reset aka consolidation and a new Stage 1 forming and repeat. Keep a list of coins in the niche you’ve selected to focus on and wait for the signals. Then just treat it light fighting the boss in a video game, attack and back off, attack and back off, attack and back off… Get in a little late, get out a little early and and don’t worry about leaving 2x gains on the table because you’ll move that into the next 10x-er.
Pay Attention to the Market Caps
You can estimate your target by looking at the Market Caps of bigger coins that the newer, smaller coins are being compared to. Market Caps, like price, also operate on Support and Resistance. This can help you analyze exit points. When the masses pump a coin and the Market Cap is getting too high (compared to other similar coins) due to general FOMO or influencer posts instead of reasons to do with the product, you know it’s time to sell.
Self-Educating is KEY!
Just like in stock, all the money in crypto comes from when you stop looking to others for opinions and start making your own. That way you’ll get there first!
I’m not going to do Cliff’s Notes for the entire 45min video, but hopefully this little preview will convince it worth the watch. Don’t forget to follow Alex Becker on Twitter because he posts the crypto Gaming coins (his niche) that he’s watching/trading on there all the time (NFA).
Trade long and prosper!
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