How To Determine An Altcoin’s Potential – ALTCOIN MAGAZINE

First and Foremost: DYOR

As with any investment, you should always do your due diligence in researching the coin and coming to your own conclusion about its potential. “Do Your Own Research” (DYOR) is a common bit of advice within the crypto community that should be your first step in determining whether or not to invest in a particular altcoin.

The more digging you’re able to do, the more likely you’ll be able to protect yourself from scams and losses.

While you DYOR, you should investigate the following things:

• The altcoin’s ranking on top 100 crypto charts such as coinmarketcap.com.
• Whether or not the altcoin is listed on the exchange you intend to use.
• The altcoin’s chart history, volatility, trading volume, gain factor, etc.
• The philosophy/purpose behind the altcoin’s overall project or blockchain.
• The people who are responsible for developing and mining the altcoin.
• The community of people who have already invested in the altcoin.
• Recent News/updates regarding the altcoin project.
• Which wallets will allow you to store that particular altcoin?
• Expectations, reviews, and sentiments from the professional traders you trust.
• The competition from similar or related coins.

Examine Your Priorities

Think about why you want to invest in the altcoin you’re considering. Do you want to make small gains, hold onto a long-term investment, or invest in a concept because it’s something you’re passionate about? Once you know your priorities you can make sure the altcoin will meet those particular needs.

You should also consider the type of trader you are or want to be, and look into whether or not the coin you’re interested in will work well for your trading style and frequency.

Plan Your Strategy Before You Buy

Using the information you’ve compiled through your research, come up with a strategy for each altcoin before you invest. Your strategy should include a plan for managing the risk involved with the investment and for the length of time you plan to hold onto your altcoins. Set your targets, plan out your buy/sell orders, and determine your short-term and long-term goals.

Don’t Be Swayed by Hype or FOMO

It can be easy to get swept up in the “Fear of Missing Out” (FOMO) but investment decisions should never be made based on emotion. Ask yourself if you have valid reasons for investing in a certain coin if you’re feeling influenced by the hype surrounding it.

Take your time when making a decision, monitor the altcoin’s performance for a while, and ensure that the optimal market conditions are present before you invest.

Additional Reading

This article on Medium lists the numerous altcoin criteria and metrics that should be considered before investing.