Hi and welcome.
I have traded forex for nearly 20 years. I never got to the stage where I could say I was continuously profitable.
So about 20 months ago I became interested in Crypto. I hesitate to say this after less than 2 years, but I feel I do have a profitable trading strategy with Crypto. But I do not day trade the cryptos, nor do I make any use of leverage. Here are some of my trade identification rules that specifically apply to low cap alts. I have a completely different strategy for high market cap alts, but that is further away from what you asked, so here goes.
Rule base for trading Alts. I call these my “three zeroes” opportunities.
1 Never use leverage in trading crypto currencies, not even BTC.
2 Be prepared to lose 100% of the trade if the value tanks to zero.
3 Do not invest more than 10% of the crypto portfolio value in any one “three zeros” opportunity.
4 They are called “three zeroes opportunities” because they are in three distinct categories of opportunity, but they all have the same expected outcome.
5 The three categories are three different expectations of opportunity. Those that could do a 10X return, those that could do a 100X return and those that could do a 1000X return. Obviously, if you want to choose a Shiba Inu, it is highly unlikely that it could do even a 10X let alone a 1000X, so the category I search depends on the market cap value of the opportunity. Typically a 10X could be in the top 100 but unlikely to be in the top 20.
6 Regardless of the category (10X, 100X or 1,000X) the time period for holding is “up to 3 years”.
7 Graduated exit strategy. If and when the token doubles in value, I convert half of the holding to USD equivalent (eg USDC) then leave the remainder of the tokens in a longer term holding pattern. I take the short term profit and reinvest in the next “three zeroes opportunity” at typically 1% of portfolio value. I move the remaining tokens to cold storage. I would only analyze those every three months, keeping a close eye on all the three zeroes that are in their “less than doubled” state. If and when the remainder tokens double again, I take a value decision and either sell half again, or sell less than half if that constitutes the original 1% of portfolio value invested. To do this I would have to have a more compelling case lined up so that the total sold never exceeds 10% of the overall portfolio value.
8 How long will I exercise this strategy? Until either all three zeroes holdings tank to zero, or until the total value of three zeroes holdings becomes less than 10% of our crypto portfolio.
9 Expected outcomes. When there exists a full 10% value in the portfolio, the contribution of the 10% there zeroes holdings are expected to contribute an additional 20% profit than all the other constituent parts of the crypto portfolio. There are three levels of expected outcome. This is the target. There is also a minimum target of 10% and a stretch target of 100%. The plan actually states that over a period of five years, 60% of them will tank to zero, 30% of them will do a 10X, 3% may do a 100X and 1% may do a 1,000X.
10 Story so far. Very early days, but I am on my fifth “three zeroes” crypto and about to invest in a sixth. The first one was middle of 2021. It is highly illiquid and it has baselined at 1 satoshi per token. It can be up and down 200% or 70% on any one day. Total investment at the time was only about $350, and I hold one million of them after 3 successful buy/sell trades between 10 satoshis and 1 satoshi between May and Dec 2021. Sensitivity is about $450 per satoshi. Early in 2021 they were about 1,400 satoshis. So if they were to return to that value (highly unlikely, but possible) the gain would be $630K - almost as good as a lottery ticket. I’d say there is less than 1% chance of that happening, but hey ho.
I hope this may help you in some small way. I do a lot of research (akin to fundamental analysis) on small cap cryptos. I am a professional project and programme manager by trade and an engineer who understands multiprotocol internetworking from as early as 1979. Before I start researching a three zeroes opportunity, the vision, goals and objectives of the crypto is analyzed (normally expressed in a whitepaper, which ideally is a living document that continues to be updated as the crypto grows through the milestones of its roadmap), and I take an initial view on whether it could become a Cisco or Facebook, or whether it is likely to become a Netscape or aol.com. I don’t believe in putting money into anything I know little about. I will either become very self-righteous in my old age, or philosophical, but I will never regret the journey. Crypto (and its recent derivates like DeFi, GameFi and DAOs and DACs, are a once in a lifetime opportunity that is not to be missed nor ignored.
(Edited). On 2Jan22 I invested over £1,000 in online training material to become blockchain certified specialist (Blockchain Institute of Technology). That will keep me off the streets for a few months.
Oh, and by the way, a lot of what I learned on Babypips and elsewhere over the past decade or more that relates to detailed planning for Forex trading has been fully used. And where it did not provide me with “guaranteed Forex trading income” for over a decade, it has provided me with a far better outcome when applied to crypto. Another part of my crypto portfolio has a limited investment in DeFi, and another part is in “income earning NFTs”. Neither of those contributors to my crypto portfolio even existed until Nov21.
