Coinmarketcap is one of the most popular data analytics platforms for crypto investors and traders, as it provides the overall data of the market.
Not only does it provide data about the price and volume of the crypto, but it also provides information on what the crypto is, so that it is easier to understand what the product of a certain crypto project is.
While most use it to only learn about crypto, Coinmarketcap can also be used to find potential cryptocurrencies to trade with for short-term profit.
In this article, there will be three steps that most traders can use to identify what coins are good for trading.
How to Find Trending Coins on Coinmarketcap
To use Coinmarketcap for trading purposes, first traders need to familiarize themselves with the platform.
Coinmarketcap Data / Source: Coinmarketcap
The platform is a free-to-use, no-account-needed platform so that everyone can just go into the platform and use it for their benefit.
In Coinmarketcap, there are multiple data available, starting from a specific coin’s or token’s price, its daily to weekly price movement, market capitalization, daily volume, and circulating supply to name a few.
There are also data for categories, which are cryptocurrencies that are separated into different categories, based on their product or what the project is.
To utilize the data, traders can pay attention to the data on the landing page of Coinmarketcap. Using these data, there are three steps traders can take to start finding potential coins to trade with.
Find High-Volume Coins
The first thing that traders need to do is to identify coins by their transaction volume. The data can be useful to categorize the coins in terms of their potential.
Coins with higher volume tend to be more profitable as many traders are transacting it, making the token more liquid, which means it is easier to sell and buy.
The data can be used to also categorize the tokens by their volatility. For traders who love a high volatile assets, it is good to look for coins with a high transaction volume but low market capitalization.
But for traders who love less volatility and prefer safer assets, it is good to look for coins with high transaction volume and a high market capitalization.
As long as the coin has a high transaction volume, it will be easier to trade it as it can be easily bought and sold, matching the short-term strategy that traders usually go for.
Inspect its Price Movement
After categorizing the coins by their transaction volume and market capitalization, the next thing to do is to look at how the price is moving and compare it to the overall market movement.
As a trader, it is important to know how the overall market is moving to have a good bias on what position to open that day.
If the trader is a spot market trader, it is good to be aware when the market is moving positively so that the trader can start finding profit by opening positions.
However, if the trader is a derivatives trader, the knowledge of how the market is moving will give more conviction into what position to open, be it a long or a short position.
After analyzing how the market is moving, it is important to see the 24 Price movement to see if the coin is already moving significantly or not.
For example, if the market is moving positively, traders need to look for coins that have already been moving for only around a 1% gain rather than ones with an 8% gain.
This will make sure that the coin still has more room to grow, giving traders more potential profits when trading.
It is worth noting that the price movement also depends on the market capitalization, as the bigger market capitalization of coins tends to move less than lower ones.
So, when a coin is ranked middle in terms of market capitalization but has an average daily movement of 20% and the current movement is only at 5% then it can still be considered good for trading.
However, when a coin is ranked top in terms of market capitalization but has an average daily movement of 5% and the current movement is at 3% then it might not be considered good for trading that day.
Look at its Information
After adapting to those data, it is good to look deeper into the coin to have higher convection when trading it.
This can be done after a specific coin has been selected, where traders can then click the coin’s name and read about what the coin is to have a higher confidence in it.
By looking at the information provided, traders can see what product the coin is attached to, who are the team behind the coin, and what plans it has that might push it higher in the future in case traders get stuck due to psychological reasons (FOMO).
All of these can be done just by simply using the Coinmarketcap platform without moving into any other platform, which is why it is considered one of the most used analytical platforms in the market.
Conclusion
Traders can use this strategy simply to find potential coins in the crypto market. However, one thing to note is that it takes time to adapt to the platform if traders are not familiar with it, so it is good to have patience in the process.
Aside from that, traders should also combine this analysis method with others, such as technical analysis, to have a higher probability of profit in the market.
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Disclaimer: The views expressed belong exclusively to the author and do not reflect the views of this platform. This platform and its affiliates disclaim any responsibility for the accuracy or suitability of the information provided. It is for informational purposes only and not intended as financial or investment advice.