Choosing The Right Coin To Trade

Written by Edward Gonzales

March 30, 2021

When dealing with cryptocurrencies, there is no such thing as “the right” or “the best” coin to buy or trade. When choosing a coin to trade, you must consider many variables. The chosen coin depends on your trading strategy and what you want out of the trade. You must also consider the timeframe under analysis. There is also liquidity, market capitalization, and community presence to consider as well. You don’t want to invest heavily into something with no community involvement, little liquidity or that goes outside of your trading parameters. Nor do you want to find yourself stuck in a coin you don’t believe in. Let’s take a look at some variables to consider when choosing a coin to trade. 


When choosing a coin pair to analyze, you want to choose a pair that is full of liquidity. What does this mean? It simply means you want to trade a coin that has a lot of trading volume. Not to be confused with the total market value of an asset; also known as market capitalization. You can be trading a voluminous pair such as BTC/USDT but if you’re on an exchange with a small number of users, chances are the liquidity won’t be sufficient to day trade properly. Which leads us to our next point:

Time Frame

The best coins to trade in will be based upon which time frames you choose to analyze. If you are looking for a day trade on a weekly chart that shows oversold, that coin may have already experienced a rally and might not be a good candidate anymore. In a few weeks, however, it may be a coin that returns 40%+ in a trend reversal. Likewise, you can’t observe the daily or weekly time frame and then enter a coin pair off the 5 minute time frame and expect  immediate results. This type of misinformed time frame trading can cause premature “panic” closes on deals resulting in unnecessary loss. 

Market Capitalization 

There are so many different cryptocurrency options to invest in it truly is hard to define the “best” one to trade. One important thing to consider is market capitalization. As stated earlier, this is the total market value of an asset. To determine an assets value you would simply multiply the max supply by the current price of the asset. Buying into something with such a huge market cap like Bitcoin can be considered safe by many. While buying into Bitcoin can be considered a safer investment than other cryptocurrencies, it may not be the best option for “the little guys.” One way a person can take a little bit of money a long way is through small market cap coins. Just for example, if you have interest in exploring music you might find AUDIO to be a worthwhile investment. This project and many others can be considered “hidden gems” by many as they are very early in their journey. One of the main issues around low-cap coins is that not all of them will turn out to be wildly profitable. (This is not financial advice. This is just a reference.)

To keep it short and simple, there is not a “best coin” to trade. You want to find a coin that you can dollar cost into if you get your entry timing wrong. Don’t look for pump coins to chase because oftentimes influencers will shill out these coins to the masses and then sell them off suddenly in what is known as a pump and dump scheme. If you want to practice trading with real money, most would advise to start with BTC/USDT. There is plenty of liquidity, it is safe, and it will forgive your mistakes. It’s safe to say that if you get your timing wrong with BTC/USDT you can simply wait for the market to return to a price that is favorable towards your position. Always do technical analysis before entering any trade or investment position. You can visit our website here to learn more about cryptocurrency.

By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

Written by Edward Gonzales © Crypto University 2021

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