Find the Most Oversold Altcoins Systematically
The rule of trends is they can last longer than anyone expects them to.
Just buying an altcoin because it’s oversold is rarely a profitable trading strategy. Regardless of indicators, prices can remain depressed for so many reasons.
ⳭInsiders selling to fund their protocol.
ⳭThe overall market is weak (BTC and ETH are in daily downtrends).
ⳭIncentives no longer entice HODLRS.
Having said that, there are times when the selling pressure is just too great and the market must begin to mean revert.
Mean reversion happens even in the most ‘fudded-out’ coins. ADA and MATIC are perfect examples.
No major altcoins lost more in value or had larger debates on Crypto Twitter, yet they both reclaimed their previous ATHs and then some.
Short Squeeze Is a Repeatable Trade Setup in Altcoins
Often, the best altcoin plays are those with excessive short funding in the futures markets.
The beginning of 2022 saw this perfect scenario unfold where most Solana Ecosystem pairs were down 90% and short-sellers were literally paying 100s of percentage points in fees (APY)just the hold their position.
Some infamous short-sellers like GCR of FTX leaderboard fame, were making millions each day. As copy shorters piled late enough the trade became crowded and the market simply ran out of space on the downside. Thus causing one of the most epic short squeezes in crypto history to take place.
At one point, the cost of shorting coins like MAPS was more than 5% per day. In other words, holding a theoretical short would cost 1825% per year!
How to find excessively oversold altcoins?
- Go to advanced settings in CoinRotator and set the signal streak at 20+
2. Depending on your broker, head to ftxpremiums.com or Binancepremiums.com and see if the futures funding are excessively negative. For a less granular view, you can try Coinglass or Coinanalyze. Both are reliable sources for futures funding data.
3. Set an intraday alert for the price to close above the Supertrend. This can be done via Tradingview alerts. If you are unsure how to set this up head to our discord where we’ll be happy to walk you through it.
4. If the list is too large to monitor, one further refinement is to check for upcoming news events. For example, now there is a conference in Amsterdam for crypto devs. A lot of positive news has been released since the start. Coins like DUSK and, yes, even MATIC are announcing positive events which will put upside pressure on their coins.
How to know when the trend is not coming back
ⳭGive the position some breathing room.
ⳭSet a timeline. Usually, a week or two is long enough to know the market simply isn’t going to bounce from that point.
ⳭUse a mental stop loss.
ⳭAnd most importantly, don’t overleverage your position. A few percent of your portfolio is enough.
If you are trading too small and desperate to make millions in a single trade you are simply going to wash out before you have a chance to make it in crypto.
If you liked this strategy and want to know more about coinrotator.app, please stop by our discord and learn more. There’s nothing for sale and we are simply traders who like to share their ideas. No egos, just learning, and some good trades.