A lot of traders are overleveraged and trying to make it all back in one trade.
What if I told you the gains you want are possible but you have to slow the fuck down. Identifying profitable altcoin trades requires a bit of patience and a sound approach.
Trading on low leverage on exchanges like Binance and FTX can be super profitable but you gotta take it easy my friend.
First, open a weekly chart. Find an altcoin that has been down for at least 3–4 weeks. Check the narrative. Something decent, no meme coins. These days there are a few plays that will work for the next few months/ years.
- Layer 1 (LUNA, NEAR, AVAX, MINA
- Dao Altcoins (SUSHI, PEOPLE, BIT)
- CrossChain Bridge (SYN, SGT, ANY)
- Privacy (SCRT, ZEC, ROSE)
- Layer 2 (BOBA, IMX, LRC)
Before you dive deeper into the actual trade, go back and check the charts. Has it come out of a base after a deep sell-off? Don’t jump into something which has only been weak for a few days, there’s too much volatility in that.
This strategy won’t work with something like the recent price action on WAVES and RUNE. Wide candles are risky and imply too much FOMO or short squeezing. Stay away from those. (although they did signal the coming move if you were checking the weekly candle close on Monday morning so be on the lookout!)
Back to the main point: You can take a low leverage trade on one of these altcoins AND collect funding.
Head over to coinglass.com or some other historical funding database site and see if the altcoin has a history of negative funding. That is what you are looking for; a coin that will pay you to leverage it.
Why do coins rise with negative funding?
Usually, there is an on-chain incentive to stake the coin, and people holding the spot version are trying to protect their downside.
This is a good strategy too but it can be expensive and even harder to time than buying and holding for a swing trade.
LUNA from early March has been on a tear in price. Rising from 60 to today’s 115. In spite of the insane fud around the ponzinomics of how UST is collateralized, the market has been driving the price higher. All while holding LUNA on low leverage you would have been collecting sweet sweet funding in the process.
LOOKS is another ponzified altcoin with an interesting history. Created as a gas rebate airdrop for opeansea.io users, LOOKS has a staking program that has yielded returns in the thousands. Great, another leverage altcoin that requires hedging and is trending higher.
What about the liquidation risk?
This is where the optimal position size is important for your portfolio. You need to ensure you are not using more than 1x leverage on your brokerage account and second, the contract is perpetual. Don’t use futures that expire, this will screw up the strategy in a hurry as you won’t get paid and the contract could expire at a loss.
Where to find these plays?
Use the weekly screener on CoinRotator.app to find these low leverage plays.
1. Head to the advanced filter settings
2. Switch on weekly signals
3. Change the signal streak to 1–5 to find the freshest altcoins for this strategy.
If this sounds like something you’d like to try but are still not sure you got the gist of the strategy, join our discord where we talk about these kinds of plays and other trending strategies every day.