One thing pretty much all cryptocurrencies have in common is that they get to a point where they get pumped – and usually they get pumped pretty hard. You can look at any chart whether it’s BTC, ETH or recently BCH or any other altcoin. Here’s how such a chart looks like:
There are two “softer pumps”. You see how it is growing in a pretty short period of time. It gets pumped once and then is moving sideways and then getting pumped again. In order to make this strategy work you have to find the price before the pump and then enter the stage. Maybe you will never get to the point where the coin hits the pre-pump price but usually they bounce back sooner or later to the same level they were before the pump.
So why should go enter now after losing lots of value? The reason is that such a pump may show the potential of the coin, what the market believes it can be worth. There’s no guarantee that you will reach alltime highs again. It may happen in a couple of days again (then be careful as it may just be another pump and you should get out sooner) or weeks, months or years. That’s what you are looking for. You want a coin that has proven to reach a certain price level already, get in as cheap as possible and then hold until it’s the right time to sell again.
As already mentioned, the quicker it bounces back the quicker you should think about selling. But having a coin that is constantly growing to reach its alltime high it may be possible that it keeps on growing and you should stay in there.
However, here are a few words of caution: This strategy is very specific, you need to find coins that have been pumped already and lost all the gains again. So out of 100 coins there may only be like 10 or 20. This is not too bad and the reason is that the cryptocurrency market was hit hard by speculation and pumping prices of pretty much all coins.
But you are not speculating, you are investing. Thus you want to stay in there for quite some time showing 100%+ returns with most of your coins you hold. So it’s crucial to pick coins that really have a mission that do not exist just for the sake of it. You need to believe in this project and trust that it will solve a crucial problem. Ideally you have a whole team behind that is working on it 24/7 and is also backed by venture capital. You are looking for early Ethereums, Golems, Moneros and such. Avoid coins where you are unsure about their purpose and their team. Even if the opportunity looks great (like having the chance to enter with pre-pump prices) you should stay away or at least be very cautious (having only a very small percentage of your portfolio in there).
Currently the best place to trade with this strategy is Bittrex.