Choosing the Right Cryptocurrency for Trading

This guide is part of the “Intro to Crypto Trading” series.

There are so many different types of cryptocurrencies that it’s hard to keep track of them all. There are more than 20,000 coins and tokens listed on exchanges around the world as of writing this. Every day, new projects start up that promise to change the way we do business, play games, or use AI. For a trader, this creates too many options, too much noise, and the temptation to jump into whatever is trending is very high.

Bitcoin may be the main crypto, but beyond it lies an endless choice of altcoins. Some are legitimate innovations with lasting value. Others are thinly veiled cash grabs designed to extract money from speculators. 

The history of crypto is littered with examples of people who picked projects without research and paid the price. Terra’s LUNA collapse in 2022 is one of the most famous examples. It was a stablecoin, one of the top-10 cryptocurrencies in the world, worth over $45 billion, and it evaporated within days.

This is why choosing what crypto to trade is very important. Without this framework, it will be easy to fall victim to hype cycles, pump-and-dump schemes, and liquidity traps where you cannot exit without massive loss to your investments. The purpose of this guide is to give you a system. You won’t just follow Discord channel suggestions and influencer hype to find your investments. Instead, you’ll learn how to judge cryptocurrencies on your own. 

It’s not so much about finding “the best one” when it comes to choosing a cryptocurrency as it is about fully understanding the coins available. This article will go over each step of the process so you don’t make mistakes and can make choices which fit with your trading plan.

Pick your trading strategy

You cannot pick a coin until you know how you plan to trade it. The setup for a one day scalp looks nothing like the setup for a six month hold.

Trading styles

Day trading 

This really is more of an art than a science. When day trading you’re capturing small price moves over hours or minutes. Success requires an asset with high volatility and liquidity, because you need to get in and out quickly without paying the price in slippage. 

Bitcoin and Ethereum dominate day trading volume, making them attractive for scalpers and intraday players. Their deep order books ensure you can enter with size and still exit cleanly. Looking back in history during Bitcoin’s 2021 bull run, intraday swings of 3–5% were common, creating fertile ground for multiple round-trip trades in a single day.

Swing trading 

Swing traders operate on a longer horizon, days to weeks, focusing on medium-term trends. The best swing traders often come from stock trading with clear chart structures. They watch for breakouts from consolidation, trend reversals confirmed by technical indicators, and coins reacting to news catalysts. Solana’s rally in late 2021 offered multi-week swings where traders could ride momentum from $30 to $200 without being glued to screens 24/7.

Position trading

This is where fundamentals matter more than short-term charts. Traders hold positions for months or even years, seeking to capture broader trends. Bitcoin and Ethereum are the most common choices, with strong institutional support and deep liquidity. 

Some altcoins also qualify if they have real world use cases and strong communities. For example, Chainlink became a position trade for many after proving its value in providing oracle services to DeFi protocols.

Assessing your risk tolerance

Your personal risk tolerance will also play a key role in which cryptocurrency you trade.

• Conservative traders: Stick to well-known cryptocurrencies with a large market cap, like Bitcoin, Ethereum, or other well-known names. These coins have the most liquidity, the clearest tokenomics, and the least chance of disappearing overnight.
  
• Aggressive traders: Tend to favor altcoins with a market cap of between $1 billion and $10 billion. These can move 5x or even 10x, but they also have low liquidity, high volatility, and sometimes hard-to-understand fundamentals.
  

You should base your decisions on how much risk you can handle and how well you can handle drawdowns. A lot of traders fail not because they choose the wrong crypto, but because they choose one that doesn’t match their trading skills. When volatility goes up, a conservative trader who is chasing small-cap coins is likely to panic, which will make them leave the market at the wrong time.

This initial step is all about managing risk. The size of your position, your stop-losses, and your exit strategies are just as important as the coin you choose. A trader who sets clear stops and only risks 1% to 2% of their money per trade can make dozens of bad decisions and still be profitable. If you overinvest in a speculative altcoin without a plan, you could lose your whole account in one trade.

Key factors for evaluating cryptocurrencies

When you know your style and how much risk you can handle, the next question is which coin deserves your money? That’s where fundamentals come in. Price charts only show you what already happened, but fundamentals like liquidity, market cap, tokenomics, and the strength of the team, tell you if the coin has the depth and staying power to support your trade long term.

Liquidity and trading volume

Liquidity is the ease with which you can buy or sell something without significantly affecting the price. In highly liquid markets like Bitcoin trading, a $1 million order barely moves the chart. In illiquid small-cap altcoins, the same order could swing the price by 10% or more.

Trading volume is the measure of how much of the asset is exchanged over a given period. High trading volume means an active market where buyers and sellers are constantly trading. Together, liquidity and trading volume determine how safe and practical it is to trade a given asset.

Why does this matter? Because low liquidity creates slippage. Imagine entering a small-cap coin with a $100,000 position, you will soon learn that selling it later pushes the price down 5–10% against you. What looked like a profitable trade becomes a loss purely because the market could not absorb your order.

You can track liquidity and volume on aggregators like CoinMarketCap or CoinGecko, or by looking at the order book and volume stats on your chosen exchange. Always compare across exchanges too, a coin may show high volume on a small offshore exchange, but if it is not available on regulated platforms, that liquidity may be unreliable or even manipulated.

Market capitalization

The market cap is easy to figure out, here is the formula: price x circulating supply. Market cap helps traders understand what to expect from a coin/token. It’s one of the most important things to look at when judging cryptocurrencies.

• Large-cap (over $10 billion): This includes Bitcoin, Ethereum, and sometimes other coins like Binance Coin. They have a lot of liquidity, a lot of institutional participation, and a lower risk of total failure. They are less volatile, which makes them safer than small caps.
  
• Mid-cap ($1–10 billion): This group includes well-known altcoins like Solana, Cardano, and Avalanche. They weigh the risks against the chances of growth. In a bull market, mid-caps can double or triple in value, but if they don’t get enough users, they could go out of business.
  
• Small-cap (under $1 billion): These are the risky investments. Some small-cap altcoins have grown so much that they are now in the mid- or large-cap range, which has made early traders very rich. But most of them fade away, and their low liquidity and high volatility make it hard to trade.
  

Market cap is also a signal of maturity. When Bitcoin broke through $1 trillion in February 2021, it cemented itself as more than just a speculative asset, it started being treated like digital property by institutions and governments.

Knowing the market cap helps align your expectations. You cannot reasonably expect Bitcoin to 100x from here, but a promising small-cap altcoin could. 

Project fundamentals

If you trade for short periods of time, fundamentals can still help you stay safe. A project with a strong community, a clear use case, and a team that can be trusted can handle market shocks better than a meme coin that doesn’t have any of those things.

• The whitepaper and real world use: A whitepaper is like a map for a cryptocurrency. Strong projects show a real problem and a clear way to solve it with technology. The original Ethereum whitepaper from 2013 introduced the idea of smart contracts, which later became the basis for whole industries like DeFi and NFTs.
  
  • Bitconnect’s whitepaper, on the other hand, made vague promises and didn’t have any real technology behind them. This led to one of the most famous failures in crypto history. Always ask this question: does this coin solve a real world problem?
    
• The community and the development team: The people who are working on the project are very important. Make sure the team has real credentials, experience in tech or finance, and is still active. It’s a big red flag if a team disappears after they launch. The community is just as important. Twitter, Discord, and Reddit groups that are active and involved often help projects get more people to use them and stay relevant. People thought Shiba Inu was just a meme coin, but it got popular in part because of how loyal the community was.
  
• Tokenomics is the study of how a coin’s supply works. Is there a set amount of coins, or can they add more as desired? Are tokens locked up and slowly released, or will insiders flood the market when the vesting schedules are up? You will find most of these parameters in the whitepaper, but other sources include on-chain data, exchanges and market data.
  
  • For instance, Bitcoin’s halving events, which happen every four years and cut mining rewards in half, have caused supply shocks that lead to big bull runs in the past. On the other hand, tokens that are inflationary (with supply growth) tend to lose their value over time.
    

A quick look at tokenomics can help you stay out of trouble. If a project has only given out 10% of its tokens to the public and the rest are held by insiders, the prices could drop by a lot when those tokens become available. If you don’t pay attention to this, you will get caught off guard when your positions lose money even though the charts look good.

Technical analysis in crypto

If fundamentals help you decide what crypto to trade, technical analysis tells you when to trade it. Timing is everything, and charts are your best friend here.

Volatility

Volatility is what makes crypto exciting. In traditional markets, a 2% change in a day is big news. But in the world of cryptocurrencies, prices can change by 10-20% in just a few hours. This is an opportunity for traders like we have never seen before.

Day traders love high volatility. You can use tools like the Average True Range (ATR) to figure out daily ranges and Bollinger Bands to see if prices are getting too far away from their mean (average). Volatility is also good for swing traders, but they look for moves that last for several days instead of just sharp spikes. 

Bitcoin’s rise from $3,850 in March 2020 to over $64,895 by April 2021 is a well-known example of volatility in action. Traders who were able to predict when volatility would happen had many chances to make life-changing profits.

Analysis of charts and past performance

Technical analysis is very important when it comes to working with charts. At a very basic level, traders look for:

• Trends: Is the asset going up, going down, or staying the same? Moving averages, like the 50MA or 200MA, can help you see these trends clearly.
  
• Support and resistance: S&R are important price levels where buyers and sellers enter the market. One of the oldest trading strategies is to buy when prices are low (at support) and sell when they are high (at resistance).
  
• Momentum indicators: RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) are two types of momentum indicators that can help you find overbought or oversold conditions and changes in momentum.
  

Good traders don’t rely on a single indicator. You want confirmation. If an altcoin rips through resistance on heavy volume, and RSI shows momentum while MACD flips over to bullish, that stack of signals builds conviction for a trade entry.

History matters too. Ask whether the coin has survived crashes before. Assets that recover from brutal bear markets show durability, and that resilience is what traders look for when choosing long-term holds.

The exchange’s availability and trading pairs

Availability is a useful but often ignored factor. If a promising coin checks all the boxes for fundamentals and technicals but is only available on a small exchange with low liquidity, trading it could be risky. Major exchanges like Binance, vTrader, Coinbase, and Kraken usually have the best opportunities, and they usually have a lot of trading pairs.

Which pairs are available for trading is also important. Tradable assets trade in pairs. It’s easier for beginners to trade coins that are paired with fiat (USD, EUR). Sometimes the only way to access smaller altcoins is by trading through Bitcoin or Ethereum first. 

This adds an extra layer of risk because both assets can move quickly in price. If Bitcoin drops while you are in the middle of converting it into a small altcoin, your overall position takes a double hit. Always account for this extra volatility when planning your trades.

Checklist for picking your next trade

Go through this short checklist before putting money down. It stops you from chasing noise and helps you focus on setups that are worth the risk.

• Setup quality and strategy: Does the trade match your style and time frame? Do you have a clear entry, target, and exit point? Don’t confuse short-term scalping with a swing or position trade. Mismatched setups usually backfire.
  
• Liquidity reality: Can your size be filled without heavy slippage? Is the order book deep enough and are you on a reliable exchange with fiat or stablecoin pairs?
  
• Market environment: Is this coin trending with the broader market, or fighting against it? Is Bitcoin growing or falling? Even the best setups fail if you trade against the dominant trend.
  
• Risk-to-reward: Based on your entry, stop, and target, is the potential reward at least 2–3x the risk? If not, pass on this trade and wait for a cleaner setup.
  
• Catalyst and context: Is the coin trending with the broader market (altcoin season), and is there a catalyst to drive the move? Is there news, an upgrade, or an event that could drive momentum?
  
• Technical conviction: Do you see multiple confirmations (trend, support/resistance, indicators) that line up? One signal is noise, multiple stacked signals create better odds.

Running this checklist only takes minutes, but it separates good trades from impulse buys that can drain your account.

Build your watchlist, trade your plan

There are thousands of cryptocurrencies to choose from, so trading them without a plan is like going to a casino with your eyes closed. The way professionals and amateurs do things is often what sets them apart. Professionals know that trading volume, liquidity, market cap, tokenomics, and volatility are all very important. They use a checklist or something similar to get rid of noise and only look at assets that fit with their trading strategy.

Unfortunately, there isn’t one cryptocurrency that is the best to trade. Day traders who need a lot of liquidity might do well with trading Bitcoin, while swing traders might do better with altcoins. No matter what you’re trading you want to look at the basics first, such as the whitepaper, development team, and community. 

Start to make a list of assets that meet your criteria, call it a shortlist. Update it often as the market changes. Most importantly, stick to your plan instead of following the hype. Treat every trade as a calculated decision. Use a structured analysis process and disciplined risk management to stay in the game and grow your account.

Ready to put all this into action? Open an account with vTrader and get direct access to Bitcoin, Ethereum, and hundreds of altcoins with 0% trading fees. They’ve got fast execution, tight spreads, and a trusted platform built for traders who actually want an edge.