There are two main ways to understand the altcoin markets, forecast the future direction of price movements and therefore pick good investments: fundamental analysis and technical analysis.
Fundamental analysis attempts to determine the real value of something in order to determine whether it is undervalued or overvalued. When it comes to trading altcoins this is more difficult, because they are generally very early in their development – so their value reflects potential future success rather than their current position. You can still look at a coin’s level of adoptions, the strength of the network, number of transactions and so on, but this will only take you so far. To a great extent you must rely on estimating the potential size of the market in the future and the chances that this potential will be fulfilled.
Technical analysis uses price and volume data, and seeks to find patterns and indicators which can be used to forecast the future direction of price movement. For more information about how this works as well as the latest analysis for both Bitcoin and some of the top altcoins please take a look at our page on technical analysis for Bitcoin.
Cryptocurrency markets are highly news driven. You are trading assets in a very fast paced world of bleeding-edge technology, where new developments are released every day and the political / regulatory environment is still uncertain. If you want to make money trading altcoins, therefore, you really need to make sure that you keep yourself up to date about the latest news and developments, both for the coins you are trading and for the industry as a whole.