Welcome back. Matt here.
Today, we’ll learn the tricks of the trade for one of my favorite topics — NFTs!
If you’re familiar with stock trading, you probably know some of the most common strategies to find stocks in play — like tracking breaking news catalysts, finding sympathy plays, and looking for higher relative volume due to an attention-grabbing event.
Believe it or not, you can use some of the same strategies you use to trade stocks with NFTs.
That’s great news for traders like us — those who have nailed down a couple of patterns and want new opportunities to apply them to…
Stock Trading Strategies That Apply to NFTs
Let’s take a closer look at three powerful ways you can use your stock trading knowledge to succeed at trading NFTs.
1. Sympathy Plays
If you’ve listened to Tim Sykes or Tim Bohen at all, then you’ve probably heard about sympathy plays.
When a more expensive stock with a brand name sees positive price action, traders look for a lower-priced stock in the same sector. The goal is to potentially capitalize on the moves those lower-priced stocks may make. Those are called sympathy plays.
The same concept can apply to NFTs. Maybe you can’t afford the astronomical floor price (the lowest price you can get one for) of a Bored Ape Yacht Club NFT, but you can afford a Phunky Ape Yacht Club NFT.
Copycat NFT projects have sprouted up left and right, sometimes fighting with each other for copycat NFT dominion.
Moral debates about the practice aside, there’s definitely an opportunity out there for NFT traders with smaller accounts.
2. NFT Promotional Events
In real life, brands throw product launches, conferences, and other PR events to drum up attention for their companies.
NFTs are learning how to do the virtual version of that now. More and more NFTs are launching promotions to get more temporary attention on their tokens.
For example, the Bored Ape Yacht Club had an AirDrop process of its new ApeCoin. That meant that anyone who’d bought, sold, or held a BAYC NFT would get access to the ApeCoin.
Opportunistic traders sold upon receipt for a quick profit. You can kind of think of it as a stock dividend, but way cooler.
Also, famous entrepreneur Gary Vaynerchuk recently launched the VeeFriends Series 2 Friends List NFT project. Holders of his BOOK GAMES tokens that make the allocation list (32,000) will get the opportunity to mint Series 2 VeeFriends.
3. NFT Earnings Events
Stocks have a variety of earnings and funding news that impact stock prices when they’re released. It’s part of being a business.
Now that NFTs have more eyeballs on them, there are similar opportunities to drum up attention to an NFT’s financial health. Naturally, this can influence more traders to pay attention to the specific NFT.
For example, in the vein of mergers and acquisitions, Bored Ape Yacht Club reportedly looked to sell a $200 million dollar stake in their franchise, which is valued at $5 billion dollars.
News like that naturally drives more attention and more volume to the BAYC brand, and NFTs in general. Traders like to see a financially healthy company with plans to grow even more.
NFTs are also being included in charity auctions. This helps everyone involved: the beneficiaries of the charity, the types of people with deep pockets and wide connections that attend such functions, and the traders who catch some positive price action at the right time.
NFTs are becoming full-fledged businesses. They now hold many of the same functions a traditional asset class might. And they’re also being introduced to society in much the same way.
I don’t know about you, but I’m ready to get dressed to the nines to attend an NFT charity auction. Just kidding, I’m staying in my Austin casual shorts trading from home.
That said, it’s clear that it’s time to learn everything we can about this budding new section of the trading industry. And that’s why I created the Crypto War Room. It’s got the most up-to-date information on everything NFTs. If you want the complete lowdown on the crazy new world, you’ll get it here. Don’t miss out.