Hey, I know some stuff about this.
It's not a "stock" conversion play but a currency conversion play. It happens mostly with trading foreign currencies. Large corporations do it often when they have operations other countries. For example, if a company knows it needs to buy a large amount of product from a specific country they may transfer dollars into that country's currency to secure the price they've paid (in USD) for the product they need. Investors do it if they think one country's currency is due for a rise or fall. E.g., The Euro just became cheaper to the Dollar. If you think this won't last (and that the Euro's price will rise to the Dollar) you could buy some Euros now (while the Dollar is strong), hold them until the Euro is more valuable against the Dollar, and then buy Dollars with those Euros in the future.
You could do the same with alt currencies.
My advice:
- Focus on just two alt currencies - Bitcoin and Litecoin or Bitcoin and Dogecoin, etc.; Keeping your focus small will allow you to follow the trends easier
- Focus on determining which alt currency is currently undervalued (or poised for a rise) due to some news or other factor
Once you've found the currency that's currently undervalued you can shift your BTC to that currency, hold it while it rises, and then buy back your BTC. The problem is that all alt currencies are VERY volatile. As I'm writing this I'm realizing that it's easier to do this with buying BTC with Dollars...because Dollars are very stable.
Some people refer to this strategy as "arbitrage", it's not. Arbitrage refers to a gap in value between two things because the market doesn't have all the information it needs to value the "thing" properly.
Good luck with your trading!
