Shorting is stressful

Maybe i’ll learn… maybe?

There are so many decisions to make trading crypto. I thought that it was about time to pull some money out, not because of any specific market analysis, more just on a personal risk level sense. However, having done that, I then regretted it, and asked myself what if… i.e. how annoyed am I going to be when BTC gets to £18,000 / $25,000 versus the $14,000/£10400 it’s at now.

So I went back in, or at least I went partially back in, and made a little profit. However, I then decided to go back in with the rest of the money I left out, and now i’m underwater on that bit… so effectively I’ve shorted BTC and am waiting for it to drop. Slightly scary given it looks like not going quite that low at the moment!

Ah well… fingers crossed.


Getting it right all the time. Accepting variance to target!

You may have seen that I posted on social media a link to an article about how Crypto is affecting the mental health of those engaged in the space. If not here it is again:

https://www.cnbc.com/2018/01/09/managing-the-stress-of-owning-bitcoin-and-other-cryptocurrencies.html

The particular thing that I struggle with in this space is getting it right! By that, I mean the ability not to leave money on the table. Cognitively I can perfectly well accept that it’s impossible to pick the perfect buy in point or sell point, but nevertheless it’s stressful.

I suspect that other people have different strategies to cope with this, for example some people seem to work predominantly in BTC value rather than fiat. It seems perhaps better in some way to miss out on 0.01 BTC rather than a more tangible £100 which you know you could have done something with. Ultimately though, it’s all an illusion. It’s never possible to get it bang on without an element of luck, so you have to try and internalise that and accept that you will have missed out on a few percent at the bottom and a few at the top, but that in then end if you keep making good decisions based on logic and analysis (and frankly sometimes a bit of gut feeling) then you will come out ok.

Of course the other thing is that if you really can’t cope with losing the money, then you shouldn’t be doing it, but that’s a very hard thing to get your head round, because no matter how much you’ve put in originally, once it’s gone up, it’s very hard to see it go down again as it inevitably will! There will always be that feeling of If and But and Maybe! 🙂

Try and keep sane, and enjoy the learning exercise, and don’t beat yourself up when it inevitably goes wrong. Learn the lesson and have another try, and practice decent risk management (i.e. don’t risk too much on any one endeavour).

Happy trading.


Timezones and time periods in Crypto, a lesson learnt

Just a very short post, but one thing I’ve learnt is to be extremely careful with dates and time zones in Crypto analysis. There is so much analysis out there and validating the time periods that are being talked about is critical to making sure you don’t jump the wrong way. People talk about the trading session and also sometime mention actual times. Given how quickly things move unless you properly validate where they are posting, or the time they are referring to to predicted move can be over before you even jump on it.

If you’re getting into technical analysis and trading this is quite a useful basics post.

 

 


What Exchanges do I use and why.

I’ve been asked a few times recently about which exchanges I use so I thought I’d pull this together.

At the beginning of my Crypto journey, I signed up for a a lot… in fact I had no real idea why I’d use one over the other and even how to compare! Now things have settled down to a main pair plus supplementary ones as needed.

The main pair are Bittrex and Binance.

Both have a good reputation and have been around a while (albeit that a while in Crypto isn’t very long). Binance is the newest as it started up in 2017.  Anyhow, both seem to be pretty solid performance wise. In general I prefer using Bittrex because I like the interface better, and also because Binance has a weird thing going on where I can’t seem to clean out the entire amount in a wallet. I.e. when you sell you can only sell for example 1.69 LTC. even if you’ve actually got 1.69375849. Realistically that’s not loads of money now, but it’s not clean and in the future who knows, that could be lots of money! Over all though, between the two they have the majority of coins that I would want to trade.

One caveat is that very recently both exchanges (likely very many in the space) have temporarily paused registrations for new users. Binance is now back open again, but I think Bittrex is perhaps still paused. This is really to do with the massive influx of new users to the Crypto space and the need to increase capacity. I don’t see this as an issue for these exchanges.

Of course something the more established exchanges don’t always have is all the very latest coins, so recently I’ve also been on others:

These new ones often are a little more ropey and I’ve certainly been hit a couple of times when I wanted to trade but couldn’t because the wallets were down on the exchange. In the end that’s the added risk that comes with getting in early to some of these new coins.

In summary

When choosing an Exchange, I would look at the following:

  • Reviews / Reputation
  • Time in market
  • Performance
  • Coins available

Realistically you may not get everything, so test the deposit and withdrawal functions with small amounts. In the end if you want to pickup a new coin as the market builds you need to get on some dodgy small exchanges. Beware and don’t risk more than you can deal with losing.

Finally, the majority of times you need BTC (or ETH) to buy coins. I.e. most trading pairs are either in BTC or ETH. Therefore where do you get your BTC to start with.

Many people i.e. a large percentage of the market seem to go for Coinbase. However being in the UK, I have tended to deal with BitBargain.co.uk and Coinfloor.co.uk. Both have pros and cons.

BitBargain is very efficient and has been around ages. They are essentially a marketplace / broker, so you can generally transfer money direct from your bank account to the seller. There is however around about a 7% mark up on prices compared to the published BTC price. Coinfloor on the other hand is closer in price to the published BTC price as it’s an exchange. On the plus side it allows GBP fiat transfers using the SEPA program. This means that you can send fiat direct to the exchange and then buy BTC. There are of course charges and there is a minimum limit of £2500 so only really useful for bigger purchases. On the plus side this is a place you can transfer BTC and sell to fiat, if you’re brave enough to short the market or if you need to take some profits out to fiat.


Where to store your coins?

Sadly at the moment there is no one simple answer to this and frankly perhaps there won’t be for a while.

For the mainstream coins like BTC, ETH, LTC and a few of their forks e.g. ETH Classic, that I’m looking to hold long term, I’ve got a Trezor wallet. This is one of the two well known hardware wallets, the other being a Ledger, that allows completely offline storage and relatively easy access. It has the benefit of giving you complete ownership of your keys, but also significant protection. It obviously isn’t all that agile, though, given that you have to send money to an exchange to buy something new, and incur fees when you do that. In addition, not all coins are supported

The other extreme is to store everything on an exchange. This is frankly a pretty terrible idea unless you’ve not got much and don’t mind losing it. We’re still in an unregulated space here, and frankly exchanges tend to go away sometimes, most often taking a whole bunch of money with them! It’s perhaps not as common as a while back, but there have been instances in 2017.

So is there a half way house? Well yes. These range from online wallets, where you own the keys, to online wallets where you don’t (effectively like most exchanges) and then there are desktop wallets, where you basically sync down the whole blockchain of a coin and own the keys. These are a good alternative to a Hardware wallet, although if your PC is compromised they are pretty easy to remove funds from and there is plenty of malware out there just looking to do that.

Realistically then you need a strategy which is likely different for different coins. I tend to keep a small amount, maybe 0.1 on an Exchange like Bittrex which is relatively reputable, so I can day trade. I then keep long term hold coins on my Trezor where they are supported. Finally, I run a number of desktop wallets for things like NEO, NAV, CLOAK, where I want to benefit from the staking of those coins (a reward for running part of the network). These are currently on a server machine that I use for other things, but I’m likely to move them over to a designated Crypto machine which is never used for downloading or browsing just to minimise risk.

 

 


Some market observations

A very short post today as it’s the first day proper back at work and I’ve a few other posts on the go in the background. Anyhow, it’s been an interesting couple of days.

Over the weekend, BTC rallied and reached £12,000-12,300 a few times. However today there has been a major drop of £1500+ down to the £10,600 mark before a little recovery.

It seems most likely that this was caused by the news from China that they were looking to start moving Crypto mining out of their economy. Essentially removing subsidised power and other support, and asking local governments to begin an orderly shutdown of companies acting in this space.

What I find interesting, is that logically when BTC drops in price Alts in comparison should go up. However, what seems to happen is that Alts also take a massive hit, followed by a recovery against BTC. So it seems that there is a boost to Alts when BTC drops, but not before everything drops first. As always, timing is everything.

Anyhow, it will be interesting to see how this pans out. China have been moving in this direction for a while. The first time in my experience in Crypto was the restrictions on ICOs which gave NEO a massive hit and cost me a chunk of money (only because I panic sold…). It will be interesting to see how the market recovers. There are other places to mine so medium term I doubt this will cause a major dent, however it maybe will accelerate the trend towards Proof of Stake coins versus Proof of Work. More on that on another post soon.


Trading lessons learned (or perhaps learning!)

One thing that of course everyone kind of knows, but doesn’t always act on is that trading is a very risky proposition. There are simply so many reasons it can go wrong.

For example, as I mentioned the other day I’ve just got into Raiblocks. However, realistically, at least in the short term I got in a few days late. One of the major challenges I find is that trading effectively seems to need more time than I really have. I.e. the ability to not only research entry and exit points, but also to have time to actually act when you need to, rather than that few days late (which seems to be my normal at the moment). Another example of this issues is Kin. A few days back that looked like a good bet, it had recently moved into the Coinmarketcap top 100 at 4 Satoshi. Sadly at that point I did nothing… or rather I did something else at the time. The next morning it was at 9, i.e. over 100% growth.

On the plus side, one of the lessons I’m learning is to now hold off jumping in late. Agreed that doesn’t always work, i.e. you may lose out on a further jump, but realistically these things are normally triggered. The error I’ve made with Raiblocks is misunderstanding that the trigger that took it from 10000 Satoshi to 24000 Satoshi was most likely getting listed on a couple of bigger exchanges. Binance and Kucoin. Sadly I missed the initial bump and then tried to catch the bump from the listing, although it had essentially already happened. With BTC jumping up in the last couple of days, that’s left me under water again. Another expensive lesson to learn!

My other challenge is not being strict enough / structured enough. I.e. actually my first investment into Raiblocks was actually reasonable even now, 0.1 BTC at approx 17500 is less than 5% of my portfolio and was a reasonable entry price albeit not a great one. I then followed that with 0.2 on a whim chasing the entry on the bigger exchanges. Once again impulsive and without a clear plan, plus taking it over my 5% risk limit that I like on any one Alt coin.

Luckily one of the things that does seem true is that so long as the fundamentals are good, i.e. the project is run by quality people and has a decent roadmap, things will come back in time, and therefore panic selling has the potential to lose you money permanently. Unfortunately I’ve learnt this all too often, with NEO, Binance and others making big gains recently, when sadly i’d already sold as I figured BTC would keep on going up a few weeks back, causing Alts to drop further. I think therefore this time, I will simply wait, at least until I’ve recouped some of the losses, and then rebalance, to free up some BTC for other investments.


The question is how much are you willing to accept for a Bitcoin?

Yup, dumb question right… obviously as much as possible. But what’s possible?

How many of you out there are sat watching; it goes up, it goes down, it goes up, it goes down a lot, it goes back up a lot etc?

I’m coming to the conclusion that what matters is what will you accept for a Bitcoin at this point in time, after all, there is every chance that at some point in the future you will be able to get both more and less than what it’s worth now, but until you actually sell, then it’s all meaningless anyway, because, unless you’re a “true believer” and think that it will actually become a global currency, or unless you’ve already made a ton of money from this and don’t need to care, then actually what you’re willing to accept now, is really all that matters.

Converting to fiat currency, to take some profit, pay some bills, or simply re-invest elsewhere, means potentially giving up thousands in the future, but it does at least bank real money that can make a difference now, rather than living on a knife edge constantly wondering, will the next drop be a big one that will take ages to recover from.

On the other hand… if you just wait another month, it could double again 🙂 funny how much this is like gambling!

 


Thoughts on trading

So one of my aims this year is to improve my trading. I.e. figure out a way to make reliable gains rather than accidental ones! All whilst minimising stress :).

To that end i’m going to start looking at some of the courses on the site here: https://www.babypips.com/learn

It’s one that has been recommended a few times on the Arcane Bear site/forums/YouTube which is another site I’ve got into recently.

As it stands here are a very few things I’ve learnt so far:

  1. Sometime gut feel is good, (Other times it isn’t). You need the science to go make that be useful.
  2. It’s really hard to jump on a pump… i.e. once it’s pumping and you’ve noticed, most times it’s too late.
  3. Sometimes you’ve got to accept some losses, although I find that hard!
  4. The Fibonacci Tool is really useful to get an idea when to take profits and how to avoid jumping on a pump just before it dumps.
  5. Try not to get caught up in what could have, should have etc. etc. We can all say I wish I’d bought BTC five years ago, and the same applies to I wish I’d put X amount on Y coin. At this point, I’m happy if I can enter a trade make some profit and cash out. Yes I might not make as much as I could, but it reduces stress and makes some profit… As I learn more I will hopefully get closer to the margins to make the most of each trade.
  6. Really don’t risk more than you can cope with… and it’s hard to know what that is until you lose it. One thing I’ve found is that at the start, I was looking at 0.1 BTC as not a lot… after all 0.1 doesn’t sound much! Then again… it’s now £1000… and that’s a new sofa (as my wife likes to point out!)

I will keep updating this, or more likely create a specific page for trading tips as I learn.

Cheers

Nathan