About a year ago one of my non-trader friends got really excited about Bitcoin, and started telling me about how it was going to be the next big thing for trading, and blah blah blah.
I said, well, you don't really have good trading platforms for Bitcoin yet, and the exchanges are immature, and it's all immature, so why would you want to trade Bitcoin in favor of some FOREX pair like USDJPY?
Well, the answer he gave me was "because Bitcoin is cool."
So later, last November (2014) I met some guys at the local Bitcoin Meetup, dev types, who had been in on Bitcoin from back when it was just one dollar. And they told me some wild tales about making fortunes then having it all stolen, etc. Anyway, I got the idea that yeah you could have made a lot speculating in this one particular digital currency with the right timing a couple years ago.
But nobody answered the question as to why you would want to trade Bitcoin instead of, for instance, USDJPY now.
Nevertheless, I did learn about the best online wallets and about how to transfer money between banking systems via Bitcoin as a non-geeky person using rapidly maturing operators such as Circle.com
Fast forward a year.
I've got my international money route all set up and I have been happily transfering money back and forth internationally. This is very cool, since my local bank here charges me $100 to make transfers plus a spread, plus they make me fill out paperwork for two hours in microscopic Chinese characters. Usually I get a form filled out and make a mistake over one stroke in a Chinese character and the clerk will pull out a new form and make me fill it out again. Agony.
With my new Bitcoin route I can move money from a brokerage account in one country to one in another with a few mouse clicks and very small fees.
So I have some skin in the Bitcoin game, so to speak, and I had been getting pretty comfortable making transactions purely for the sake of international FOREX transfers. So, if Bitcoin was going up, I would hold it overnight or a couple of days, then go ahead and complete the transaction, smile over a little profit and have my fees covered, and it was all good.
OTOH, if Bitcoin was going down, I would make the transfer as quickly as possible and not sweat it.
THEN my local exchange added a nifty trading platform plus short selling with 4.5 to 1 leverage. Now it's getting interesting.
I made some very small trades just to get comfortable with the platform.
Then when Bitcoin broke out of its range for the monster rally this past week I was locked and loaded. Made some good trades all the way up and almost got top tick. Then scalped it on the way down. And today I am doing some more scalping.
As a trader nowadays I usually make month-long swing trades in options or vol products, so this was a new experience for me, sitting there staring at the 1 minute BTC chart. Kinda fun.
I have spent the past year of my trading apprenticeship focused almost entirely on volatility, both in terms of IV in options and also VIX and other indexes. I am all about volatility. And then I was watching Pete Mulmat's most excellent futures show "Splash into Futures," the other day, and it's just a throwaway line, he's talking Euro futures, I think, and he says
"In FOREX, a 10% move is a huge move."
Well, duh. I never realized that, not being a FOREX trader.
So now I get why you want to trade Bitcoin.
As a new FOREX asset class, it's got wonderful volatility. It's like trading UVXY, it lights up the board like there's no tomorrow.
The following user says Thank You to suko for this post:
Interesting, I was interested in bitcoin since it was 30 buck a crack. But the problem with exhanges and shady dealing kept me off it. If the volatility is the most important factor that drives you to bitcoin, then compare it to NASDAQ small caps, where price moves 100-500% on pumps and crazy news and then drops. People are killing it there, all while using regulated brokers, established platforms and actual stock exchange.
Trade to live. Not live to trade.
The following user says Thank You to xelaar for this post: