Strategies that seem to work in crypto trading - futures io
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Strategies that seem to work in crypto trading


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Strategies that seem to work in crypto trading

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  #1 (permalink)
pisco
Vienna
 
 
Posts: 1 since Apr 2013
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Hello guys,

any suggestions for potential strategy ideas that seem to stick within the crypto-currency market.

From my first analyses it seems to me that the market it highly driven by news announcements.

Any suggestions from your site?

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  #2 (permalink)
 rleplae 
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pisco View Post
Hello guys,

any suggestions for potential strategy ideas that seem to stick within the crypto-currency market.

From my first analyses it seems to me that the market it highly driven by news announcements.

Any suggestions from your site?

Crypto-trading seems difficult to me, for the reason that i experience, for example
that it is a lot easier to buy BitCoins than it is to sell them (and be sure to get other currency
in rerturn, often the exchange will ask for ID verification, etc..).

Trading in my understanding is to take advantage of price fluctuations, while it is easy to
see the fluctuations and create a system, it's less easier to actually transact in a fluent automated
way...

Also there is not central clearing for crypto currencies, there are different parallel exchanges
which all add to the complexity..

A way around maybe another financial instrument that follows the price of the crypto currency
but the liquidity might be an issue...

just my two cents

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  #3 (permalink)
 TMCap 
Edmonton, Canada
 
Experience: Intermediate
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Posts: 16 since Jul 2017
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pisco View Post
Hello guys,

any suggestions for potential strategy ideas that seem to stick within the crypto-currency market.

From my first analyses it seems to me that the market it highly driven by news announcements.

Any suggestions from your site?

I can't offer any suggestions for actively trading the crypto's as I have a pretty limited exposure to them. Beyond buying some Bitcoin long ago and just filing it away, I am not active in analyzing the various crypto's.

I tend to view them as more of a store of value (think buy and hold dividend paying stock, brick of gold, etc) that someone may want to have a small amount of exposure to, rather than than something I would be inclined to trade actively. The reasons outlined by rleplae represent why I stay away from it for trading purposes. You may come up with a great system, but if the environment within which you trade limits the ability to reliably execute that system, your risk increases and system reliability decreases.

My two bits anywhoo.

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  #4 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

I haven't traded bitcoin yet. However, some strategies that might work:

1. Trend following on a medium time frame chart, such as weekly.
2. Treating bitcoin as a risk asset or corollary to the S&P 500 or NASDAQ. Basically, if the market is up, buy bitcoin as your risk asset. You would need to verify/check correlations. But, in general, you might look at various spread combination.
3. It is likely bitcoin will decline when the overall market pulls back. This is assuming bitcoin is treated as a risk asset and not an alternative store of value. I mean, right, if you need to sell something, bitcoin seems a likely candidate as it is more difficult to articulate and justify holding it. However, not really sure how you might profit from any such relationship, if it exist. One solution would be to look for bitcoin proxy companies to short, in the event of a decline, with the anticipation that they might fall harder/faster due to the more speculative nature of their business. You might also hedge by buying trading companies that handle more traditional transactions.

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  #5 (permalink)
 CSC1 
Vancouver, Canada
 
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Hey team I've been quiet for a while but i've been getting really into bitcoin trading on a short term basis. I think if anyone is an auction market trader on the futures side you can do very well trading cryptos using the same ideas. It's a very emotional market, lots of over-leveraged players on both sides. I'm using volume profile every day to pick my levels.

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  #6 (permalink)
 mokum 
Pattaya Thailand
 
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Did some reading into mining difficulty and eventual price discovery.
Only if i can find some good parameters for the fact (my thinking) that, if the mining difficulty increases the price is likely to decrease.

But its not that easy, and time limits me a bit.
(but there is a lot of research material around, hashrate, time between blocks, difficulty adjustments, block reward ect.)

Most of the mining power (of bitcoin) is now centralized in China/Mongolia, and the company Bitmain, is builing a huge farm in Karamay China.
So more or less the idea of Bitcoin was decentralization, is becoming centralized now (money talks)

If the Chinese government pulls the plug, or an outside disaster (like earthquake) hits the area where the mining farms are
then i foresee a huge decline in the value of bitcoin. But that would be a long term strategy.

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  #7 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

I am a traditional ES trader. Bitcoin is trading a lot like ES with more volatility and more trendiness. It is trading really technical so far with great trading opportunities. I think risk is high but so far the markets have maintained order in the sell off. I think one advantage might be that it isn't leveraged by design. Maybe too obvious but the common patterns the last several days has been major sell offs overnight as China weighs on traders and then relief rally when U.S. traders wake up. Buy side book has been heavy on the sell off, as well.

I haven't been able to trade actively yet so I'm not sure whether or not the strange positions sizes will be a problem.

I would caution against any sort of averaging in or anything like that as there are many reasonable arguments why it could go to near nothing. However, my bias suggest more upside.

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  #8 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

Right now, it looks like I've identified that NK risk is contributing to bullish bias for Bitcoin. Anticipate some rotation out of equities next week. The NK risk is not the only factor by any means.

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  #9 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

The fake depth at 4395 is really obvious. I predict 4395 to be taken out (buy side) shortly. Some HFT or idiot is flashing huge fake size. The buyers are going to take all this out. Target is still a good ways higher.

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  #10 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011


Something to watch might be the options implied volatility for NVDA and AMD as clues to (1) success of bitcoin gold and (2) future implied volatility for bitcoin. Not an options guy/expert so terminology might be wrong but buying a straddle (break out) in these stocks while perhaps selling volatility in greater market might offer a sort of hedged approach.

Another strategy for consideration is buying bitcoin and buying puts on NVDA. The idea being that bitcoin has greater potential to rally while the puts may provide some protection in event of a sell off. A secondary advantage, if you get assigned you are able to sorta trade the bitcoin via the put for the stock.

Of course, the details matter and are critical with ideas like these. I have not had time/ability to do a full analysis of these ideas.

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  #11 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

Right now, it looks like prices are melting up due to upcoming SegWit 2x event. My very basic forecast suggest 50% appreciation capability near term (not exactly a prediction but more of a possibility I keep in mind). One possible strategy would be to place a portion in BTC/USD with leverage and sell before the event and to place a smaller portion in an offline wallet. Because of possible hard fork event, institutional investors will be forced to buy and hold through the event. One can anticipate a rapid appreciation before the event with subsequent sell off or range bound action after the event.

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  #12 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

While I do not believe in Bitcoin per say, I think it is a good time to be holding it because of the following:

1. SegWit 2x. If you don't hold it before you won't get it. It is likely that either B1 or B2 will be the dominant coin. If you're an investor, you have to be holding before this event. You cannot sell. You must be invested.
2. SegWit 2x Failure. If Segwit 2x doesn't materialize, then provided that a consensus is reached for increasing network processing speed then it is still a very bullish event. More processing speed equals more networking effect.

The basic thesis is that this is a bullish event. The best way to play this might be the following:

1. Buy a leveraged position in BTC and sell shortly before the event. Play the build up.
2. Hold a smaller position in wallet for the long term play.
3. Buy volatility in stocks that might be impacted like AMD and NVDA.

Something to consider, there is enough money behind BTC now that one should watch for all the arguments against BTC to fall away. Examples:

1. BTC is broken/too slow. This is a software update. Watch for rapid appreciation as "old truths" no longer apply.
2. Nothing backing BTC and ability to clone BTC ad infinitium. A consortium of investors could come out and back it. Even with 500 million dollars then those conditions no longer apply.
Etc...

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  #13 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

Something very interesting happening in micro-time on GDAX now. Check out the 1 minute chart. Service was down for a few minutes. So, we had several prints with no volume then a massive spike down and immediate recovery for the moment.

There is a $58 spread

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  #14 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

Not a strategy but I notice a bot (assuming its a bot) will often buy in appx 1 cent when the market declines. I'm suspicious it is market maker or liquidity provider. Self trading isn't supposed to be allowed. Of course, it might be some sort of dollar averaging algo. But, esp notice it when market trades with a tight spread. It could be some sort of order splitting algo but looks like a bot to make the flow look more two sided. It might be for safety -- make sure the market hasn't jumped or something. My suspect was it was a market maker though.

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  #15 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

If your curious about huge sell off after seeming positive announcement regarding fork, here's the deal-- some investors who were diversified crypto probably loaded BTC before fork to capture alt coin. Without split, there is no reason for them to be loaded into single coin. However, I think this is bullish. I think that it is more likely there will be one or two cryptos only and BTC is likely to be one of them. Basically we are seeing the "post fork" behavior right now.

If hypothesis regarding rotation out of BTC after fork is correct, look for breakouts in other alt coins now...

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  #16 (permalink)
Pedro40
Pittsburgh, Pennsylvania
 
 
Posts: 563 since Jan 2013
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Obviously buy and hold or cost averaging down.

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  #17 (permalink)
Benjamin Jones
Finland, Helsinki
 
 
Posts: 3 since Nov 2017
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There is now right way to put this but I try to find cryptos with great technology and team, and has partnerships with major corporations.

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  #18 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
 
Posts: 644 since Nov 2011

We might see the BTC market change from a momentum to a more mean reverting market with new futures participants. It probably won't take place overnight but it is something I'm keeping in mind. I think it would take months if it even happens. It is just something I'm keeping in mind at this point as a possibility.

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