Site Administrator Swing Trader Data Scientist & DevOps
Manta, Ecuador
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
Posts: 50,088 since Jun 2009
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Hey guys,
With recent talk about cryptocurrencies, I wanted to push myself to create this thread and try to share some things that I've learned so far about cryptocurrencies.
I intend to share a lot in the thread. Please "follow" to be updated when I post...
Hey BigMike loong time follower but not much of a contributor but thought I can add snippets/gotchas on crypto cash things - not sure if this is the right thread or there is a general Crypto trading thread where people can share whether it is trading, buying, wallets, staking including diff altcoins - thanks
If so, it seems that I'm really getting too old for this sh..
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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Well I am just trying pancake swap and seems limited for exchange but but cheaper in transaction fees using Binance coin as compared to ETH... so don’t discount those cakes !!!
So a technical error let's them sell bitcoin at a huge discount then they try and back out of it by saying it couldn't be sold in the first place because the exchange didn't have it? Is this a perk of running a DeFi exchange? Would they be locking accounts and giving money back if they charged to much?
I want to really thank Mike for starting this thread plus all the humor contributors.
My hope is to see some serious comments soon and invite Ozquant and others to follow-up.
The fact that MassMutual, a mutual life insurance company, bought BTC and Goldman Sachs is now apparently advising its clients to dabble in crypto suggests strongly that blockchain technology might possibly be similar to the launch of the internet than a repeat of the 1636-7 Dutch tulip bulb market bubble.
I would really like to see some credible feedback based on real experience from some serious traders/investors on day, swing or long term trading with cryptos.
Here's my limited experience and 101 input.
1. Accept that it could be a bubble and use only a very small percent of your portfolio (1, 2 or 3%) and prepare to lose most or all of it.
With all of life's distraction and my nomad life style, my first purchase was just in March 2021 with 0.1 BTC coins at a market price of $53,833 along with .25 ETH near $2,000 plus small amounts of a few other coins like BCH and LTC. I have capped my purchases at 1% of my portfolio and have added some portions, so I now own 1 whole ETC and 1 whole BCH plus .2 BTC and some other cryptos.
2. Be ready for less information than you typically get for your stock brokers.
I was shocked that Kraken only shows my crypto holdings and the market prices but not my basis in each crypto. I have to track that in a spreadsheet to know when I may making or losing money on each crypto trade. Supposedly they can display my cost basis if I open a margin account, “Quickly and easily leverage Kraken funds to go long or short on a currency pair by up to 5x”.... No F***ing thank you!!!
From minute to minute, market prices usually are not the same on each exchange. I use The Crypto App to follow market prices when not at my computer and Kraken prices are often different than The Crypto App, which I think are from Coinbase. Fortunately, from what I have seen usually there are only small variances, a few dollars on BTC and ETH or a few pennies on less expensive cryptos.
3. Expect funding delays
It took Kraken several days (about a week) to credit my wire transfer to my account apparently since Kraken uses small financial institutions to process wire transfers.
4. Plan for Two-factor authentication issues delaying short and long term activities.
I avoided the crash in BTC at the end of 2017 due to some opaque error in Authenticator on my cell phone preventing two-factor authentication required to setup a crypto account. Sadly, I also missed an entry in BTC at around $20,000 last year and only recently managed to “Homer Simpson” the Authenticator app into working to open and fund my Kraken account.
5. Anticipate less, slow, or non-existent customer service
I originally contacted Coinbase to explore crypto trading in 2017 while on a vacation in Vancouver, B.C. Recently, I tried to finalize and fund a Coinbase account but could not since they think I am Canadian and I cannot correct their bad assumption without first showing them my Canadian passport or documentation of my change in citizenship???? Scans of my US passport with my birthplace displayed and my Nevada driver's license are just not good enough for them to accept my US citizenship.
My personal market observation is that there may be some rotation under way as the recent leaders, BTC and ETH, slip from record highs while BCH and LTC climbed vigorously in the past week.
I have some modest profits and need to decide whether I am a swing trader, an investor, a lucky fool soon to lose it all, etc.
I would really appreciate feedback regarding any reasonably successful fundamental, technical, profit target based or even clairvoyant approaches to timing trade entries and exits for cryptos.
Also, it would be great to get feedback on more credible sources of crypto information/opinion to review. I have been viewing some Real Vision crypto webcasts but would like to hear some less bullish one also.
Happy trading,
Michael
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I think it says its locked and only available to members but apparently if you just enter your email you get free access (and added to RVs email list!)
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My spouse and I have enjoyed snowboarding near Kelowna and mountain biking throughout BC over the past 5 years and started considering a part-time retirement home in Canada until the new laws passed penalizing foreign home buyers. That ended all my effort to learn about investing laws and regulations for Canada. So you will have to look on-line or elsewhere for Canada's rules.
After watching for a long while from the sidelines and dealing with some challenges, I started by investing in both Grayscale's BTC trust and ETH trust through my regular stock broker since it does not require the typical crypto coin complications of a wallet, etc. Those trusts were designed for institutional investors lacking the rights or comfort level for direct crypto purchases. After seeing that those are financially inefficient, I looked at direct crypto purchases.
I suggest that you evaluate the 3 - 5 largest exchanges open to Canadians by reviewing on-line comments, especially negative ones, and other sources, then choose an exchange, put some money that you can afford to lose by scaling into in a few popular coins, and then watch as well as learn from the charts and other sources. Kraken has a daily newsletter, relatively biased on the bullish side. I purchased increments repeatedly over a month and am currently have net gains.
FOMO and buy-the-dips are strong temptations in crypto. I am glad I did not chase BCH recently and prices eventually came back to my 875 limit order price. I am only using candlestick patterns to make trade entries for now.
Hopefully, we can get some feedback from others about what trading approaches are successful (more wins than losses) and evaluate which we may want to employ.
By having some "skin in the game", you will likely watch more carefully and learn faster than if you just read the occasional surprising headline stories. You will also acclimate to a different environment than your current typical stock broker, especially the 24/7 plus weekends trading.
For now I am leaving all of my crypto in Kraken's account since I believe that there is a greater risk that is could lose a wallet key, etc., than someone would hack Kraken and steal my coins. At some point in the future when I get enough money in crypto, I may move some to a cold storage wallet.
Please share your experience if you move forward.
Thanks,
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I believe that I remember Rao stating that he liquidated all of his other assets and went 100% crypto. So he may have an usually strong bias for crypto.
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Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 4,095 since Dec 2013
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Irresponsibly long! Even have a T-shirt.
His primary trades are Bitcoin, then Etherum and then an unrevealed portfolio of 10 other currencies.
His only major non-crypto trade is currently European Emissions Credits.
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Yes I live in BC and it's beautiful. And oh ya super job they did with the foreign home buyers tax. Housing markets higher by a wide margin now and alot of people are shut of the owners market. Especially first time buyers.
As for trading cryptos my main concerns are... 1) the new regulations Canada has put out for crypto exchanges that might affect how they operate here.
And 2) I only trade futures because you can go short as easily as you can go long, there is no slippage on a lot of the most liquid instruments, and it's super easy when it comes to taxes.
If any of those are a no then I'll probably pass on crypto.
Government regulation is a crypto risk world wide and there are headlines daily of threaten or actual new regulations. To date the US SEC has prohibited Crypto ETFs but Canada recently approved one. I have no idea how Canada regulates cryptocurrency.
There is an existing BTC future contract (=5 BTCs). Recently a ETH futures contract (=50 Ether) was launched on the CME but Think-or-Swim has not yet or only recently approved trading ETH for its customers. Both those futures contracts should allow long or short positions.
Apparently, the major crypto exchanges also support long and short positions directly in actual cryptocurrency.
Importantly, crypto exchanges are each separate entities and do not access a central market like the CME where all US futures trades occur via authorized brokerage firms. My understanding is that the counterparties for cryptocurrency transactions are only customers of the same exchange and not from a different exchange. This obviously impacts pricing and liquidity.
Regarding taxes, my impression is that Kraken will only identify the trades and everything else is my responsibility in doing my taxes. Here's what they say,
"Countries differ on how cryptocurrency transactions, trades, and holdings are taxed (if at all) and how they view cryptocurrencies in general (e.g. as money, as property, as a commodity, etc). Please consult a local accountant, tax lawyer, and/or government official for advice.
It is the client's responsibility to determine what, if any, taxes apply to the trades completed via our services, and to report and remit the correct tax to the appropriate tax authority.
If you require a record of your balance or trade history, click here for instructions on how to export your data to a CSV-file."
Again, I have virtually no knowledge of Canadian tax law. It is possible that the "datadump" without taxation perspective might be enough for you to pass on direct cryptocurrency trading.
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Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 4,095 since Dec 2013
Thanks: 3,403 given,
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ICE also has a BTC future (=1 BTCs) and CME launch a Micro BTC (=0.1 BTCs) in May.
I'm not an expert on this but this is not my understanding. Coinbase the largest US exchange does not allow short positions. I believe Derebit does (not available to US residents) but on Derebit you are trading derivatives (swaps and futures) and not the actual crypto currency.
This is a good point in several ways. 1) There is no centralized clearing. You are taking the credit risk of the exchange. If the exchange has a problem (hack, theft etc) you are very much at risk. While there is some risk in regulated futures it is significantly less. 2) Some of these exchanges don't use a central order book and can and will trade against your orders, much like some FX shops.
Tax rules are complicated and do vary by jurisdiction. In the US if you trade a Bitcoin Future, it is taxed as a futures contract. If you trade Bitcoin itself though it is taxed as a cryptocurrency. I have no idea how a perpetual swap would be taxed though. Your not trading Bitcoin itself, but a derivative of it!
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Thank you very much. I have decided to forgo spot crypto trading for the same reasons and more than I stopped trading FX.
- Deregulated exchanges... although this would not stop me from investing with a coinbase or a binance it would give me pause on the smaller exchanges and it just something to keep in mind.
- I cannot find a straight answer on the simple question if shorting is possible like futures or if it a pain like stocks.
- tax implications are Im assuming going to be taxed at the capital gains or the equally unsatisfying, as a property holding tax.
- as I already trade futures EXCLUSIVELY and for the reasons stated above I can trade Bitcoin that way with all the freedom of the futures advantages.
- and although prohibitively expensive margins the micros given liquidity will be ideal for me.
Bitcoin Margin Rates dropping from 42% to 39% which with Bitcoin at 56000
- Full size is dropping from $117,600 to $109,200
- Micro is dropping from $2,352 to $2,184.
Ether Margin Rates dropping from 50% to 44% which with Ether at 3500 is over $10,000 from $87,500 to $77,000
I'm looking for a crypto platform that allows me to place an OCO bracket order (or at least a stop) at the same time I place my entry order, and the only one I can find that seems to do this is Tradestation Crypto. The various exchanges (Binace, etc.) seem to make you place a bracket or stop after you place an entry order. Can anyone confirm if this is true or not?
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Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 4,095 since Dec 2013
Thanks: 3,403 given,
8,112
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Just FYI, I haven't used Tradestation for Crypto but I believe I heard that their model is 'Trade with market maker' and not 'order book' which probably means your slippage would be higher
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