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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...
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.
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.
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.
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.
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.
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.
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.
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.
