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best way to trade Bitcoin?
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Created: by Tasuki Attachments:0

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best way to trade Bitcoin?

  #1 (permalink)
San Diego, CA/USA
 
 
Posts: 7 since May 2018
Thanks: 3 given, 7 received

best way to trade Bitcoin?

Hello,
A friend of mine is going through the necessary hoops to establish accounts with two cryptocurrency exchanges, Kraken and OKCoin. As far as I know, he only wants to trade Bitcoin. Does anyone know if there's any advantage, monetary or otherwise, to trading through these newbie exchanges rather than simply trading the CME's futures instrument (current contract BTCZ18, at least on Tradestation)? OK, with the CME's product you'd have to roll your position to the new contract four times a year if you're a longterm investor, but it seems to me that this is a minor inconvenience compared to the safety of a regulated futures market, protected by the National Futures Association. I worry that, if these new exchanges go belly-up, how are investors going to get their money back?
Does anyone have any insights into this? If so, any help much appreciated.
Tasuki

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  #2 (permalink)
Legendary Market Wizard
Houston, TX
 
Trading Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 3,082 since Dec 2013
Thanks: 2,505 given, 5,529 received

Answer
This post has been selected as an answer to the original posters question Answer

Negatives
  1. Size. CME Contract size is 5 Bitcoins ($32k), CBOT Contract size is 1 Bitcoin ($6.4k) while the exchanges allow you to trade a lot lot smalller
  2. Bid-Ask/Slippage. I don't know about the exchanges you mention but Coinbase has a much much tighter Bid-Ask then the CME contract. That translates to a lot of slippage
Positives you didn't mention
  1. Fees. Moving money into and out of brokerage accounts (to trade futures) is effectively free, and fees for trading are low. Fees to move money into and out of Cryto Exchanges, and to trade on Exchange in comparison are very high

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  #3 (permalink)
San Diego, CA/USA
 
 
Posts: 7 since May 2018
Thanks: 3 given, 7 received

thanks, and followup question on Bitcoin trading---CBOT symbol?



SMCJB View Post
Negatives
  1. Size. CME Contract size is 5 Bitcoins ($32k), CBOT Contract size is 1 Bitcoin ($6.4k) while the exchanges allow you to trade a lot lot smalller
  2. Bid-Ask/Slippage. I don't know about the exchanges you mention but Coinbase has a much much tighter Bid-Ask then the CME contract. That translates to a lot of slippage
Positives you didn't mention
  1. Fees. Moving money into and out of brokerage accounts (to trade futures) is effectively free, and fees for trading are low. Fees to move money into and out of Cryto Exchanges, and to trade on Exchange in comparison are very high

Thanks for your very helpful answer. Just one question: so, is there a CBOT contract for Bitcoin as well as the CME's "CBT" ??? Very cool that the CBOT has a smaller contract size, but what's the symbol for the CBOT Bitcoin contract?
Many thanks,
Tasuki

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  #4 (permalink)
Legendary Market Wizard
Houston, TX
 
Trading Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 3,082 since Dec 2013
Thanks: 2,505 given, 5,529 received

Correction it's CBOE not CBOT

XBT-Cboe Bitcoin Futures

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  #5 (permalink)
Los Angeles, California
 
Trading Experience: None
Platform: MotiveWave, Optuma, Wav59
 
Posts: 42 since Jun 2012
Thanks: 3 given, 11 received

P2P Bitcoin Exchange Services

I'm considering on creating a bitcoin account for online purchases and I'm considering P2P bitcoin exchanges because of the low fees. However, for any bitcoin exchange are there any hidden or unexpected fees that I might regret for just having an account? I'm new to this so I like to get to know about it before I start transferring money using my Paypal account.


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  #6 (permalink)
Hyderabad,India
 
 
Posts: 86 since Oct 2013
Thanks: 40 given, 19 received

just my 2 cents here...

but... have you observed that the CME futures were created at the "Peak Time" of the bitcoin... ?

fwiw... it appears that the pros wanted to ride this bitcoin bubble till the end...

and... since the pros do not enter cheap markets... they created an institutional level product (that too on the well reputed CME)... just to go short...

LOL... reminds me of that movie... (had to google it.... its been a while...)... The Big Short...

That manager went to whatever investment bank (dont remember the name) to create instrument for him to go short...

CLASSIC STUFF... # SALUTE TO THE PROS.... LOLOL

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  #7 (permalink)
Legendary Market Wizard
Houston, TX
 
Trading Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 3,082 since Dec 2013
Thanks: 2,505 given, 5,529 received

The difference is, in the 2007/8 financial crisis (The Big Short) the entire world was chasing yield and would buy any debt instrument that offered a slightly higher yield. That's who the buyers were of the MBSs / CMOs / CDOs that were created by the Banks for certain customers to short.

Who are the buyers of the Bitcoin futures that the Pro's are selling?

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  #8 (permalink)
Hyderabad,India
 
 
Posts: 86 since Oct 2013
Thanks: 40 given, 19 received

that's not a difficult question to answer

re__il 'traders' and 'investors' IMHO

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  #9 (permalink)
Chicago Illinois
 
 
Posts: 18 since Jun 2019
Thanks: 4 given, 6 received

I know it has been awhile, but I'm curious to see how things ended up going?

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The following user says Thank You to TickTick for this post:

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