Today I made my first major cryptocurrency sale. I sold 0.25 BTC and bought 9.1 ETH in substitution.
Why? This is the first test in practice of how I am going to use cryptocurrency (trading) to enhance our long term crypto holding returns (investment).
And it is comforting to use a tool that has been used previously in other investments. That of ratio investing. This time, it is ratio trading.
In its simplest form, one ETH was equal to 0.03992BTC on 02Sep20. (One BTC = 25.05ETH)
one ETH was equal to 0.0245BTC on 28Jun20 (One BTC = 40.8ETH).
One ETH was equal to 0.0249171 today (One BTC = 36.35ETH)
There is a distinct support/resistance level at 0.2640BTC/ETH, so the substitution has been done at 0.2740BTC/ETH (3.7% above S/R line).
For reversal of this substitute trade, the T/P targets at the next S/R lines are:
0.0331 before 31Jan21 for +21%
0.371 before 28Feb21 for +35% and
0.0400 before 31Mar21 for +46%
Its a tough one. I think were best waiting on tecnhicals to show us the way. If it breaks market structure if it starts to create lower highs and lower lows. I cant see it just going off a cliff
Update. Yesterday, I reversed this sale in two tranches. I sold 2 ETH for 0.0334 BTC ea = 0.0668 BTC and sold 4.9 ETH for 0.03448 BTC ea = 0.16856 for a total of 0.23536 BTC. The total transaction period was 18 calendar days and the gain was 21.4% for the first tranche and 25.4% for the second tranche. All the price action happened during the first four days of 2021. I guess you could call that a perfect trade. That is the largest profit I have made from one trade for over six years. And because it was not leveraged, and because it is in support of the long term goal to own BTC as a store of value, it felt painless. I doubted the goal was going to be achieved, but I am sure nobody thought that BTC would reach $20K and carry on to get over $30K in the same month!
I have other trades based on the same principle of ratio of value to one BTC. The one I felt most pumped up about was the purchase and sale of XEM within 24 hours with a 21.5% gain. It was only 2% of the portfolio value, but it sure felt good. With zero leverage, there is no such concept as a stop loss either. For me, at the moment, the volatility of crypto allows zero leverage trades with similar gains to leveraged trades in Forex, and a totally acceptable psychological feeling of control.
Got lucky with a buy of Loopring (LRC) at .3900 USD. Popped up to .6300 USD I believe yesterday. Sold at .5700 on the way back down (moving fast!). Bought back in at .4700. Caught a nice ride!
Did you survive the last week? I luckily closed all positions before the dumps started. I was lucky to be awake during the event, at least the first half.
Had an ETH buy filled at 985 in all the mayhem. But sadly had closed a BTC buy at 32000 just an hour before all of the action. I’ll need to remember to maybe take more notes in the future of my mindset at the time.
Hi FFF,
This happening on a Sunday preceded an emergency operation I was scheduled to have on Tuesday at 7am. On Monday I was full time consulting, so late Sunday night I moved funds into place to be able to take advantage of the mayhem. The last thing I did on Sunday was to review both my investment plan and my trading plan (associated with Crypto currencies). Both plans stated "do not make unplanned decisions in a rush, or during any time of unexpected stress or market behaviour. In my case, it was the requirement to make a rush decision when I had not pre-planned this “what if” scenario of an almost immediate 20% drop. So I decided to take the “do nothing” option. As expected I was home by yesterday afternoon, and now in the cold light of day BTC has returned to within 10% of its peak, and ETH too. I had the 15 minute time interval plots of BTC and ETH up to 20:00 hrs on Monday 11th with a trending range of lower highs and lower lows plotted, in which the “short term plan” was to buy BTC between its short range of 29,500 to 33,000 (real time) or for ETH between 850 and 1,000. In the event, my most urgent task was to get to bed for a 5am start to the day of an operation in hospital. I decided on no action based on my imminent operation. My long term plan is unaffected. My medium term plan was very slightly impacted. My short term plan (for January only) was up 7% on the month to 9th Jan, and is now up 5% for the month. Whilst regretting my decision during this unfortunately timed event, I am more happy that I followed my plan than to have been proven to be on the right side of luck than the wrong side. It is this event and analysis that makes me believe I have become a real trader during the past year. Not so much for the actions I have taken but more for the fact that I have chosen to follow my plan rules instead of make short term decisions I may come to regret. I fully expect there will be a few more opportunities in 2021, and conclude that I am satisfied with my course of action in practice. The speed at which BTC, ETH and most of the Alts recovered also supports my belief that my portfolio value pretty much maps total market cap and note that as of writing it is back up to $1.078 trillion back from the 920 billion or so it was at the maximum excursion to the downside.
Edit - I mean, market cap is $1.078 trillion, not my portfolio value
Great point here. The noobs coming in don’t realize the speed at which the different can and do move. It’s sobering to see10% and 20% moves in just minutes, but like you said, exciting to see rebounds happen almost as quickly.
Hi,
I have never been able to demonstrate an edge in my Forex trading. That doesn’t mean I have given up on Forex, but Crypto will be the vehicle via which I have chosen to proceed with the development of my trading interest.
Interesting read and congratulations! What platform are you using to execute these? Is it cryptocurrency cfds or actual coins from an exchange? Cheers and good luck.
It’s six of one and half a dozen of the other. It’s not the sending fees that concern me mostly - they are mostly between 0.3% and 0.6%. It is the sneaky way they (all exchanges) are not transparent about all their fees. When I started with Bittrex I used a credit card because they said there was no additional fee charge using debit or credit. Then the credit card whacked me with GBP / USD exchange fees. In all, I paid nearly 6%, and was not happy. Then Crypto.com (with their MCO card offer) advertised no fiat to crypto fees till end of December. That was the case, except towards the end of December they suspended any GBP accounts “pending a new provider” and now I cannot send any Fiat to that account. Now in frustration, I have opened a “Coinburp” account - a service my brother has used, and have put some Fiat in there but have yet to buy any crypto. I analyse that Bittrex is a true market spread - you can see Level 2 trading onscreen, and can offer a tighter spread that usually gets filled within 5 to 10 minutes. No such functionality with Crypto.com - and it is mobile only, which I also have an issue with.
If anyone knows of a broker (UK or US based in GBP or USD) that charges less fees for Fiat to Crypto than 2% please let me know.
Grateful for your answer. I use exodus, but never paid much attention to the fees because they are usually insignificant. I was just wondering if they are better than the others.
