Ep. 71 – Short-Term Bitcoin Trading Strategies
Trade 5 different cryptos including Bitcoin with XTB. www.twoblokestrading.com/xtb
In this episode:
Owen makes profit in his first full month live trading as a technical trader
Tom has bugs
David Cheetham discusses bitcoin trading strategies
You can use CFDs to hedge, go short or profit from short term sentiment
We discuss the great Bitcoin debate – is it more important to be ‘right’ than to make money?
Trader Interview – David Cheetham from XTB – Short Term Bitcoin Trading Strategies
David collects his ceremonial hat trick ball, although none of us are sure if maybe he’s actually been on four times… David is Chief Technical Analyst for XTB, profitably trades his own personal account, and is a keen watcher of the Bitcoin and Cryptocurrency phenomenon.
We discussed Owen’s cheeky strategy – buy and hold the physical assets in a basket of cryptocurrencies, so gaining long-only exposure, but short using a CFD trade in the event of bad news. David pointed out that this not only hedges you against the risk of deep retrenchments in the up-trend, it also generates more capital to buy in again at the bottom on the pullback. (Provided you are correct, of course…)
A classic example discussed is the recent tumble from 5000 USD for Bitcoin to 3000 USD. These were not entirely random levels – they were called by many people – and a CFD short to those levels and a rebuy at the bottom would have been the perfect trade!
Of course it is easy with hindsight, but it suggests that there may be a workable strategy here!
Bitcoin News Takes Longer than Forex
One of the interesting topics of discussion was the idea that news takes a lot longer to be factored into the price of Bitcoin than it does with Forex or well-traded shares.
The reasons are obvious – there are far fewer institutional players, banks, hedge funds and big-hitting algorithms trading Bitcoin and the alt-coins than there are trading GBPUSD or Apple shares. So, when bad or good news strikes, there isn’t a scramble to be first to act.
David pointed out that there may actually be even more ‘lag’ than Owen thought – the pressure from the Chinese regulators that is thought to have sent Bitcoin tumbling was actually building steam for a good week before the fall.
Partly then, this means that quite apart from scrambling to act, if you are planning to short Bitcoin or other cryptos then the best idea may in fact be to wait for a confirmation candle (perhaps a bearish daily candle) before getting in short. The moves tend to be deep and long so you are unlikely to miss much!
Not Bitcoin Trading Strategy Experts!
But, of course, we are just speculating. None of this is investment advice! Particularly in this Bitcoin trading strategies department, no-one has been doing this long enough to justify calling themselves an expert – we are all learning!
One thing we are sure of, though, is that as a trader it is more important to make money than be right about Bitcoin. The cryptocurrency arena is hugely divisive, and although David is long-term bearish, he is happy to just make money from trading and ultimate doesn’t care if he is right or wrong on the future of Bitcoin! Owen heartily agrees.
Traders Support Club Brochure
It was great to see so many of you on the Traders Support Club webinar on Thursaday! It was well received and we hope you all learned a lot about backtesting from the undisputed master Ali Crooks!
Ali also took on board feedback that people were sometimes unclear on exactly what they were getting in the course, so he has produced a brochure that explains it all. Click the link below to visit the download page, and don’t forget to mention Two Blokes Trading for your £500 discount!!