Trading Strategies Input
Hey guys,
Have recently got into cryptocurrency trading/investing. However, I am a total beginner and was just thinking of some strategies. Was hoping someone could add further insight and share their strategy.
So here's the scenario:
- I am a big fan of Coin A, and believe it will shoot up long term. Therefore, I try to cost average to build my position. Buying more and more when it dips. Its a fine strategy but you're limited to your principal.
2. Same story as above. Big fan of A and believe its a great long term HODL. However, instead of pouring my money into it, I go for coin B that have a higher potential of increasing. If it goes from $1 - $3 in 1 week, and say my principal is $100, then I am at $300.
At this point, I can take out $200, and invest the $200 into Coin A.
I started off with $100, but now I have doubled my position in Coin A, but also have a free position in Coin B.
*However, the trick is finding coin B.
Does this seem like a logical approach?
No, that's not how this works, that's not how any of this works.
So you presuppose knowing not only one, but two coins that will go up, as well as the ability to predict price highs and lows so that you can do market timing. Speechless.
If you really want to invest in crypto, don't invest more than you can seriously afford to lose.
This is how all these crypto people are.
https://steemit.com/bitcoin/@bitcoin-related/how-to-hedge-bitcoin-and-m…</a">For example, this is a blog I found a while ago when researching how to hedge a crypto bet. TLDR is that this person thinks selling when the price goes up then buying back when it goes down is "hedging."
Reminds me of the early aughts day traders tbh
Don't they have bitcoin futures now? Hedge using them?
You also have to consider that transfers from one crypto to another is now considered a taxable event. Since you're doing short-term trading, it gets taxed as income. So let's say your income is greater than $82,500 and less than $157,500; this means that you'd be taxed at 24%. So if you sell with the intention of buying another crypto currency that outshines the first one, you have to make at least 24% on that trade just to break even.
I was looking into this interesting idea of talking to an accountant and creating an IRA, and then putting cryptocurrency into the account. Then you'd only be taxed on the final amount, and you could do anything you want with the funds until then. If you were to withdraw before you're 59 and 1/2, you'd pay a 10% penalty, but with the gains in crypto, you could still be more than fine. I'm not actually sure this would work, but just food for thought.
No that isn't correct. you are only taxed on your gains not on your position. For fucks sake, how would anyone make any money in the markets if they had to have a return like that just to beak even?
I think you get taxed if you cash out.
But I m using the gains from other cryptos to trade for a better position in other coins. Its just transferring from wallet to exchange and back to wallet.
I think you might want to take a quick refresher on how income taxes work. You are off on the taxed basis (not the full investment, only the gain) and which rate you would use (its a tiered system where the dollars in that tier are taxed at that rate, not the highest bracket you are in).
I setup a simple algorithm that accounted for volume and news. Anytime bitcoin was mentioned on a number of sites, the program would buy using a certain exchange. I set order type to always be limit dependent on that criteria. I did this with small amounts but then realized the volatility made rules based trading way to risky. Furthermore, I had to set additional rules for only purchasing after a large price move because of the liability of the large transaction cost. I'd recommend staying away from crypto.
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