Topic: Am I right to understand that this trading strategy is a very bad idea? (Read 167 times)

Why talking about Coinbase only when there are many exchange you can use that has lower fee?

But for me to shorten your problem? Use Binance exchange and instead of Getting back to your wallet why not just convert to USDT the value of 200$ so once the price of ETH falls down again you can easily Buy back without spending Big transaction fee.

Making this 7x and then decide when to pull out your coins..

You forgot about fees in your original calculations. You should look at how much a swap can cost now if you use a DEX or AMM as they call them now. $20 is cheap, normal is more like $50 and if you are really unlucky you get $100 or more. And that is even if you get it filled at the price you want.

Prefer CEX is ok but also there are commissions and withdrawal fees:)

 Are the fees just as bad there? It would be just similar on most platforms because fees now specially in ETH is insanely high so you can really expect  those numbers.

When trading up or making out conversion actively then dont expect that you would get 100% of the total profit that you could get in USD.Always think off about that
there are difference between buy and sell rates on each platform plus having that network fees when you do tend to make out external transaction
between exchange and your own wallet.

If you cant afford on paying up fees then you can always opt in on holding those coins instead but actually you can really choose up another altcoin
if you wanted to make active trades but just dont choose ETH for now.

First of all, cryptocurrency trading is not easy (it not just buying low and selling high) as you think, some trading learn is still required for you to be a profitable trader.
Having said that, the maker and a taker fee of coinbase was only the reason why people complain about coinbase, I personally hate their level of centralization.
An exchange like Binance, Kraken, Bibox could be a better alternative if your location is not restricted but you can check here for the list of exchange trading fee.

This is not a trading strategy imo, but an investment strategy. You should be fine doing this too if you don't have that much capital or can't really handle the stress of timing when to enter and exit the market. However, doing this strategy requires a lot of work on research if you really want to make huge gains, especially if you're trying to find low marketcap gems.

Before you do any trading activities, I suggest learning and practicing with some indicators so you get the basics at the very least. What you imagine and how it happened might be different, especially the emotional part, where a lot of people make mistakes because they're too greedy or too impatient.

This is called buying low selling high + buying back at low. It is a good strategy but let me remind you of some things that are theoritical here:

1. 200$ to 100$? this means the change was 100$ which is 50% of 200$ - means the market price dropped by 50% this or the other way around that is rising from 100$ to 200$ which is another 50% gains - such high changes are very less in any year compared to small percentage changes.

2. In order to capitalize on small percentage gains you need the exchange fee to be low otherwise you get deducted on a lot of possible profit.

The strategy is doable but only when the market move percentage is high like in the example, but in reality it is rare. So you are correct that to profit from this your better move is to buy and hold to sell at a bigger profit percentage compared to the buying price. Basically holding for long term.

It's a pretty normal strategy, not really bad, you just have to find some ways to mitigate the issues, which is in this case, the transaction fees. If you're going to do that strategy in the long term, then you can just let your funds sit in some coin there while you wait (BTC maybe?) then just trade after you see that it's time to enter again. The conversion you made might have that much of a fee due to it going somewhere else maybe? I've only ever had issues with how high withdrawal fees are, trading fees though? Not so much (though I do use Binance so idrk about Coinbase).

If the funds you are gonna wager is high then the fees wouldn't matter. Or yet do a one time buy with considerable amount and wait for a target profit instead of buying low sell at something x then wait for it to go down again. Much better if you go all in and sell at a desired price.

In that way, you'll maximize the profits and the trading fee. But of course it depends on your risk appetite, I'm not sure cause different traders have different ideas and opinions.

That's a great strategy and that's a common one, buy low and sell high(or never sell) but never leave your fund on exchange for how many years of waiting when the price becomes dump, that's no a good idea.

From this blog regarding the comparison of crypto exchange fee, I think eToro exchange platforms have a great advantage of trading like this because they don't have trading fees either the maker and the taker and I saw there's no transaction fee upon withdrawal.  Probably that is a good advantage to them and they're also a reputable exchange so far that you can trust.  However, if you like Coinbase, it's up to you.  I may suggest always to have a DYOR and don't rely upon other's suggestions because that is your money, not them.

awesome, thanks!

Coinbase.com is a simple exchange for amateurs/newbies and people who want to do quick trades or swaps minus caring about fees. If you want to go into real day trading where fees are low then I suggest you use Coinbase pro, Binance, kraken, Kucoin, Huobi etc otherwise the strategy is very OK. I use it too for my spot trades.

This site should give you an overview of trading fee rates of different popular crypto exchanges - https://exchangewar.info

That strategy is the common one, the one you're worrying is only for coinbase, there are lots of exchanges that offer lower trading fees, and while you mean converting it to $ you can use stable coins such usdt. Binance, kucoin and other exchanges offer lower trading fees like 0.001%.

While its good in holding, but make sure you wont be stocked when price drops while you could profit when you sell at ath and buy again when it drops.

One thing you need to remember is that there is not one bad trading strategy, but rather improper use and a lack of overall understanding. Strategy theory has the methods and characteristics of its application if it is applied to a certain type of trading which is suitable.
It's simple when you don't really understand the whole trading strategy so try to take another trading strategy that you understand in detail.

sometimes any trading strategy will be effective if it is used by those who are good at implementing it optimally.

Trading strategy is great, but market is volatile and that's why, none can be sure that eth might again go back to the previous buying price so that we can buy back to make 2x profit on it. After all, take entry into any crypto-currency after doing proper technical analysis. 


I'm not sure, but you might be using Coinabse Wallet for interacting with dapp. If that so, than high fee will be charged as that's the ethereum transection fee to do the swap of Ethereum into USDC which is ERC20 token and transection on ethereum blockchain is still on high zone. So, it's better to go for coinbasepro or binance where only trading fees will be deducted.

That's the usual strategy that a trader can follow. You can repeat that most of the time whenever you've bought a coin that really has the potential to increase even it won't move up twice or thrice as long as there is a movement and more than the price that you've bought. Use Binance instead if the fees in Coinbase are hurting you. You should find yourself a suitable exchange where you can trade and the fees won't be a problem for you. There are a lot of them and give you an idea, here's a list: https://coinmarketcap.com/rankings/exchanges/

It's a great strategy if you don't have to worry about transferring your money somewhere else. It's the transaction fees that can kill you with your money. When it comes to interexchange transfers and conversions, I don't think it's a lot. To add to jackg's explanation, it's not that big of a deal with the fees. You're trading with your balance and taking advantage of the market. That's buying low sell high strategy.

There's nothing wrong with HODL-ing. It's always been encouraged to BTC believers. The best way is to DCA your way to having a great profit in the long run. The best thing you could do is be consistent with your investment and see your portfolio grow in a few years.

Coinbase pro used to charge 0.25% fees so you'd pay $0.25 to buy and $0.5 to sell (the fees may have gone up since).

It's not a bad strategy, you have to rely on stuff going back though and I'd suggest trading on things once something has already gone there.

Buying bitcoin when it was worth $45k after dropping from $60k for example would've been a good investment. If you put in a bad buy then you'd have to wait/hold for a while and try to pick a good one. And you won't be able to use that strategy in a downturn.

Hypothetical Strategy:

(Note: I know ETH is worth more than 100 dollars, I'm just using 100.00 as an example in this hypothetical strategy)

1. 1 ETH is worth 100.00 USD per ETH coin

2. You purchase 1 ETH while it's still worth 100.00 USD per ETH coin

3. ETH jumps in value to the point of being worth 200.00 USD

4. You sell your 1 ETH while it's still worth 200.00 USD

5. You now have 200.00 USD

6. You wait until 1 ETH value drops back down to being worth 100.00 USD

7. You use your 200 dollars to purchase 2 ETH, and then repeat steps 1-7


This strategy seems like a good idea in theory, but in reality it's a horrible idea because coinbase fees
will cause this to not be a profitable trading strategy.

I then explored the possibility of employing this strategy if I were to just convert ETH from
one coinbase supported currency to another, and the fees are still the same.

For example, if I were to convert 1 ETH that I own, at the time of me making this post,
to USDC, a coinbase supported crypto that has the same value of USD, I'd still be paying
30.33 USD in coinbase fees. I would 'lose' 30.33 USD just converting it, thus making the idea a bad idea.

Is this why I hear people complain about fees with coinbase? I'm too much of a noob to crypto to complain, I'm still just trying to learn.

Now when it comes to two other exchanges I learned about (Coinbasepro, and Binance), I'm just
in the beginning stages of exploring those exchanges. Are the fees just as bad there?

As far as I know, this strategy is impossible to use because of fees, and therefore a very bad idea.

Am I wrong, or is there a scenario where this works?

Until I learn more, the ONLY trading strategy I'm using is:
1. 'buy and hold'
2. Put my amount in cold storage
3. Don't sell anything until after holding onto my amount for at least a year,
   so that I can save money on taxes because a long term capital gains tax,
   is cheaper than a non-long term capital gains tax.