Topic: Everything you wanted to know about BTC futures but were afraid to ask! - page 3. (Read 4054 times)

It surely seems to be a bit of a dilemma fillippone, especially for someone who either does not have an outside cashflow already established to be able to attempt to spend a lot of time on bitcoin related matters and other stuff and not be wanting to attempt to monetize their time spent to some extent.  I tend to recommend a variety of self-help mechanisms, and I also tend to be weary about purported experts - even when I am forced to consult with them - and not even saying that they are not necessarily very knowledgeable in their field if they do it full time, but there might also be a variety of vehicles that they employ to keep their clients dependent upon them rather than providing self-help kinds of knowledge.

I understand also that there are some clients that might just say fuck it.  The fee is cheap enough (whether it is .5% per annum or up to 2%) that they might feel that it is well worth the fee - even though the higher the fee, the more difficult it will be to justify continuing with the use of such services, in the event that the advisor is custodying or the consulting is for one-shot time frames and perhaps flat fees?

Financial managers likely need to employ a variety of complicated financial instruments to establish to their clients that they are "doing something" even if some clients might realize that in the whole scheme of thing (including after the fees) their portfolio may well not be doing better than if they self directed into an index fund, and surely bitcoin should be providing further justifications that such complicated instruments are not necessary because on average bitcoin even outperforms the best of the prior investments (index funds), and so whether I personally am correct or not, I do not give too many shits, but many times when peeps are talking about a variety of sophisticated instruments, I still continue to assert one of the best places to start (especially in bitcoin) is to get your basics down, and in the longer term - (such as 4 years or longer - might take 10 years perhaps), your financial portfolio will quite likely outperform your having had employed a variety of other financial instruments into such investments.  

So for me, getting the basics straight is a starting point, but it is NOT necessarily exclusive, especially if some peeps might feel that they have more time, then they might experiment with other financial instruments to attempt to complement their approach once they have assured that they got their basics straight, whether that is the use of futures, options, leverage, margin, shorts, etc.. some of them are easier to learn about and to figure out how to use than others...

And, yeah it seems to me that each financial instrument that is employed, there is a possibility that the investor is magnifying the risk, even though the instrument is meant to allow for the lessening of risk, if it is used properly... and another trade off could be that the employment of some of the financial instruments ends up taking away some of the upside profit potential because it ends up betting in both directions - which may or may not be needed in my thinking, so for example, when I got into bitcoin, I already had a significant amount of investment already into a variety of traditional investments that were largely dollar based.  So, I had already figured that my bitcoin investment was already a hedge against that, and so even if I ended up accumulating a relatively decent amount of value in bitcoin, it still was not as large as my various dollar based investments - even though through the years - because of bitcoin's value appreciation relative to the dollar became so much larger and larger portions of my overall value and even outgrew the dollar-related appropriated investments, which at that point justified that I should attempt to take some measures within my BTC holdings to attempt to ameliorate some of the downside risk within the BTC portion (because its value became so great).  

Of course, if someone is coming into investment, and they have no other investments besides bitcoin, then it could be prudent to actually consider hedging mechanisms right from the start... I doubt that I am really good at speaking to that.. but I do understand that the various mechanisms that I already discussed, including considerations of futures, might thereby become more relevant to a person in such a financial/psychological circumstance.

Hopefully I am not derailing your thread too much when it comes to attempting to consider basics before even considering whether futures might be a good thing for normies to attempt to employ...which seems to be part of the point that I am trying to make .. in a kind of long-winded way.

By the way.. in my response above, I fixed the quotes in fillippone's post to clarify which comments were from icopress - otherwise it may well appear that fillippone is merely talking to himself.. which might happen from time to time, but not in this particular case.. hahahahaha

Let me answer to this.
I disclosed a lot of knowledge about the trading future, and options. I explained the basic stuff, vocabulary, and basic strategies.
I never told anyone how to trade their stash, when opening a position, and when closing it.
I never commented on other people's analysis or trading strategies (with only one notable exception).

So, I might or might not be involved in future, but I never tried to "sell" any trading strategy. Even more, I have too much respect for each one risk and time preferences, personal constraints knowledge or history, or other facts that might determine their trading style, to comment on other people actions, besides correcting factual errors.


EDIT: fixed a quoting error. I am not talking alone, this time.

Overall, I cannot really disagree with any of your points, icopress, and even though, like I suggested, I do not involve myself in various kinds of sophisticated financial instruments, I kind of was passive aggressively implying that none of them are really necessary for individuals in bitcoin - unless they really know how and why to employ such tactics - and they are also temptations of attempting to get rich quicker than what conventional basic mechanisms might achieve.

In other words, bitcoin seems to remain as such a goddamned asymmetric bet that even someone who is brand new to bitcoin and investing (such as fresh out of highschool /college and freshly beginning to invest), and just employed basic techniques of buying and holding BTC, the other tools (such as futures, options, margin, leverage through exchanges, shorts, leveraging bitcoins for debt) would not be necessary in order to accelerate these newbies to fuck you status in about half the time (or even less) than traditional investment allocations would have accomplished.  

Accordingly, just engaging in various kinds of longing of bitcoin could cause a regular normie into fuck you status in 10 to 20 years rather than 30-40 years of the traditional systems -  that are also far from guaranteed of reaching fuck you status in traditional systems.  By the way, many of us likely know about regular peeps who had been prudent all of their life and invested and saved, and they still were forced to work into their 60s or longer because they just did not have enough money to pull the fuck you lever.

I understand that my personal expansion of what I meant in my earlier posts causes this post to largely deviate from the topic, but I do mostly assert on a regular basis that newbies should be continuously working ways to slowly build their principle in conservative ways, and sure when they are young they can surely take some additional risks, so while they are attempting to invest more conservatively, they can continue to study the various investment options to figure out whether any of those more sophisticated investment options might work for them and their situation.. including that after 5 years investing in bitcoin, even at $100 per month (which would add up to $26k in 5 years), there could well be a very decent amount of investment capital that had accumulated through that time, such as half a million (as shown in this chart), and even if fuck you status had not been reached, the person is well on the way to possibly achieving fuck you status in a 10 to 15 year timeline - assuming that $2 million in today's dollars would be the bare beginning point to fuck you status and of course, with the passage of time - even 10-20 years from now, that $2 million in today's dollars may well need to double or more for a bare basic starting point for fuck you status, but if decent appreciations of BTC value continue to outpace other assets and investments (which seems quite likely), then there may well be abilities to really increase contributions too with the passage of time and to accelerate the capital invested into bitcoin and likely to be able to monitor and study the bitcoin space in such a way to know whether there might be some ways to compliment such bitcoin investments without getting sidetracked into shitcoins or even financial vehicles that might not be worth employing.. not saying that futures might not work but that it could take a few years for any newbie to study the matter (and maybe include consulting too) in order to figure out if it might be a good vehicle to complement individual investing beyond buying and hodling.

Of course, the past abilities to accumulate in bitcoin and to witness price appreciation that outpaces almost any other asset or investment does not mean the same numbers of price appreciation are achievable in the future, but there is no real evidence that the investment thesis in bitcoin is getting any worse, so I still am suggesting that normies and newbies start out with similar tactics of solidifying their basics before employing more complicated tools that may or may not be necessary to reach fuck you status in a pretty reasonable time (such as half the time or less as investing in traditional assets.. which I would include a lot of the various bullshit out there currently to fall into that category, too).  I ongoingly share my ideas and even helping to work through what are the basics that need to be considered for free in several public threads when the topic comes up.  Accordingly, a lot of peeps do not even understand their particular basics that should include considerations of their cashflow, other investments, view of bitcoin compared with other investments, timeline, risk tolerance, and skills, time and abilities to study, learn, plan, strategies, employ various tools that might include trading, reallocating from time to time and/or other possible financial instruments (which would likely come after they had already made sure that they had a somewhat solid grasp on their basics).

My post was kind of just an impulse, so to speak, an example of questions that, in my opinion, a beginner should study immediately after he learned the meaning of the word "futures". I didn’t want to sound like an upstart, so I didn’t give answers to these questions, (although I found out the answers to most of the questions, simply making mistakes over and over again/losing money). Therefore, of course, if within the framework of this thread there is at least one person interested in futures trading who asks me about something, then I will be happy to answer.

I totally agree with this expression, but I have another question. ^{[Are you personally involved in futures trading?]} I would even call this a rhetorical question, since I lead to the fact that disclosure would undermine your competitive advantage only if you were trading. But I'm also pretty sure that posting the intricacies of trading, regular updates, and answering questions will ultimately lead you to become a more disciplined, more knowledgeable trader.

Even though icopress seemed to have been presenting himself as a bit of a newbie in this category, I do believe that he could have attempted to provide some of the answers himself in order to help the subject along.

I don't employ a variety of more sophisticated financial tools in my own tactics, even though I figure that there are ways to allow them to better hedge my positions or even to allow me more optionality, downside risk etc, yet, I also know that there are some folks that will give away some of their strategies for free, and some of those strategies may well be quite solid in terms of managing your own situation that are not necessarily any better than if you were to pay for advices.   

Tank you for the input. I will try to analyse a few of those questions in future update(pun intended).

Please bear in mind that while a few question are good material for beginners (test platform one is quite good), other are the holy grail of trading (how not to miss a bottom? When closing a trade?): I don’t have this answer, as nobody has. And even if I had, for sure I wouldn’t share it, for free of for a paying fee, as this would severely undermine my competitive advantage in the trading.

This mean: everyone selling magic recipes in trading is, basically, a scammer.

This guy literally reads my mind ... Frankly speaking, in order not to scatter attention, I would prefer that there was only one accessible and understandable thread about Futures, (with the transition from basic knowledge to information published in the OP). Below are a few questions that I would like to know the answers to if I were a beginner.

• How theory differs from practice?
• The basics of hedging for beginners, (including strategies)
• How not to miss the bottom, (for example, is it worth placing a duplicate contract for price growth in an incomprehensible situation?)
• Action plan as an integral part, (where and when I should close the trade?)
• Security, (Trading against the trend, why my stop loss did not work, etc.)
• Test mode, (on which platforms can I get my first experience of futures trading without risking?)

We saw that coming, but not so fast!


https://twitter.com/skewdotcom/status/1393132333465808897?s=20

Obviously, when you put in the same arena

• A few investment bank trading desks, playing the cash and carry game
• The micro-bitcoin future, lowering the capital requirement to play the cash and carry game
• A bearish price action taking out a a few leveraged buys

Of course the curve must flatten.

Detail of the above image:


From 23% to 3% in three months. This is impressive.
I am just wondering how many bitcoin were needed to do so. I think it's difficult to extrapolate this information from the publicily available data.

CME launched a new version of their futures:

CME Group’s Micro Bitcoin Futures Open for Trading


So basically, instead of controlling the usual 5 BTC, a microbitcoin future will control only a tenth of a bitcoin.
Hence the capital will decrease from 300,000 USD equivalent to 6,000 USD.
This means many more traders will be able to benefit from the liquidity, reliability and compliance of the trading venue at CME.


Link to the Official Press release:
CME Group Announces Launch of Micro Bitcoin Futures

The days of the 20% contango at the CME are numbered:

UPDATE 1-Goldman launches cryptocurrency trading team -memo


Finally someone big enough came to the market. Soon they will start selling the future against the underlying flattening the curve.
We will see who will prevail between GS and the leveraged longs.

This is gold.

Contango plays on CME, how to gain from it, why it is still present:

How institutions are searching for crypto yields



This is a very nice article, detailing not only where is the “arbitrage” but also why it is there and what are the underlying dynamics.

I appreciate it all for such a valuable data and Usually a good finding for this reason and it'll make sense clear that nothing isn't a straightforward assignment for long haul reason inside this blockchain framework, it's truly an acknowledged assignment which has done and I moreover accept that Bakkt isn't however prepared to require the challenges to the favor of Bitcoin, one of the most issues in this stage is the cost instability so Bakkt will not competent to do something with respect to this issue, so diminishes will stay same and Bitcoin will pick up more space inside this framework.

Futures can for sure be used for both speculation and hedging. Futures are just a tool in the hands of the investors.
If used as a speculation tool futures have the advantage of leverage.
This means that with the same amount of money speculators can control a bigger amount of BTC, hence influence the market more efficiently.
is that damage? I don't know. Speculators take their risk and put their capital at work.
I don't know if it is unfair. In the end, they can very much likely lose their capital.
 

This thread is very usefull, because a few days ago there was someone who told me that the purpose of the future is actually very good this is a tool used for hedging. Moreover, companies need exact figures regarding future transactions that are often carried out for the purposes of their financial reports and their budgeting. However, today the market for the future is being damaged by the Popes who use the future not in its place, but as speculation. I was confused at first, because I didn't really understand about the future let alone BTC in the future, and finally I found the thread that you made. It was that you wrote that the use of Future is not only for hedging but for speculation as well. So why do some of my friends think that futures are used for speculation can damage the market and they are attributing the decline in BTC prices some time yesterday because BTC futures are due. Is that true?

CME is proving to be the main exchange for the “institutional” cohort of bitcoin trades.
Thence they stand out a little form the crowd. They have a few characteristic that put them on a different plan from the others.
Their future basis is lower than other exchange, meaning their future is being pushed down by institutional more than other markets.
In fact,  they tend to have lower trading activity with higher OI data, as they were used to hodl positions.

This doesn’t mean they haven’t done well this last quarter:


CME Group: Q1 2021 Bitcoin Futures Revenue ‘Higher Than the Entirety of Last Year’

Cool ... I don't even know how I missed this thread.
A little later, I will also share some details and perhaps formulate a couple of questions, (Simply put, from now on I am watching you).  

[1] The beginner's guide to technical analysis: https://www.babypips.com/learn/forex/elementary ^{[discuss questions of interest]}

Once again, an entertaining read on contango, this time by Arthur Heyes:

ALL ABOARD!




The guy might be a pirate, but for sure can write entertaining articles.

Looks like the Bitcoin contango is the hot topic of the day.
Bitcoin Magazine publishes a good recap of a J.P. Morgan report detailing how to play the bitcoin futures curve:


JPMORGAN EYEING BITCOIN’S CONTANGO, RELEASES BULLISH REPORT



I guess it is pretty natural, given the abundant yield it can be extracted from the market via cash and carry operation:



I want just to add you can find the original article here:
Wall Street Reports On Bitcoin

Finally, also Bakkt is moving away from the zero they registered during last month.
Actually, Bakkt is experiencing his record open interest:



Well, this other diagram will help to put all this in the right perspective:



While it might be unfair to compare Bakkt with some unregulated exchanges, it's worth noticing the comparison with the CME who has an OI 25 times bigger.

Apparently, I am not the only one looking into Bitcoin futures contango.
A very good article on Bitcoin Magazine tries to explain what is a Contango, why it is present in Bitcoin futures and if it is going to stay there for long.


A DEEP DIVE INTO BITCOIN’S CONTANGO

It's quite a technical article, but even if you don't grasp all the details, it's a good way to try to understand what is happening in bitcoin markets nowadays.


Recommend read.
Also, remember I am always here to help.