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Topic: How do you manage Bitcoin price risk? (Read 849 times)

copper member
Activity: 140
Merit: 51
as.exchange
December 28, 2020, 12:58:00 PM
#68
Bitcoin is risky, it is also very volatile, this also goes for all the other crypto currencies as well. You have to just learn to live with that and there isn't much you can do. Even if you do everything in your power and drop the risk as low as possible, it is still riskier than most other things. Which is why I think it is quite important for you to realize crypto will always be risky and get involved fully aware of that.

I am not saying people can go 100x leverage their positions and hope for the best, that would be riskier than normal, but even with DCA and buying periodically to drop the risk, you are going to still have big pumps and big crashes here and there, a DCA during 2018 would still be a loss, but would be a huge win right now. So basically you have to just drop the risk to regular standards and just wait for the price to go up.

You are right, but what about derivatives? For example by holding a portfolio of options+spot BTC, or futures/swaps+spot BTC, or even better - holding only tranched value securities, you can by yourself decide what amount of price risk to take, and whether it's upside risk or downside risk, or market-neutral risk. From my experience and to my knowledge, people who use financial derivatives can really fine-tune expected returns and without any hassle watch the price to drop or increase - they are in profit anyways, or at least don't lose anything.



managing the risk so as not to experience a lot of losses in bitcoin is quite difficult,
that is by using the stoplose feature if you are a trader, and the second is to buy back when the price decreases.

Very true - many inexperienced traders ignore SL&TP features and just blow their accounts very quickly for no reason.
sr. member
Activity: 2660
Merit: 339
December 28, 2020, 11:02:34 AM
#67
Bitcoin is risky, it is also very volatile, this also goes for all the other crypto currencies as well. You have to just learn to live with that and there isn't much you can do. Even if you do everything in your power and drop the risk as low as possible, it is still riskier than most other things. Which is why I think it is quite important for you to realize crypto will always be risky and get involved fully aware of that.

I am not saying people can go 100x leverage their positions and hope for the best, that would be riskier than normal, but even with DCA and buying periodically to drop the risk, you are going to still have big pumps and big crashes here and there, a DCA during 2018 would still be a loss, but would be a huge win right now. So basically you have to just drop the risk to regular standards and just wait for the price to go up.
copper member
Activity: 140
Merit: 51
as.exchange
December 28, 2020, 05:31:22 AM
#66
Totally agree. That's why one of my personal rules when trading is to be patient not just when waiting for the value to rise but also when waiting for it to plummet and exhaust. If you want to earn money through trading, you have to take the time to monitor the changes. You can't just keep holding without checking the charts regularly, especially if it's already nearing the exhaustion point. Otherwise, you might as well just hire an investment manager, which will cost you a lot of money.

Great point. As to my knowledge that's how our CEO was able to buy BTC @ $1.6k and later in 2018 sell it @ around $19.5-19.8k. Without monitoring it could end at $10k already (nearly 10x return which is very good), but it didn't. And as you correctly noted, the investment managers nowadays are not that useful but super overpriced.



For me it is not about holding, it is about understanding the charts. What if you do holding but the trend is against your bias then for sure you will incur huge losses. Remember that there are right time to do holding and it is only applicable when the market is trending. In order to manage the risk very well, you should have edge or what they called niche. The edge is all about mastery of a specific strategy for example you are a swing trader; do not force your self to do scalping or momentum trading. You should use the strategy that is suitable to you in order for you to have good risk management.

What you refer to is about investment horizon as well, which is dependent and relates to the investment strategy. Once could invest in BTC @ $10, and just hold until today... imagine how much they would earn Cheesy but that's more from investment side I assume, rather than trading as it is. But my personal opinion (in line with EMH) is that by looking at charts won't give any advantage at all - you look at the same thing with everyone, and there are way smarter people who interpret what others think by looking at charts. And the smartest ones go even further by considering what others think what others think by looking at charts. But just looking and analyzing data/charts which is known literally to everyone in the world won't typically yield in sustainable alpha over long-periods of time.



Yes, I really agree with you, because hiring an investment manager is an unpleasant choice too in my opinion, because besides spending a lot of money it also makes us a little complicated in knowing the assets we have, so it is very clear that you must always take the time to monitor chart changes and market conditions by ourselves.

True, besides as you might have seen some charts posted around that "smart money isn't that smart anymore" - professional IMs fail to outperform retail investors in 2020, which might be their beginning of an end.
sr. member
Activity: 1456
Merit: 359
December 27, 2020, 07:57:40 AM
#65
Some people simply ignoring market swings and just forever HODLBTC; with BTC price volatility, it's not that pleasant to see that today you have $1k in BTC, tomorrow it's $10k, and then $500...

Holding is the most effective way to manage the risk the volatality of the market brings but it isn't as easy as many people make it seem, the example you used above is a perfect scenario (although highly exaggerated) of what holders go through especially as you can't totally ignored the market as the news is always in your face. Every price movement is been discussed which makes you always monitoring your portfolio. The altcoins market is what could possibly give you the example you highlighted.

In crypto, everything is uncertain. And it depends on how we manage the assets that we have. I myself am still focused on being able to control my emotions and also do not easily believe all predictions especially those that don't make sense.

Not everything, the fact that the market moves in cycle of ups and down is certain and with that knowledge you can work on the perfect strategy to deployed in managing of your risk assuming you're not into the idea of holding.
For me it is not about holding, it is about understanding the charts. What if you do holding but the trend is against your bias then for sure you will incur huge losses. Remember that there are right time to do holding and it is only applicable when the market is trending. In order to manage the risk very well, you should have edge or what they called niche. The edge is all about mastery of a specific strategy for example you are a swing trader; do not force your self to do scalping or momentum trading. You should use the strategy that is suitable to you in order for you to have good risk management.
member
Activity: 122
Merit: 20
December 27, 2020, 05:16:17 AM
#64
Quote
People always miss the fact that noone who has ever bought bitcoin in a dip lost any money. Those who lose money are the ones buying the top (specially in bubbles) and have to face the bubble burst (like buying at $20k in 2017 and face the 2 year long bear market).

Totally agree. That's why one of my personal rules when trading is to be patient not just when waiting for the value to rise but also when waiting for it to plummet and exhaust. If you want to earn money through trading, you have to take the time to monitor the changes. You can't just keep holding without checking the charts regularly, especially if it's already nearing the exhaustion point. Otherwise, you might as well just hire an investment manager, which will cost you a lot of money.
copper member
Activity: 140
Merit: 51
as.exchange
December 27, 2020, 04:46:19 AM
#63
People will always want free money, that is in their nature, and I understand in some situations but you have to find the difference between the silly one and reasonable one.

For example, USA government is giving away money to people, that sort of makes sense, I think instead of giving money they should have actually do it reverse and pay everyone's debt, that would have been a lot better, and that way you would have to talk with less people, just the ones that are owed and you would pay more money in logic because people have a lot of debt, but you would at least get a discount compared to individuals who would do it one by one. Pay their rents, pay their bills, pay their mortgages, basically pay all the debt they have, when someone has zero debt, even if you do not give them any money at all, they would probably survive. But if you give them money, they would not be even capable of paying their debt fully and would still be at zero.

I believe you made a really great point! But that can be a totally different topic for discussion. That concerns more monetary vs. fiscal policies in relation to overall economy vs. targeted stimulus. For example in USA, yes, they just handle free money to everyone and did achieve a minor economic stimulus, but in China they didn't do that (even though Chinese economy was also not in the best shape after COVID-19 lockdowns early in the year), but instead what they did - they did very targeted stimulus. For example: entertainment industry (like theatres, cinemas, etc.)? - let it go bankrupt if it has to and cannot survive on its own - not a big deal; SMEs, BioTech, new Tech, and e-commerce? - support them and give super cheap loans, and all kinds of subsidies (especially to BioTech and MedTech - it's super crazy now here about this). Was that a good or bad decision in short-term? - As we see already it was a good one. Was it a good or bad decision in long-term? - We need to wait and see.

But speaking about the option of debt repayment for people I see both the good side and bad side about that though. The good side is as you mentioned - people get a huge relief and can have normal life. The bad side - 1) people will not learn from their mistakes, so once you pay off their current debt, they will get new ones, and history will repeat, 2) I as an average American, might not have issues about my debt (no matter how big it is), and would rather get free money and invest in US stocks or Bitcoin (best option Cheesy), if I am intelligent enough, and I could pay off even greater part of my own debt. And of course from conspirologist side - I would want to keep people indebted (modern slavery), would know that I get this money back anyways (since most people just go to waste that money by buying useless things), and add some dopamine to their minds so they will spend even more than what they received. So from that perspective, just handing free money is not the best, or nicest option, but it's the most optimal for society and for the ones above (I think, but my decision is by no mean is the final or the most correct one).
hero member
Activity: 2926
Merit: 640
December 26, 2020, 01:02:08 PM
#62
People will always want free money, that is in their nature, and I understand in some situations but you have to find the difference between the silly one and reasonable one.

For example, USA government is giving away money to people, that sort of makes sense, I think instead of giving money they should have actually do it reverse and pay everyone's debt, that would have been a lot better, and that way you would have to talk with less people, just the ones that are owed and you would pay more money in logic because people have a lot of debt, but you would at least get a discount compared to individuals who would do it one by one. Pay their rents, pay their bills, pay their mortgages, basically pay all the debt they have, when someone has zero debt, even if you do not give them any money at all, they would probably survive. But if you give them money, they would not be even capable of paying their debt fully and would still be at zero.
copper member
Activity: 140
Merit: 51
as.exchange
December 26, 2020, 05:04:39 AM
#61
For what I did when I do trade in different platform exchange is that I applied Technical analysis, watching the resistance from time to time,
and sometimes hold or day trade. Aside from this methods, I looked up also in the volume and for the buy support. Due to in this way I could have a chance to earn in the future, just be patient only.

May I know please for how long you have been trading like that, and how much you earned net of spreads, trading fees, inflation, etc.? And even better if you could share Sharpe Ratio, Beta, Treynor, alpha, stdev, max drawdown, return range, median, etc. - then we could see how profitable that actually was Smiley
copper member
Activity: 140
Merit: 51
as.exchange
December 25, 2020, 09:07:41 PM
#60
Same goes for me on where majority of people i've known do really ask me out about crypto or bitcoin generally on how i do make easy money with it without even thinking
that these things do came from all hard work.

I did rather give them some site on telling the basics and pointing out that this isnt an easy money scheme that you can get rich overnight.

Im always reminding them about the risk of losing money instead on making some gains.Managing risk is important because if you dont consider this then
expect for unfortunate things to happen.

Really happy to see such people! That indeed shows that there are some people left on this planet who are not crazy greedy and try to rip off everyone around. I guess this gives a hope that at least some of the Community Members are indeed good people, as opposed to the "get rich and cheat everyone around"-to the core in traditional finance and currently DeFi/ex-ICO.
hero member
Activity: 2996
Merit: 609
December 24, 2020, 05:13:36 PM
#59
to manage bitcoin price risk? of course by using a support and resistance strategy,
without this strategy I was very blind, and I succeeded, even though not 100%,
it's just that it makes it easier to handle risks in bitcoin volatility.
Not only in support and resistance thing but also in other technicals a well which you can really use on making up your analysis.There's no such thing about 100%
(....)
Telling buy low, sell high, support, and resistance strategy is really simple and easy to say, but if you will dive deeper, things are complicated.
We are talking about risk here, I believe every trader or investor may practice risk management, it is one of MUST strategy that trader needs.
Managing the Bitcoin price risk is difficult, that's why a lot of my family and friends already asking about Bitcoin to me and they are always telling me about "easy money", I always educating them that they should first know the risk, especially in crypto market.
Same goes for me on where majority of people i've known do really ask me out about crypto or bitcoin generally on how i do make easy money with it without even thinking
that these things do came from all hard work.

I did rather give them some site on telling the basics and pointing out that this isnt an easy money scheme that you can get rich overnight.

Im always reminding them about the risk of losing money instead on making some gains.Managing risk is important because if you dont consider this then
expect for unfortunate things to happen.
copper member
Activity: 140
Merit: 51
as.exchange
December 24, 2020, 12:51:25 PM
#58
Telling buy low, sell high, support, and resistance strategy is really simple and easy to say, but if you will dive deeper, things are complicated.
We are talking about risk here, I believe every trader or investor may practice risk management, it is one of MUST strategy that trader needs.
Managing the Bitcoin price risk is difficult, that's why a lot of my family and friends already asking about Bitcoin to me and they are always telling me about "easy money", I always educating them that they should first know the risk, especially in crypto market.

You indeed are doing a great job in educating people and clearly explaining to them what it actually is! Unfortunately not so many people are same with you, and would just blindly recommend to "buy all in" or to sell house and buy as much BTC as they can... Bitcoin is indeed an alternative asset for now and thus carries a great deal of risks, and consequentially great potential returns. Thus the one who cannot handle such risks will get killed quickly.

And even for support & resistance levels & tech analysis... Don't you guys think that too many people know about it now? And as more people know about a particular strategy or method - the less useful it becomes (see "Efficient Market Hypothesis") - you cannot outperform market if you do the same things with the rest of people...
legendary
Activity: 2506
Merit: 1394
December 23, 2020, 10:25:02 PM
#57
to manage bitcoin price risk? of course by using a support and resistance strategy,
without this strategy I was very blind, and I succeeded, even though not 100%,
it's just that it makes it easier to handle risks in bitcoin volatility.
Not only in support and resistance thing but also in other technicals a well which you can really use on making up your analysis.There's no such thing about 100%
(....)
Telling buy low, sell high, support, and resistance strategy is really simple and easy to say, but if you will dive deeper, things are complicated.
We are talking about risk here, I believe every trader or investor may practice risk management, it is one of MUST strategy that trader needs.
Managing the Bitcoin price risk is difficult, that's why a lot of my family and friends already asking about Bitcoin to me and they are always telling me about "easy money", I always educating them that they should first know the risk, especially in crypto market.
legendary
Activity: 3122
Merit: 1140
December 23, 2020, 05:54:12 PM
#56
to manage bitcoin price risk? of course by using a support and resistance strategy,
without this strategy I was very blind, and I succeeded, even though not 100%,
it's just that it makes it easier to handle risks in bitcoin volatility.

Not only in support and resistance thing but also in other technicals a well which you can really use on making up your analysis.There's no such thing about 100%
but as long you do make profits then that what matter most.When it comes on managing risk then this would vary on each traders ways on how they do handle it out.
There are various ways thought but it will be a situational kind of action so its up to someone on how he deal with it.
full member
Activity: 1260
Merit: 103
The OGz Club
December 23, 2020, 05:03:51 PM
#55
to manage bitcoin price risk? of course by using a support and resistance strategy,
without this strategy I was very blind, and I succeeded, even though not 100%,
it's just that it makes it easier to handle risks in bitcoin volatility.
copper member
Activity: 140
Merit: 51
as.exchange
December 23, 2020, 10:45:23 AM
#54
Well, it depends on who you are talking to about it because a lot of members here in the forum would prefer BTC instead of USDT but the majority of the new players in the market are aiming to have a higher USDT value and not looking at how much BTC that they have. I think that could also count as a price risk to BTC and how you manage it. Hedging your assets could be ideal.

A lot - yes, but still not the majority as can be seen from the comments in other threads. Furthermore, that's the case only in tech-advanced communities, but if you go to rural area of China, or very north of Russia, or to some jungle in Africa - nobody wants to get even 100 BTC for free. Just useless there Cheesy But you offer them USD and you will see a different reaction.

How would you hedge the risks? That's the main question I was trying to get opinions about from the community members.



DCA is simpler than all other options, you could find a "more profitable" method if you want to, but there is no method that is more profitable and also easier at the same time, DCA provides people with both very easy ways to make money but also profits them almost all the time as well. You could always suggest people something much better according to what you think, however that may not be as great for other people who try it out.

I personally used DCA for years now and I can honestly tell you that I can't even imagine changing my strategy, I love it very much. When you find something you love this much in trading world, it is a very rare feeling and you should never let it go. Just for the hopes of a bit more profit, you should not destroy all you worked for.

But simpler - doesn't imply better, right? And no need to find really more profitable ways, there could be more stable or sustainable ways. And as you said - there can be more profitable ways too. You are correct that you shouldn't give up on something that is already working just for a minor improvement of returns, yet, as financial markets are dynamic and continually change, same is required from risk management and investment strategy - it should be evolving and always changing depending on market state and changes, otherwise there's a risk that when everyone start using the same method - it stops working (called - alpha decay, - the more people know about a "good strategy" - the more other people use it, and the worse it becomes).
legendary
Activity: 3318
Merit: 1128
December 23, 2020, 07:16:43 AM
#53
I do DCA and it helps me get better results in the long run. Obviously if you end up buying at low and selling at high you are going to make a much much bigger profit, this way you are buying from low but buying from high as well and you end up with some average price, but this works out much better when price falls and you do not lose too much money compared to other people who constantly bleed out losses during the same period.

If you learn what DCA is and try to mimic that for a long period of time, you will definitely drop the risk to a very low level as well. https://academy.binance.com/en/glossary/dollar-cost-averaging . Check this out, it is from binance so you know it is a good source and you could learn everything you need to learn about DCA from here.

Sure, DCA is very common easy to implement, and relatively cheap way to actively managing your portfolio of assets / investments. However, based on history, other portfolio management strategies perform better than DCA. For example by simply implementing different ways of rebalancing portfolio, depending on market stage, you can get way better results than with DCA. And that's not to mention different types of financial products or more advanced financial strategies.

Here you can learn more about different "easy" ways of dynamic portfolio management strategies (buy&hold, constant proportion, constant mix) from Stanfrod: https://web.stanford.edu/class/msande348/papers/PeroldSharpe.pdf
DCA is simpler than all other options, you could find a "more profitable" method if you want to, but there is no method that is more profitable and also easier at the same time, DCA provides people with both very easy ways to make money but also profits them almost all the time as well. You could always suggest people something much better according to what you think, however that may not be as great for other people who try it out.

I personally used DCA for years now and I can honestly tell you that I can't even imagine changing my strategy, I love it very much. When you find something you love this much in trading world, it is a very rare feeling and you should never let it go. Just for the hopes of a bit more profit, you should not destroy all you worked for.
copper member
Activity: 2940
Merit: 1280
https://linktr.ee/crwthopia
December 22, 2020, 08:46:52 AM
#52
You touched upon a great point "most of the people want to profit on a USDT basis and not BTC" (my point not relevant here, but we had a nice discussion with the Community about if Bitcoin is for Fake Rich, and you just gave an additional prove to that Cheesy)
Well, it depends on who you are talking to about it because a lot of members here in the forum would prefer BTC instead of USDT but the majority of the new players in the market are aiming to have a higher USDT value and not looking at how much BTC that they have. I think that could also count as a price risk to BTC and how you manage it. Hedging your assets could be ideal.
copper member
Activity: 140
Merit: 51
as.exchange
December 21, 2020, 11:29:00 AM
#51
That is the advantage of cryptocurrency markets, and that's why I love it even though I have been down so many times with it. That's just the process of becoming an efficient trader and, hopefully, a profitable one. Anyways, once you have paired it with USDT in an exchange, you would get great volumes on it because most of the people want to profit on a USDT basis and not BTC. I'm currently not doing arbitrage at the moment, but the market maker is definitely a great strategy. 

You touched upon a great point "most of the people want to profit on a USDT basis and not BTC" (my point not relevant here, but we had a nice discussion with the Community about if Bitcoin is for Fake Rich, and you just gave an additional prove to that Cheesy).

Yes arbitrage is great in fact, as by definition it's "risk-free return", but usually it turns out to be practically not possible to implement, or the profit is so small that it becomes pointless. But yes, you had great points!

And actually about arbitrage trading we will have one innovative financial product for that in 2021, which nobody ever had (not self-promotion).
copper member
Activity: 2940
Merit: 1280
https://linktr.ee/crwthopia
December 21, 2020, 12:18:05 AM
#50
Trading 24/7 is definitely a good thing as it allowed people to react immediately at any time to the new events as opposed to stock markets. And what you refer to about trading anything but top20 cryptos is a valid reason as those pairs have less liquidity, less coverage, thus they have more arbitrage and inefficiency opportunities to be exploited by the ones who are able to do so.
That is the advantage of cryptocurrency markets, and that's why I love it even though I have been down so many times with it. That's just the process of becoming an efficient trader and, hopefully, a profitable one. Anyways, once you have paired it with USDT in an exchange, you would get great volumes on it because most of the people want to profit on a USDT basis and not BTC. I'm currently not doing arbitrage at the moment, but the market maker is definitely a great strategy. 
copper member
Activity: 140
Merit: 51
as.exchange
December 20, 2020, 12:49:01 PM
#49
I understand that as.exchange is trying very hard to bring as many people as they can to their website and one of the best ways to do that is create a discussion topic and talk about that topic as much as you can, replying to everyone as frequently as you can and use that to promote their website. This is MUCH MUCH better than those shills that start a topic leave a link and leave, those are idiots, if anyone ever wants to do marketing that would be basically considered guerrilla marketing by all accounts, they should take as.exchange as example.

However it doesn't change the fact that people do have good ideas here, specially the DCA version because that usually is something that works. I would say try to reply a bit more kindly as well instead of trying to create a bigger discussion.

Thank you very much for your kind comment! We really appreciate that. However, self-promotion is not the only point of current discussions, but rather we really do aim to find out how users in general manage their risks, succeed in the market, what they wish to have available, etc. Because whatever you personally, and anyone from our users wish to have, but doesn't have - we will make sure you will have that available on as.exchange.

And speaking for DCA, yes, as I noted, it is definitely helpful overall, however it won't make a person having great returns overall, nor it will save trader from significant or prolonged price declines. For example if you enter @ 18k, 19k, 20k, 21k, 22k, and then price declines to 4k, 4.5k, etc. The returns can be super negative, and if you used futures or margin account - it will get the entire balance liquidated.

By the way, please note that as far as to this point, we never posted our link, nor we even mentioned the alternative way of price risk management, which we do believe we have, but we don't want to disturb people with those types of "ugly marketing" which you referred too.



Well this is a very important topic you have choose. Im my experience on last 2-3 months  i see s a huge jump or a average dump. In this 2-3 months bitcoin help us to keep smile in our face. Though now it is in super hype because of it is breaking its all time high price records.  Though we know that we are going to see a huge dump very soon. I remember that thing that taking risk is a must choice on crypto but keep in mind that take a risk that much amount what you can afford otherwise take your profit and wait for price dump don't think what after happen your sell that price is gone up because you have think that you are now in a total safe zone wait for dump and invest again.

Yes, correct, but nobody can ever know when the pump will happen or next dump... Even Ray Dalio who recently finally accepted that Bitcoin could be a good alternative to gold. And even current $24k could be all time low price if you count from this very moment and afterwards price never returns to such levels. Then you could be discussing with your grandkids that you saw price of Bitcoin as low as $24 Grin or you could be discussing that the price was ATH @ $24k and then dropped to $1k and never went up again... nobody knows.



I consider BTC / USDT pair or any coin with the pair of stable coin is more convenient to trade when the market is acting either extremely bullish or bearish because we can make analysis for a coin only which saves lot of time and confusion while trading at volatile conditions. But it is better not to trade at all at bullish season until you see a huge drop on the prices which convince you that bullish trend got exhausted.

You are reffering here to one strategy used by some of our friends. They indeed made a fortune on such "safe" bets by leveraging a lot and acting on minor market corrections withing the major trend. But still, you don't know if that was a market correction or trend change.
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