Topic: How do you manage Bitcoin price risk? - page 2. (Read 787 times)

Indeed BTC has less risks compared to altcoins. However on the contrary BTC is super risky compared to traditional assets. About risks and volatility overall on average it's like this: bonds < stocks < commoditiies < alternative assets < Bitcoin < altcoins.

And isn't it contradictory "bitcoin price has a risk but we can avoid that risk by investing an amount that we can afford to loss"? I am afraid it's not avoiding risk, it's simply accepting it, and actually preparing that this risk will destroy your capital.




I don't recommend any strategy actually, since it can be easily automated, and if so - it's already known and in use by someone who can do it better than any of us and faster. I think, as I noted before strategy, skills or experience are not the things which make successful trader/investor, but the financial instruments they can use. As you cannot invest in million things which are accessible to the elites of financial world.




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.

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.

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.

I'm completely aware that with the pair USDT-BTC, you could get really volatile. So whenever I'm trading right now, I stay away from it because those swings will either benefit you or kill your account in the process. With my current trading setup, I avoid the top altcoins and BTC from my trading pairs just because of those swings. I mainly regret the part where I included XMR because it left me a bag, but it's quite far from the liquidation limit.

I think the innovations on trading in the stock market have affected and definitely the same it's just that in crypto, it's 24 hours. No closing in the day or night (in different timezones). It can be called an innovation because it wasn't previously used in that category, but it doesn't mean it didn't improve.

So what strategy are you're recommending of I may ask?, holding has always proven to be more successful and the safety among all the strategies out there. Basically you lose nothing, all you just have to do is to wait. While I'm not doubting such scenario you highlighted to be the case but do understand that you're putting out some outrageous example there. Sure things will become costly but not to the extent of putting your investment into lose.

There's a reason why investing is the best bet against the future economy, the chances of having much more than your current have is certain most especially when you pick the right investment. Bitcoin is a perfect example of the right investment as it has all the features of a success investment. It has a finite supply which guarantee price increase provided the demand of the asset remains constant or increase with time which from every indications is certain.

I have to admit you basically wrote the entire trading strategy, which if implemented carefully can yield some decent returns But I would love to know about your hedging part - how do you actually hedge except for partially liquidating BTC and entering USD?

First of all you should accept the fact that crypto is volatile and you can not possibly change that, so if you started to trade crypto you should be aware of that.

All you can do is to just limit your exposure to risk using some strategies such as dollar cost averaging, hedging and of course using stop-loss and take profit all the time.

The most useful strategy would be dollar cost averaging which if used properly can significantly minimize the risk you're taking on your trades and give you a better entry price whether you're shorting or longing or just buying on spot without leverage.

You are referring to volatility trading, then why don't you try trading options since there you can make bets on volatility, or trade BTC and hedge the adversary volatility change with derivatives Also there are straddles, strangles, butterflies, etc., etc. where you can just construct the desired position to make your bet. Like that with derivatives you: 1) get higher ROI (because cheaper than spot), 2) can fine-tune your bet, rather than take 100% market up/down potential, and 3) with current crypto market state not too many people do that (yet there are some of course) so could earn decent arbitrage profits.




Just gave up on trying to manage price risk? well, that's kind of passive strategy, which is also okay. Like in capital markets in the past few years passive investors (ETF / Index holders) tend to earn more net of fees as compared to active investors. Yet, the very few among active ones can earn very substantial profits.




Yes, you are indeed correct.




If someone believes in strategy, then why not just use algo-trading or directly invest in algo-fund which employs that particular strategy then?

It takes time before you'll be able to master any strategy that you'll going to use inside this market, if what he's said is just simple and really being followed then logically most traders are gainers,

But in reality, this principle is not that easy even how you tried to established your position, there's a time that ongoing trends will hit you up to cope up with the situation.

Very important to deal with every decision that you take. Fund management is a type of skill that not anyone have, by managing it right your position inside any market is much better in the long run.

Easy to say but really hard to be done.I would ask you if you do able to spot out which is the bottom and which is the peak price?

If this thing is something that can be known or to be handled then lots of us traders are making serious profits now since we can able to handle
out those price volatility which is the most impossible thing to be done as a trader.

Managing risk will particularly talks about on how you gonna handle your capital and making yourself sustainable into this market.

It will vary on someones goal because there are people who do focuses on making some accumulation and aiming for long term and there are people who do really
make out some active trades in short span of time for them to make out some money out of those volatility or movements.Risking is always been part and
managing it wont really be that easy because it will really be affected on someones emotion when it comes on decision making.So experience will really be
the key and a strict self discipline regarding on how you do deal on such situation.If you know that you are already on gains then better to secure it.

Bitcoin volatility is indeed very high, this is what makes investors and traders think of buying bitcoin,
but take it easy, there are strategies to minimize that risk, you just need to buy gradually if the price of Bitcoin has decreased or dumped,
then your capital will be maintained.

Being in the market for a couple of years, I don't manage bitcoin's price risk anymore. I'm looking to it as something positive just as its volatility will make my investment someday higher than what I'm expecting. Just as you've said that a forever hold guy, I think I belong to that group.
No worries even if the market swings from top to bottom and vice versa, what's important to me is that I'll see someday the bitcoin I've got will rise in an unexpected price. Although it's a tough game for holders, patience is really one of the key to overcome those market swings. With the experience and witnessing and enduring several bears, it made my feeling numb as I look at the price.

Honestly I am not that great trader as to know those terms or use them in reality. I have been literally normal trader all the time and the kind who just holds bitcoin and get some profits when bitcoin's volatility shows some upward moves. The one who buy at bitcoin's lowest possible point of that month or quarter and hold for few months and take the action as soon as it goes up.

However, it's always been hard decision as to when to enter into crypto. Bitcoin is hard bitch, and just now the market gone up by 10%+ in few hours. So it's very hard to decide whether I should get in or just wait for the market to drop. These kind of decisions are still hard for me to make all by myself.

I am very interested in this thread and will see what others has to say about this.

Aren't you worried with altcoins more about price risk? There it's well possible for price to quickly collapse if you don't know the actual situation when you enter in position.

Always i worried about bitcoin when i trade btc to usd. Another i don't worried bitcoin i try to only growth satoshi alt coin buy sell.

Yes, that's why with actual trading strategies and risk management techniques there's no sustainable method of getting rid of price risk. Those will just try to make sure that "on average" you don't lose all your money. But average is just all valued divided by N, and you never know if the next value will become so extremely negative, that it will destroy all your previous small positive values, yet still on average keeping you with modest positive returns.


Yes, you made very good point about liquidations. The reason behind that is simple. First, it's at the core of those exchanges' business model - to get you liquidated (most of the times it will happen) - then it's exchange's earnings, and you just lost everything. I saw a lot of exchanges that survive entirely on this "liquidate all" model (sometimes manipulating numbers also - to get you liquidated). Of course not everyone is like that, but the majority is. Second, with FOREX and commodities - they are more regulated, people entering there overall are moree educated (by % of total capital in FOREX + commodity vs. crypto) thus they know more about what they are doing. And those people actually try to invest, as opposed many newcomers in crypto who know nothing about leverage or Bitcoin, but heard in the news that Bitcoin always goes up, and see leverage of 100x and think "Im gonna become next Bill Gates tomorrow with this". Once crypto truly becomes mainstream (I believe it will eventually) the trend for liquidations will somewhat balance for FOREX, commodities and crypto.

As for the new products, I would really appreciate your, and other's opinion about this, where we describe a new type of financial product (new not only for crypto, but for any other market you can imagine; not advertisement, but truly appreciate all your comments and opinion on this): https://bitcointalksearch.org/topic/--5299655

And yes, when BTC price keeps growing - everyone is happy (apart for shorters of BTC ), but once it reverses (and you never know when it will start - maybe after few minutes you check the price) - then here comes the downside which most of the people didn't bother to / didn't know how to protect. And the value of BTC is very unlikely to stay same - back in 2018 you could buy 1 apartment in Russia (and even in Moscow), apart from other cities. Then in 2019 - you couldn't buy even half. Now you can buy part of it probably - that's the issue with price risk.

They do offer the old-fashioned and traditional products but what's more interesting is the fact that the amount of liquidations happening every now and then are extremely higher as compared to what we see in forex and commodity derivative markets. I'm happy with what's already being provided but will definitely love to see something new rolling in so the old things get a competition. About price risk, how is it not pleasant to see our BTC's "price growth"? When the value of our BTC will remain the exact same in BTC since we hold it, it doesn't make any difference.

Truth stop limit will not work the same as you like to use it many people use it and think they will save their trade for more losing streak  . Many traders lost a lot because of this function, due to its very volatile price it is easier to hit your stop limit than your price target.  volatility is the main problem of Bitcoin and  that's why it's not good suggestions to always have this option it can easily break your stop limit many times . Risk management and good entry is the best option to enter in the market with low leverage if your in the future trading .

I assume that's because holding is just the easiest way for now. There should be someone like Robinhood but for crypto-derivatives to allow more people know about how to profit from various market opportunities in easy and simple way.

And thank you for your kind comment If you will have any recommendations or suggestions, please let me know - we will be happy to not just offer "build by traders for traders" but "by professionals for everyone", with what common people and everyone wants and understands.


No need for crystal ball at all. For example people could benefit not from "futures", but also forwards? from principal-protected products (call option combined with risk free asset)? from BTC-linked maturing swaps? cross-crypto swaps? there are many many other opportunities in fact, that are currently overlooked and ignored. But they could really benefit common people (with proper explanation of course). And apart from that there's something even more interesting that is being launched than those "well-known derivatives"😉

As for strategy, plan, etc. - you are right! But that exactly limits the "entry-level" for people. - too complicated, too hard, too risky, too volatile, too ... Shouldn't there be a pimplier way for common people to understand what it is and be able to get what they want?


Great profits = great risks, indeed mostly is the true case and known from finance theory, that expected return is compensation for taken risk. And I believe earlier in this tread I mentioned why even with long-term risk management is important. It's like with pension funds - they have very long investment horizon, but they take active approach in managing their risks. And art investors also take good care of their asset. Don't just throw painting of Picasso to the garage and say "I will come to check you after 15-20 years"

I totally didn't mean new ways of trading or new trading strategies - that's indeed a different topic (skill vs. luck vs. insight information vs. tools vs. products vs. strartegies), but I meant about new products (including what I mentioned above about principal protected notes).