Topic: Investment strategy (Read 1792 times)

Yeah I am doing sort of the same thing there is really no strategy that I use in order you make money with Bitcoin. I just wait for the price to climb and when it is high enough then I just sell them against a profit.

I do not have a real investment strategy, mostly I just look at the price and than predict what is gonna happen.
I now hold my bitcoins till the halving and that is my strategy.   

Bitcoin is still like a company to me. When you buy bitcoins, you become a partner with bitcoin corp. If bitcoin corp succeeds, then you get your profits. If the company goes down, then you go down also. If the company bankrupts then you're fucked. Nobody would know if bitcoin will be there after 10 or 20 years. But USDollars will be there, as the  United States of America will be there.

The strategy that most people use is investing in bitcoins and then holding on to them for years in the hope that in the future the price will be higher then ever.
This is a risk because it is not sure that the price will be what people expect it to be.

I do not make use of any strategy when it comes to gambling. If I gamble I always try to go the safest route like with roulette I most the time play only red or black.
This ups the chances of me winning but the margin is not that high. 

To op`s question on which one to get involved with.

Just pick a winning side already that shown value over the years = bitcoin.

As for your strategy though, you might want to get a cheap or near free gpu to invest in the pump and dump alt coins to trade back into bitcoin as much as possible.

But dont expect a huge success, since these are pump and dump scenarios.

That is pure is speculation and I think you know this.
As great as SegWit with it's new possibilities which it will bring us is, there is no certainty that the price will show any movement just because this gets implemented.

The price is quite low at the moment. When the SegWit comes out later this month, the price will rise.

you ask how to invest to bitcoins? it's very simple just buy more bitcoins when they're cheap and keep them for year or two or even longer if you want, and when price will be good enough to sell for you, sell them and you will get more money

If you're pretty sure that price of bitcoin will rise even more,of course invest in them, buy many as you can and sell at right point

Just don't be afraid that after you bought some bitcoins or orther alt coins their prise will drop next day, it is normal

Yes, I totally understand what you went through. You are a good example of how hard is intraday trading, since even having a better knowledge of the market that the average other trader, you were still losing money. Even if we both believe that bitcoin value will rise, as said K128kevin2, the investment is still not safe, which make trading activities even more riskier. More than one should have broke his teeth trading on this morning variation (French expression, I hope it works in English )

Anyway, thank you a lot for your help and the time you used to help me.

Yes that is exactly right, it's a trading strategy. But yeah if you want to be safer then long term investments could be the way to go. Honestly though, if you're looking for safe, you probably shouldn't be looking to invest in bitcoin.

I agree with your thought process, especially the underlined parts. Be forewarned that the temptation is very strong to slide from investing to trading, even among those who should know better. I know this not only because I have seen it on this board, but because I have given into the temptation myself to some degree: I mostly HODL, but I've taken a small percentage and tried to play the short term market. My rationale is (was) that I follow bitcoin almost everyday and I understand the fundamentals much better than some of the traders out there. Still, as a trader, I have lost money. I'm net ahead right now but I attribute that to me as an investor, not me as a trader.

Even if you were to trade the market short term and get lucky, there is a good chance that your studies would suffer. You'll be staying up all night when the market is in flux and you'll be missing classes the next day. Stay strong

When I started to go over the trend, I used this website to check if it's an upward and downward slope although it doesn't predict possible outcomes and it shows real time only: www.coindesk.com/price/
So to benefit you should sell when price is high and buy only when price is lower. The amount of investment you should sell  is dependent on a case to case basis for instance if its day 1 that its on upward slope then I would go with 50% at most as it could still either go higher or worst, even lower but if it has been on day 3 of going upward then I would go all in already as the overall benefit percentage is good already. When the trend is going up you shouldn't buy at that moment as it's risky since it could go down the minute you purchase some. For long term investment, I would advice building a good mining farm instead.

I like your idea since it fixes, as you said, "rigit set of rules". Moreover, these set of rules can be adapted by everyone according to specifical calculations. Nonetheless, this could more be defined as a trading strategy than an investment strategy and I am not willing to trade because of 2 main issues. First, my trading skills are very limited, and the probability that I will not benefit of the bitcoin, or even more lose money, is high. Moreover, I am still a student and want to obtain a good diploma, thus my study take a lot of time, and I would not be able to follow consistently the variation of bitcoin's value. One could argue that I could put automatic buy and sell orders, but this will go again my first point. I rather think that I could benefit more investing in the long term and applying simple strategies than being lost in a competitive market full of skilled trader.

I think that first and foremost, it's crucial to have a relatively rigid set of rules for when you buy or sell, and how much. I like the idea of going through a cycle - for example, consider 10 buys/sells, each using 10% of your total money that you've allocated for investing in Bitcoin. Let's say you only buy when a certain number of indicators say that the price will go up, and only sell when a certain number of indicators say the price will go down. Let's also say that you sell whenever the price is 5% higher than the last time you did a buy, and buy whenever the price is 5% lower than whenever you did a sell.

So basically you have a cycle of 10 trades, some of which will lose money, some of which will win, and none of which will win or lose more than 5% (assuming you sell and cut losses if the price ever goes down by 5% from where you bought it). If you win 6/10 of these (meaning your indicators are right 6/10 times) then you'll make some serious dough.

I think something along he lines of what I described above there would be optimal. You just have to be rigid with the rules, and expect to lose sometimes (but overall, win in the long term). The hardest part though is, of course, getting good indicators of where the price is going.

One method could be get into a signature campaign.  They pay better if you are a higher rank, but some do allow lower forum ranks as well.

Every time you get a payout, you match that amount of BTC.

Over time, you will accumulate a good amount of BTC, and will have only paid for half of them.  Will take time, but would work great!

I totally agree with you on most of what you said, and I appreciate and deppreciate all the explained method for the same reasons that you do.

After having this debate with you, I think that I reached a solution which could be risky the 1 month. Indeed, since I will invest an amount that I can afford to lose enterely, I will fix my investment monthly/weekly objectives or limits depending on the volatility once it would have reached a value that I would not be willing to lose (following the theory that Bitcoin value will increase). At this point, since I have no idea how fast and with which level of volatility the bitcoin value will increase (even if it would), the way I will monitor my strategy monthly/weekly seems blurred. Nonetheless, thanks to the strategy you told me, my range of choice is now much bigger. This task will be hard because of the volatility of the currency, as you said, fixing a caveat of 50% would have few sense considering that it could happen. Thus, to give an example, I could apply your strategy or the SSS when I could afford to lose everything, and slowly change toward another one when the created profit would matter for me.

Thank you a lot for your help and sorry for my non maternal English.

Ahh, I see that you have in fact already stated Prospect Theory in a nutshell. You beat me to the punch

It is true that my modified SSS plan does not cut losses in the event that bitcoin dies forever.  In fact, by my plan, the net value of the initial investment would go entirely to zero. [Note: this is also true of HODL.]

Let's say we want a plan to ensure that we limit our losses to some fixed percentage of the initial investment. Let's say 50% for the sake of argument. We decide to take either my plan, or the original SSS plan, and modify it according to one of the following methods:

Method A: Use either my plan or the SSS plan, with the caveat that if the bitcoin price drops to the point that the net value is 50% of the initial investment, then we convert all of our bitcoin into dollars. Either that's the end of that, or we re-enter the market at a later point in time. (When? ... )

Method B: Take 50% of the initial investment and put in under a mattress. Use the remaining 50% and risk it all, according to my plan (or the original SSS plan).

Method C: Start out with Method A; if all goes well and the net value goes up, then at some predetermined price point, withdraw enough in $ to cover 50% of the initial investment and stick it under the mattress. Then, with the remainder, convert to my method or the original SSS method. [Or perhaps do a variation of method C, but in stages.]

The problem with Method A is that it leaves you widely exposed to precipitous price drops which are very very common occurrences. The number of times that the price has dropped more than 50% is legion. If you think that you can exit completely at time T1 and reenter at T2 and be better off, then you're basically thinking that you can beat the traders at their own game, at precisely the time when experienced traders are most likely to win money from inexperienced traders.

Method B is really just the same thing as my original method (or unmodified SSS), but where you are more conservative in how much you invest.

So I don't like Methods A or B.

Method C works out great if the market goes way up before it goes way down (which of course it will at some point). But it doesn't say what to do if the market goes down soon after you enter it initially.

Part of me is thinking that Method C might be the way to go. But to tell the truth, I'm not convinced yet.

Perhaps, this:

Method D: Same as my plan or the SSS plan, but where the percentage is variable (as a function of ... ?) instead of fixed. But how, and why?

I'm leaning nowadays towards Method D. But I haven't settled onto exactly how to vary the percentage. Some possible parameters: 1) Vary the percentage based on your evaluation of the fundamentals as they change, keeping in mind that it is long term prospects that you are thinking of. 2) Vary the percentage based on how far above or below the long-term trend line we are. Right now we're way below the long term trendline, which would mean to be more aggressive, i.e. higher percentage. 3) Throw in a dash of Method C, like this: start out with lower percentage. If market goes up, siphon off profits and put them under the mattress. Once the original investment is recovered, feel free to increase the percentage and keep it there.

Intuitively, I like parameters 1) and 2). But something tells me to be wary of 3), that it could be one of those things [1] in behavioral finance that we do that feels good but is in fact irrational. The reason is that I can't find a good theoretical justification of it that doesn't commit one of those logical fallacies that we are prone to.

[1] EDIT: Prospect Theory is what I'm talking about, that we (irrationally) value gains and losses differently. http://www.investopedia.com/university/behavioral_finance/behavioral11.asp

Forgive my words, it is exactly true that buying or selling listening to feelings is the wrong thing to do since most of the time feeling will tell you to keep holding shares when they are drecreasing and sell them quickly when you reached some profits. Indeed, I wanted to say that I do not want to follow this idea, even if the bitcoin was meant to reach such high values and that it would mean a hell amount of profit.

In fact, I personnaly think that we are all speculating when we think that Bitcoin value will increase, even if this argument is supported by good reasons (in which I believe). Nonetheless, the SSS plan is based on a huge value increase, and its biggest default is that it do not regard any possibilities of the bitcoin losing value, or at least which plan should we follow in this case. This is maybe why, in your second post, you gived me an idea on how I should act in the case of the bitcoin value increased or decreased. But, once more, this idea is still based on the fact that the bitcoin value will grow. The boundaries of this way of doing are that, even if the bitcoin could be meant to be more valuable, it still hard to know until which point.

I personnaly believe that it is important to look at both ways, the value increase that could make us richer, or the value decrease that could prevent us from enjoying any profit if we are not willing to short our positions.

A good investment can be a business itself. you might wanna invest on gambling site as an owner instead of becoming a trader which would need you to have the skills. Learning the trading skills takes time and may require you to lose some money during the first few steps of learning it.

If i were you i owuld just buy some bitcoins and hold onto them, Ive dabbled in the world of altcoins but its a total gamble (not that bitcoin isnt). Ive probably lost more in altcoins than ive gained but maybe you will be the exception to the rule because someone has to gain from them. Out of all the coins though bitcoin is the safest bet, its THE coin and if any of them are going to make it it will be the main man himself. As for when to buy them thats anyones guess. I thought they were to expensive at £150 each so i never bought much, i now think they are too expensive at £300 so ive not bought any. Im sure once they reach £1000 i will think they are too expensive at that price too.

Fair enough. I would be interested to hear what plan would meet your qualifications that does not require you at some point to shift into "trader mode," which means that you are trying to beat professional traders at their own game. Which is hard to do if you are not a professional trader. By my understanding, a good trader is kinda like a good poker player: it's (mostly) about human psychology. Look at what you wrote above: you are going to "buy back when I will feel it's the good moment" (emphasis mine). Ask yourself this: how do traders make their money? Where does it come from? answer: most of it (or at least a sizable chunk) comes from non-professional traders who trade based on their feelings. Therefore, trading based on what you feel the market is going to do in the short term is (arguably) exactly the wrong thing to do.

 

The only thing that I can do is to give my experience and/or my results on it.

First I believe in bitcoin. So my primary investment is to have bitcoin as much as I can. This rule cannot be changed for me. I don't trade with bitcoin because I am not able to do that. But even because don't believe so much on it. Cannot be possible to calculating the movements of the price of bitcoin. I think that is impossible because of to many reasons (decentralization, without owner to take care or manage its value, speculations, impossibility to find or evaluate the demand and its increase etc). So my first rule is to have as much as I can bitcoin and possibly invest it to have even more. So in few words, buy, earn and invest to earn bitcoin.

Regarding its investment I have invested on two other crypto (using bitcoin): horizon and ethereum (which are much more than a simple crypto: are a complex project) hoping in their success as projects and not only as a currency.

I have invested then even in other three businesses online from which I have (or hope to have). There are two-three months that have very good profits from two of those and hope to have much more in the third but not now (it is a long term one). The first two businesses have mostly strong points to believe on those and I am having profit which make me believe that have found good sources to increase my bitcoins and my money (can invested bitcoin and us dollar). The first have more than 5 years online while the second give live all this activity and make vary fair promises like no one other online business. While the third have secured all the investments with an Insurance Fund which for the moment hold and amount in us dollar about 30% more than the overall amount of deposits made since today on that site. All the three businesses declare their source of profit.

This is all. If you need more detailed info pm me.

I agree with you mostly on what you said and I thank you for your advice.

Nonetheless, concerning the following sentence "You will need this inner peace so that when the price goes from $50,000 to $3000, you will not panic sell, but will instead STICK WITH THE PLAN." I would rather fix myself a limit on how much I want to lose, and buy back when I will feel it's the good moment. This is why I would think that fixing a limit in value decrease could prevent from loosing a big reward. In this case, you are right since you stick with the plan, which is the most important rule in investment or trading, but I would not agree with your plan.

Well if you're going to buy BTCBTCBTCs and hold them for a long time then you can consider that a worthy investment already. Same for some alts, Ether maybe?

It's either that or you find a legitimate investment. Avoid trading, it's an unspoken rule for those who aren't seasoned traders that long term holding are much more profitable than frequent trades.

Here's a little more detail on one way to execute the Buy Low, Sell High Plan.

First, decide how much capital you are willing to risk. Decide now that if you lose it ALL, you will at least have done it betting on something you believed in.

Next, decide that you are going to peg your bitcoin investment so that at any given point in time, the percentage of capital in bitcoin is X percent, plus or minus some range. For the sake of argument, let's make it 75% plus or minus 5%. That means you will base your buying and selling so that the value of your bitcoins at any moment in time is always between 70% and 80% of the capital that you have in the game. If bitcoin rises, then you will start to sell it off when your bitcoin investment hits 80%. Then, if bitcoin price falls, you will start to buy some back when the bitcoin percentage hits 70%. If you run the numbers, I think you will find that if the price goes from P, then enters a period of volatility, and ends up right back at P, then your total stash will be increased, even after taking fees and the spread into account. The more the volatility, the greater your profit.

And the great thing is that your actions will help smooth the market. If enough people do this, the ride to the moon will get smoother. You will be providing a service to the community and you will be getting paid for it

Who's with me???


EDIT: Don't forget the first step, the one that even the ballsiest of the bulls will still have trouble doing: make peace with the fact that you could lose it ALL. This is perhaps the MOST IMPORTANT step. You will need this inner peace so that when the price goes from $50,000 to $3000, you will not panic sell, but will instead STICK WITH THE PLAN.

If you could send a message back in time to a younger version of yourself in 2011, when it was at $32, would you tell yourself to be a trader or an investor? (Those are the only two options. You're not allowed to tell yourself what the price is gonna do.) Most would be better off to say investor. 

I would suggest you approach this like an investor rather than a trader. An investor is someone whose belief in the long term potential of bitcoin is based mostly on fundamentals, and is not much affected by price fluctuations, which as you know will give you whiplash from watching it and will likely continue to do so for years. So when the price drops, if anything you might buy a little more. The last thing you do is sell because of a price drop, which is what the majority of trades represent because the majority of trades are executed by traders, not investors. (I don't have numbers to back that up, just a hunch.)

There is a formula called the Sane and Simple Savings plan https://bitcointalksearch.org/topic/sss-a-sane-and-simple-bitcoin-savings-plan-345065 which is advocated by quite a few on this forum. Basically the idea is that you assume it is going eventually to the moon, and you plan to divest it in tiny increments on its way to the top.

I have been contemplating a modification of the SSS plan, which is to sketch out a formula to buy some back when it falls. You could even set up a bot to handle the sells and buys automatically. And here's the beauty of it: the only way to lose in the long run is for bitcoin to fail utterly. If it takes a nice smooth ride to the moon you are golden. But if it takes a jaggedly, volatile ride to the moon .... drumroll ... you are even BETTER OFF than if it's a smooth ride. That's right, I said it: this modification of SSS (SSS + buy back on dips, according to a formula) allows you to PROFIT FROM VOLATILITY. Which means that while everyone else is getting ulcers, you'll just smile knowing that every 10% down, 10% up fluctuation just increased your stash by - I dunno, a very small percent, but still it will be an increase. Woot!

just my two cents.

Hello everyone,

I am actually facing a wall in figuring out how to invest in Bitcoins or other alt coins.

Indeed, I don't know in the case that the trend is going up, when I should sell my bitcoin and cash the benefits. Moreover, I don't know neither if the trend is going down when I should sell my bitcoins in order to reduce the loss. I am also thinking, for both case, of the amount of my investment that I should sell, 100% or less?

In addition, if we considere that the trend is going up, shall I consider buying more bitcoins? If yes, how should I determine how much?

It is also important to add that I am willing to invest in the long term, and not trade everyday bitcoins.

If would be really kind of you if you could help me with constructive argument, I am already aware that I should invest an amount of money that I can afford to lose . Nevertheless, I am not aware of how to effectively manage my investments.

Thank you in advance for your help.