Strategy So Far + Results

Thus far I haven't really nailed any big directional moves. Although I have had the right read on a couple, and a couple I have had amazing washout entries. Only to sell a pop for 10-20% then have the coin rally 100%+.

However this is fine. Capturing 4 trades with 10% return (each) on entire account is equivalent to capturing 2 directional trades for 50% moves, on 50% risk. Probably similar risk-reward as well, and definitely higher probability of success on the day-trade.

Thus far my break and butter trade has been identifying a stock that is up massively, and getting a liquidity providing entry on a flush, and then selling the pop. Most of the time the coin has peaked for the medium term but the size of the flushes are enormous. They generally flush to around the spot where the trend had accelerated.

I have found it very important to only go in half size originally, which allows for one more add lower if no bounce immediately.

I have nailed some disgusting entries by having orders in prior to the flush, and am sometimes immediately up quite significantly. Basically a liquidity gap, before buyers come in at the lower prices.

A big observation in general is that because of the volatility of the coins, any entry on a dip will at some point result in a bounce. So with a wide stop, and room to add, the probability of success is very high.

In fact I would go so far as to say, the only times I have ever really been about to hit a stop are the times when my initial entry wasn't the best; because I tried to throw in a little bias and picked some up at poor prices. And even then most of the time I have managed to scratch the trade out, because I added at good prices.

Results so far: I started with 0.1186 bitcoins which was NZ$350, at a bitcoin price of $2200ish (big spread on the local guy I used). Currently that is 1.77 bitcoins, with a bitcoin price of $2700, so roughly NZ$6000. That's around 4 doubles, only 7 more doubles to go until $1m haha...

Plan going forward: I will start to run into liquidity issues around my next double, so that seems like a good time to begin taking some out. Will take out around $3000, and then half my additional profits from that point.

At some point I will need to hedge my bitcoin exposure. Am hoping to do this when I start pulling profits out. I will find a broker that pays positive roll to hold a short bitcoin position. In terms of hedging strategy I'm not 100% sure. I would love to just hold it as a passive, except that it would need constant rebalancing; and I don't fancy myself getting squeezed on a passive position.

Point to note is that the bitcoin needs hedging for two reasons:

(1) I have exposure to the bitcoin price. And it could go down 80% or more.

(2) The opportunity in the space probably dies down if bitcoin goes down more than 50% (which it easily can). So I would also be hedging my own future profits a little bit.

So it's not urgent (because I don't plan on creating hedging account until $10k(ish) account; but it definitely needs to be done!

Note: It might be worth getting some historical data on bitcoin and analysing pullbacks vs bubble burst.