
How to Get Rich Trading Bitcoin - zinxq
http://www.cringely.com/2017/04/04/get-rich-trading-bitcoins/
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csomar
I found nothing helpful in this article. The OP talks a lot but then come up
to you and say "Buy the Dip, Sell the _peak_ ". Yeah, sure. But is it really
that simple if you don't pick the dates?

Let's say you started very lately on this game: You bought on Oct 08 at 588.
You then sold after a 20% gain: That is, you sold at 708 around Nov 12. Now
the price of bitcoin doesn't correct, it goes up full retard to 1160. Then
correct to 850. You buy there and "Boom", bitcoin still dump again to 740. Now
you are faced with a hard choice: Hold the trade until you make profit, or
dump it and "get the fuck out".

My experience is: Stress and uncertainly will play a huge role and you'll make
the mistake of dumping at 740 and only see the price rises later.

The OP's suggested trade is simply a retarded market making strategy. If you
are down for some business, at least do it right.

~~~
ge96
>...goes up full retard

haha

I bought late, I'm wondering why watching it real time drop in rice by
potentially hundreds, at least I consider it disposable income

edit: what I'm considering is selling if it goes up twice what I put into it,
to at least get what I put in then keep what I have, and let it fluctuate. But
I realize I'd miss out on the "compounding interest" by having more to
increase than less.

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donquichotte
There is very little substance to this article. This is the core "strategy":

"This suggests my new Bitcoin trading strategy, which I admit I have only
tried so far on paper. [...] Bitcoins go down in value when the demand for
them as transaction instruments decreases. When that Russian oligarch sells
his shiftload of Bitcoins for US dollars, Bitcoin value goes down. When that
happens — when Bitcoin prices drop by 20 percent or more — BUY! The price will
inevitably come back up, I assure you.

When Bitcoin prices rise by 20 percent or more — SELL! You just made 40
percent on your money.

Rinse, repeat, automate, get rich."

This is also known as gambling. I'm not judging gamblers, but if it were so
easy, the author of this post would have implemented it in a few lines of code
and actually gotten rich instead of writing a muddy, unclear piece of
trivialities.

~~~
dalore
Let me summarise it a bit more for you.

Buy low, sell high.

~~~
camus2
Yeah, lol, how low is low? how high is high? I mean this got to be the most
meaningless sentence ever.

~~~
mhluongo
That's the point of the summary. The blog post had no substance.

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nemo44x
Perhaps I'm reading this wrong but he would have done better just sitting on
the coins rather than trying to trade them.

He claims with his method he started with $100 and bought Bitcoins valued at
.05 which means he could have bought 2,000 BTC at this time.

He claims his method netted a profit of roughly $20,000.00. BTC is trading at
$1143.00 right now.

If he would have bought those 2,000 coins and sold them right now he would
have proceeds of $2,286,000.00, essentially all profit as it started from a
$100 investment. Plus he'd be paying a long term capital gains tax and not the
many short term taxes he'd have paid by day trading BTC.

I suppose buy and hold would have been the better strategy.

~~~
tinco
Buy and hold is only a good strategy if you have a diverse portfolio. The goal
of the strategy is then to keep the value of your assets, and maybe make a
nice percentage associated with growing economies.

If you are operating however with an edge on the market, that is to say you
have knowledge you think some percentage of the market does not have. For
example you profoundly believe that Bitcoin will increase in value, as the
author of the article does.

In that case, buy and hold is only a mediocre strategy. At most you will make
whatever the percentage is that the asset will grow.

If instead you make use of the idea that between now and the mystical future
bitcoin value increase, it will go both up and down, you can come up with
strategies that make you more money than that value increase.

I think it's possible to come up with a strategy that are guaranteed to make
you more money, based solely off those two assumptions "Eventually it will
increase" and "there will be fluctuations". Some simple ones I've come up with
I think come close to it, but I've never dared to execute any of them. I
wonder if there's people here who have.

~~~
nemo44x
It would appear that in this instance his strategy of trading the asset
numerous times over the years has led to significantly less yield than if he
would have bought and held.

If you have an edge on the market there's a good chance you're either breaking
the law or deluding yourself. Not that some people haven't found legal edges
and made vast fortunes from them - sophisticated mathematicians have for
instance. But there's many more who confused dumb luck for alpha and ended up
underperforming the market or broke over time.

You're right though - buy and hold is generally best applied to a diverse set
of assets. If you're making direct plays on companies and have little ability
to influence the board and leadership then that's a lot of unhedged risk.
Warren Buffet's advice is often confused with making directional stock plays.
He buys enough to get board seats and can influence the direction of the
company and has a track record of doing this well. Regular people will never
have enough of a bankroll to qualify for a board seat or have influence on the
management.

And yes, many day traders and swing traders have some strategies based on
short term changes in an asset but taxes are the killer. Short term capital
gains are taxed the same as labor but with considerably more risk.

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crispyambulance
I find it sad that crypto currency with it's really useful interesting
features is seen, almost exclusively, as a vehicle for investment thrill rides
(ie get-rich-quick bullshit).

Wouldn't be nice to have crypto-currency where the focus is simply as a robust
and secure medium in which to exchange goods and services? Am I missing
something fundamental about currency in wishing this?

~~~
elif
That's the view traditional financial market people have, and also the view
that they have of apple.

Their perspective is not the only one, but definitely the sexy one that media
can profit from.

As for the exchange of services, that is the basis of ethereum. Instead of
computing Sha(Sha()) over and over again, the mining network is a global
turing-complete computer designed around arbiterless smart-contracts.

~~~
_coldfire
Ethereum is still doing pointless hash crunching, just with Keccak-256
instead. The energy wastage will go away with a move to PoS

Regardless, the smart contract computing is still removed from the consensus
mechanism.

------
zinxq
The trading strategy aside.

The interesting part is that Bitcoin (or crypto in general) represents a
limited supply commodity that will (eventually) start to decrease in available
supply because it's also used as an active currency.

The users of it as an active currency (as opposed to the users of it as an
investment) are price insensitive and don't care what they pay to borrow
bitcoin for a few seconds. As long as volatility isn't crazy those few
seconds, they are in and out of it as a store of value immediately.

That activity further limits supply. That's the thesis. Limited and dwindling
supply along with having an active use that's price insensitive.

Hence his claim that apart from short-term volatility, as long as it increases
it's use as a currency, it's long-term value must rise.

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martinko
> growing $100 to $21,638.88 (almost a 220X profit) in about 6.5 years.

If he had just bought bitcoin and held it, its value (20000 BTC) would be
currently worth north of 20 mil. usd.

~~~
swyx
the domain name -is- "cringely.com"...

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strictnein
For the majority of people:

How to end up with $5 million trading X:

 _Start with $20 million_

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drivingmenuts
Dollars work fine as a transfer currency as well, given the short transaction
time.

1\. I order A Thing from ThingSupplier for $1000.

2\. I direct MajorBank to transfer $1000 to ThingSupplier from my account.

3\. Underpants gnomes at ThingSupplier coordinate with Shipper.

4\. I receive A Thing (now, The Thing) from Shipper.

There's no need to waste money in conversion fees.

What am I missing here?

Unless you're into high-speed trading, etc., the volatility of a currency is
not going to have an effect, because prices don't update that fast, because
ThingSupplier is not going to tie their prices to fast-fluctuating currency
value. Doing that would Not Be In The Interests of their Customers.

(Capped words because why not.)

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empath75
He discovered reversion to the mean.

I made some money doing that. I made more just sitting on coins.

~~~
FabHK
Just sitting on it is predicated on an upward trend, while his "strategy" is
predicated on mean reversion. Which one will it be? Who knows.

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conductr
IMO, also as an observer since it started, Bitcoin is media driven. Every time
it reaches new peaks it gains attention in media/blogs/etc until it something
bad happens like a hack/etc to trigger a sell off and it falls out of favor of
media. Eventually it repeats. It may be getting to a point where it doesn't
feel beta. It's a viable alternative when crazy economic things are going on
in India/China/etc and it starts actually becoming the thing it's supposed to
be: currency. Then, limited trading volume drives prices up.

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praptak
I have yet to see a strategy that passes this simple test: does it also work
if there are other people, most of them more knowledgeable about the market
than you, applying similar strategies?

Also, "Why I don't trade stocks and neither should you":
[https://news.ycombinator.com/item?id=6831461](https://news.ycombinator.com/item?id=6831461)

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anindha
The strategy is always either flat or long bitcoin. If bitcoin is only going
up in value it's hard not to make money. I'd be interested if his position
oscillated between short and long if it would be profitable?

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tboyd47
You're not going to get "rich" only investing $100 at a time. It's a good
strategy if you're buying Bitcoin to hedge against fiat though.

~~~
justinsaccount
$100 of AMZN stock in 2001 is worth about $9,000 today.

Investing is easy if you have a time machine or can predict the future.

~~~
tboyd47
Yeah, and $100 of Bitcoin in 2011 is worth $100,000 today. But like you said,
you have to know the future to only invest in wild successes.

~~~
fdsafEWSFSDFSDF
Or you could be a curious nerd like me who bought coins on IRC at 3$ a pop
trying to figure out what the hell this new thing is.

A problem for me now is what the hell to do with all these coins since I am
fairly sure i would lose half in taxes (Capital gains, Ireland), and I doubt
exchanges would accept "I bought them #bitcoin-otc back in the day" as a valid
source of funds and not report me to authorities.

On bright side can go mad shopping on Amazon and holidaying via Expedia

~~~
hackermailman
Use them to start a business, then you can dump the coins into the business
and not have to pay personal income tax. Otherwise all other schemes just lead
to tax evasion unless you cash some out via localbitcoins.com while on
holiday. In Thailand my friends "bank" is a service that converts his bitcoin
wallet to ATM codes to withdraw without a card.

