On margin trading and trading as a profession - and Einar Aas

in #trading4 years ago

Within the crypto sphere, there are lots of people who have become traders - they sell and buy different crypto currencies based on rumors, different "inside information", technical analysis and/or pure gut feeling. Yes, I've to some extent been there myself. The market rate wobbles up and down, buy while it's down and sell while it's high, how difficult can it be? Quite many are earning good money on this. It's possible to up the gears through margin trading, if one is betting right one will be able to multiply the profits with some constant. If one got the bet wrong, one ends up losing big time. I've only once tried margin trading on a very small scale - that's not for me. Well, if one really do know things the rest of the markets don't know, then indeed one may have an edge.


Comics stolen from dilbert.com

Yes, I actually do quite a big profit on trading myself - but that's a difference, I'm converting local currency with cryptos, and I always take a commission. If the rate doesn't move much, I win on it. If I have trades going in both directions at the same time, I win on it. Even when there is much flux in the markets and everyone tries to "buy the dip" or sell before the dip, I expect to go with a profit, the risk is just much higher.

Some people will be buying and "hodling" some currency because one has read up on it, understands it and seriously believes it's much better than the competing coins - yes, that way one can also possibly expect to earn money in the long term - by actually doing a proper due diligence one may have a long-term edge over the rest of the market.

With those few exception, I believe day trading on different crypto currencies is nothing but gambling, it's a null-sum-game, whenever you earn on it, someone else (probably) loses, and vice versa. Except, the house always have the edge. In the end of the day, the exchanges will for sure earn money on the trading ... they never lose on it ... or?

There is some buzz in Norwegian media those days, one man has been gambling successfully on the power markets for more than a decade, he has over and over been placing the right bets on the electricity forward markets and for the last few years he's been among the handful of people having the highest taxable income in Norway. Well, this year his gambling has turned pretty sour. Within few days he has become bankrupt. It doesn't end there, the exchange (Nasdaq Clearing) is also losing more than a hundred million EURs (though, they are able to push most of the losses forward to other clients). Some few days of heavy rainfall in Norway after an extraordinary dry summer, plus a rise in carbon prices in Germany, that was all that was needed for this man to go bankrupt.

The bottomline? Never invest more than you can afford to lose, stay away from margin or derative trading unless you know very well what you are doing, and do remember that trading is essentially gambling. If you're really sure you have an edge you may expect to earn some money on it, but keep an eye on the risks, and don't let some few successful trades convince you to quit your dayjob.

Sources in English, with some different viewpoints:

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I used to daytrade crypto's back in 2011-2014, and back then I did actually make a living doing things like arbitration trading of price differences between exchanges. Now there is ofcourse a ton of bots doing that and no place for a manual trader like me. These days I just buy and hold the cryptos i believe in for the long term.

I was interviewed in a Norwegian magazin several years ago because I was for a short while living of trading cryptos, have a look here if you want:
https://steemit.com/blog/@xtetrahedron/kryptisk-verdi-a-norwegian-interview-i-was-featured-in-about-crypto

I made a bot trading at bitcoinsnorway.com - earned a fortune on it as the order books were thin and shallow, the average trader on bitcoinsnorway.com was rather inexperienced, and every now and then someone would place a large buy-order without realizing how much that would affect the local market price.

Nobody should be margin trading.
As in, money should not be that cheap that you could borrow it to gamble.
And money is hella cheap right now.
There are people desperately looking for any kind of return.

I was thinking that it could be quite lucrative to hold bitcoin learning groups.
Have a $300 door fee, and give them a Ledger Nano and $100 in bitcoin.

Have you ever shown up to make a crypto deal only to find out that the other person didn't even have a wallet?

I was thinking that it could be quite lucrative to hold bitcoin learning groups. Have a $300 door fee, and give them a Ledger Nano and $100 in bitcoin.

My friends at @BitSpace did that a couple of years ago, but eventually I think they had to make the courses free to get people to meet up.

Have you ever shown up to make a crypto deal only to find out that the other person didn't even have a wallet?

Yes, it happens every now and then

Within few days he has become bankrupt.

Wow. That's a pretty scary story @tobixen.

I'm too emotional to make a good trader. I've been buying little bits of bit coin so I can buy some Steem but I never stick to the buy point I set myself. I keep hanging on in case it goes lower and then miss it! 😂

Although I mostly hodled cryptos until now I am thinking for a few months to learn some technical analysis as with hodling I can't seem to make any profit. If, PROBABLY, in a couple of months crypto is going to be hyped again and the prices will moon then I could make some profits, but if not all I have is locked money. I do consider though that once I jump into trading I will have to have some knowledge in order to not loose money. I am following some traders on twitter and they sometimes share their trades, but I don't feel OK with gambling my money like that.

Start at the Elliot wave theory, but don't get to engrossed in it all, just the simple part works great :)

Morning! Great post,already resteemed. Rain and carbon prices, dam i bet he his well gutted, unless he got a few BTC a few years back lol or now lol. I hope to come find you monday 😊

Well, if being personally bankrupt and owing more than one billion NOK, I guess it's important to have some stockpiles of hidden money, that could be gold, bitcoins, monero, real estate in a country not exchanging such information with Norwegian nor EU. Being such a gambler, and always exposing himself for the risk that he would go personally bankrupt, I find it difficult to believe he hasn't considered the possibility of disappearing and living from a hidden wealth.

To all of a sudden "fall" from a lifestyle where one can "burn" tens of thousands of NOK per day to a lifestyle where one will only be allowed to keep the bare minimum for survival, that's for sure going to be a shock.

Good saying. Really you have discussed the reality. You deserves a thanks for your job.

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