Understanding how people reconcile and plan when margin trading in BTC


#1

Hey team, I am in need of some input on how you handle/view profit in margin trading in bitcoin as your base.

Let’s say you went long with leverage on DASH and your goal is a certain amount of BTC per dash to exit, basically.

Does this mean

  1. If BTC skyrockets in USD value then DASH plummets in BTC value, thus making your loan a crazy loss and liquidation. So in this scenario you are betting against BTC price rise, as well as DASH going up.

  2. If BTC drops in USD value then DASH rises in BTC price and you have your exit, again you are betting BTC will fall.

  3. If dash goes up at the same rate as btc then you will loose because you owe on trading and lending fees.

What is messing with my head is that it seems like, if I am margin trading in BTC I am always betting on the price of btc and not just the price of the other asset, DASH is this case.

Am I correct in thinking this?

Seems to me it would be better for one to do this in USD rather than BTC as then you are up against only on pair?

Thoughts?

Thanks!


#2

Your logic seems sound at first pass.

However. Consider the mental gymnastics you’re endeavoring on. Is it worth it? Just dca and hodl btc!


#3

Thanks for the reply Peter! I hear you, the reason I ask is that I don’t really have much cash, but I started buying my first bitcoins a long time ago, so this is butter that I am playing with from that, I for sure want to increase my holdings.
My friend, who has put some btc in with me to try our hand at trading, is from the stock market world and has a hard time wrapping his head around how the USD conversion works into this math and entry/exit planning.
I am just after more BTC, naturally, but it did get me thinking that I may actually be betting against the increase of value of my BTC.

Then I realized I could not explain it well enough. I need to learn!

It seems like if your margin balance is BTC and the value changes then your payoff is worth more/less vs the change in the other asset.

Seems like way to much mental gymnastics, but people do this successfully?

How do they think about and approach this to plan an exit with say 25% USD profit?

Can you even?


#4

For your questions:

You are trading BTC/DASH

So you are basically aiming to buy DASH when it is low against BTC and sell DASH when it is high against BTC.

  1. If BTC skyrockets in USD value then DASH plummets in BTC value, thus making your loan a crazy loss and liquidation. So in this scenario you are betting against BTC price rise, as well as DASH going up.

You objective here is to sell DASH to BTC as it starts dropping. The objective is to later buy DASH back again once it gets to the bottom and starts rising up again. The tough part is “guessing” when those objectives happen.

  1. If BTC drops in USD value then DASH rises in BTC price and you have your exit, again you are betting BTC will fall.

Not really, once you have your exit, you are planning for when DASH is down against BTC again to buy more.

  1. If dash goes up at the same rate as btc then you will loose because you owe on trading and lending fees.

Yes, if it goes sideways, you are better to pick a different one to DASH to bet with.

In closing:

  • I personally wouldn’t borrow money to trade with, that tends not to go well.
  • Any amount you are trading with, should be considered as lost (don’t trade what you cannot afford to loose)
  • Learn to use all the trading indicators like EMA, RSI, Bollinger and so on. The B90x Videos from Peter are a good start
  • Learn what flags are commonly used to indicate a “guess” at which way the market might go, remember it is a guess, there is no way to predict which way things will go, unless you are the pope with a personal bat-phone to destiny.

Stay Fishy