farmer79
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So I thought I'd put my trading hat on and make a few comments. I didn't mean to come in and say Bitcoin is going to 0 because it is a bubble. Also my sense from reading this thread is it younger guys who may be trading seriously for the first time in their lives. I am a bit of a grizzled vet and maybe too old and set in my ways to have embraced this technology anyways. However I was a full time self financed stock and commodity trader for nearly 12 years and for approx 5 years made a living doing it. Not a great living, probably not enough for a wife and kids,but still actually paid the bills. I don't say that to brag I was no George Soros but trust me it is harder than you think. I don't think there are too many trading experiences that I have not experienced. Everything from drug like highs to actually needing to lunge at the garbage so I could throw up. (Lock limit move in live hogs don't ask anymore please)
Full disclaimer I truly believe Bitcoin is going to 0 someday, and if not I believe the advantages, especially in US will be legislated away eventually. But good trading is good trading.
A few points to BitCoin traders,
1. You have caught a 1-3 market of a lifetime. ENJOY IT!! If you are new to trading you have no idea how rare this is. Savor it. Trading is usually extremely hard, low margin, thankless etc, The last market like this was probably Internet bubble 1999-2000. Be addicted to it! Eat, sleep, breathe Bitcoin. Know everything. Sleep with your phone so you can check prices at night. I am not joking I am really not. In the fall of 2008 I made a small fortune (to me anyways) when markets were collapsing, my regret is I didn't enjoy it more. It was my high water mark as a trader and I didn't enjoy it like I should have.
2. Why is it important to savor it? Because it will not last, simple as that. I don't mean it will go to 0. I mean volatility will dry up. Although I here a lot that it "is totally new", or "nothing like it in history.". It is still a tradable instrument, and one that appears free of manipulation. So it will trade like every other instrument. Which means eventually the market will figure out how to price it and the volatility will disappear and it will move into a range. At this point the wild trading swings and just being able to hold for new highs will be gone.
3. If you are absolutely confident in your beliefs and analysis push the envelope and your risk factor. Although I suspect it is very late to suggest this. The point is when markets like this come along they can be life changing, don't miss that. This is my biggest regret in 2008 when markets were starting to collapse. I had quite literally a perfect read on the markets, I understood what was happening and I had strategies that worked perfect in that environment. Without a word of lie I could have made 7 figures in 90 days. But I made less than a tenth of that because I was afraid to push the envelope. Thinking I should still be trading cautiously. What I missed in 2008 wasn't market analysis, it was how special 2008 was. Same thing with internet bubble.
4. Remember the true measure of a successful trader is not %return, not what one year of your income tax return says, not how many great calls you make, not how high your account equity got, the true measure of a trader is, "how much money did you take out of the market?" I can't stress that enough. By out I mean out of your trading account into a bank account where you can buy stuff with it. I don't mean you need to spend it, but it needs to be removed from trading account. Pay living expenses, buy a car, or just save it. But actually remove it from harms way in your trading account.
5. Building on point 4. DO NOT SPEND UNREALIZED GAINS EVER! Especially for taxes. And they are due on Dec 31st not April 15th. Sorry for the caps but it is that important. You have no idea how many traders got badly burned during internet bubble when they had a huge tax bill in 1999 and all the money was gone by March 2000 but they hadn't paid taxes yet. And unrealized includes trades closed but money still in trading account. I dont mean to pick on James as his contributions here are epic and more importantly he has been gifted an INSIDERS subscription which is the highest fast lane honour of all. Also I don't like giving unsolicited advice especially to people I don't know. He may have more trading experience than me in which case I look silly. So I mean it as a painful lesson I learned trading junior exploration stocks in 2005-2006. James made the comment that he went out with family for fresh expensive crab with a tiny portion of trading profits a day ago. You should absolutely do things like this, you need to celebrate successes. It is important and fun. But make sure you actually take the money out, even only a few hundred dollars. Make this a rule you never break. Trust me not only will you enjoy it more but if you do get caught in downdraft it won't hurt nearly as much. Especially as gains get bigger. Next thing you know you'll pick up 10-15K on a Friday trading and decide to fly to SanDiego for a football game, however you'll think"I'll take money out next month or once account is over 250k etc." You get hit with a downdraft and suddenly you have the bill for a trip that may represent regret rather than celebration. Everyone says how easy to convert or send Bitcoin is. If you are going to spend gains take them out of account and really enjoy.
6. The Bad will happen. I know it feels like Bitcoin is revolutionary. It feels like there had never been anything that even compares to it, so old rules, especially valuation rules don't apply. There may be a kernel of truth to this in the early days when it is taking off to the moon. But ultimately it is currency, a freely traded currency without central bank influence obviously, but still a currency. Its value will eventually be set solely by that metric. Because it is a unique product and because it being used primarily as a tool to speculate in it is easy to forget that. We could soar to 12,500 tomorrow on George Soros saying Bitcoin is the future. Remember how internet analysts could move stocks back in 1999-2000? But eventually it is going to move on its utility as a currency.
7. Markets at all time highs trade differently. They are special. They can run up much farther than you think. Up until the drop today yesterday there was not a single person who was down money from any purchase point. This gives unbelievable rocket fuel because all the "sell when I get back to even people" simply do not exist. Once we retrace more for a significant period of time rather than price a market accumulates a lot of these. And this make new highs much tougher.
8. If things work perfectly there is still much that can go wrong. As I have thought about Bitcoin the last few days I thought maybe a good best case comparison is Amazon. The internet was completely disruptive technology. I don't think even the most bullish Bitcoin person could think Bitcoin is more revolutionary and transformative than the internet. We'll call Amazon the cream of the original internet crop. It has risen from virtually nothing to nearly 1200 USD per share. However between March of 2000 and Oct 2001, Amazon dropped from over $75 to 5.5. It lost over 90% of it's value. And it was the perfect internet company. If you don't like stock comparisons go to currencies. Although not as dire as stocks 30-50 percent moves are certainly possible. So build that into your risk profile. A 50-90% move is not only possible it is probable. And it doesn't mean anything is wrong or bad, it is just moving like every other tradable instrument in the universe.
I wish all of you really good trading . If it is just the first of a huge leg up to 25000, I really do hope you all catch it. If your understanding of this unfamiliar technology allows you to understand an intrinsic value of 100,000 I really hope you have the fortitude and patience to ride it out. But please take some money all the way out along the way.
Full disclaimer I truly believe Bitcoin is going to 0 someday, and if not I believe the advantages, especially in US will be legislated away eventually. But good trading is good trading.
A few points to BitCoin traders,
1. You have caught a 1-3 market of a lifetime. ENJOY IT!! If you are new to trading you have no idea how rare this is. Savor it. Trading is usually extremely hard, low margin, thankless etc, The last market like this was probably Internet bubble 1999-2000. Be addicted to it! Eat, sleep, breathe Bitcoin. Know everything. Sleep with your phone so you can check prices at night. I am not joking I am really not. In the fall of 2008 I made a small fortune (to me anyways) when markets were collapsing, my regret is I didn't enjoy it more. It was my high water mark as a trader and I didn't enjoy it like I should have.
2. Why is it important to savor it? Because it will not last, simple as that. I don't mean it will go to 0. I mean volatility will dry up. Although I here a lot that it "is totally new", or "nothing like it in history.". It is still a tradable instrument, and one that appears free of manipulation. So it will trade like every other instrument. Which means eventually the market will figure out how to price it and the volatility will disappear and it will move into a range. At this point the wild trading swings and just being able to hold for new highs will be gone.
3. If you are absolutely confident in your beliefs and analysis push the envelope and your risk factor. Although I suspect it is very late to suggest this. The point is when markets like this come along they can be life changing, don't miss that. This is my biggest regret in 2008 when markets were starting to collapse. I had quite literally a perfect read on the markets, I understood what was happening and I had strategies that worked perfect in that environment. Without a word of lie I could have made 7 figures in 90 days. But I made less than a tenth of that because I was afraid to push the envelope. Thinking I should still be trading cautiously. What I missed in 2008 wasn't market analysis, it was how special 2008 was. Same thing with internet bubble.
4. Remember the true measure of a successful trader is not %return, not what one year of your income tax return says, not how many great calls you make, not how high your account equity got, the true measure of a trader is, "how much money did you take out of the market?" I can't stress that enough. By out I mean out of your trading account into a bank account where you can buy stuff with it. I don't mean you need to spend it, but it needs to be removed from trading account. Pay living expenses, buy a car, or just save it. But actually remove it from harms way in your trading account.
5. Building on point 4. DO NOT SPEND UNREALIZED GAINS EVER! Especially for taxes. And they are due on Dec 31st not April 15th. Sorry for the caps but it is that important. You have no idea how many traders got badly burned during internet bubble when they had a huge tax bill in 1999 and all the money was gone by March 2000 but they hadn't paid taxes yet. And unrealized includes trades closed but money still in trading account. I dont mean to pick on James as his contributions here are epic and more importantly he has been gifted an INSIDERS subscription which is the highest fast lane honour of all. Also I don't like giving unsolicited advice especially to people I don't know. He may have more trading experience than me in which case I look silly. So I mean it as a painful lesson I learned trading junior exploration stocks in 2005-2006. James made the comment that he went out with family for fresh expensive crab with a tiny portion of trading profits a day ago. You should absolutely do things like this, you need to celebrate successes. It is important and fun. But make sure you actually take the money out, even only a few hundred dollars. Make this a rule you never break. Trust me not only will you enjoy it more but if you do get caught in downdraft it won't hurt nearly as much. Especially as gains get bigger. Next thing you know you'll pick up 10-15K on a Friday trading and decide to fly to SanDiego for a football game, however you'll think"I'll take money out next month or once account is over 250k etc." You get hit with a downdraft and suddenly you have the bill for a trip that may represent regret rather than celebration. Everyone says how easy to convert or send Bitcoin is. If you are going to spend gains take them out of account and really enjoy.
6. The Bad will happen. I know it feels like Bitcoin is revolutionary. It feels like there had never been anything that even compares to it, so old rules, especially valuation rules don't apply. There may be a kernel of truth to this in the early days when it is taking off to the moon. But ultimately it is currency, a freely traded currency without central bank influence obviously, but still a currency. Its value will eventually be set solely by that metric. Because it is a unique product and because it being used primarily as a tool to speculate in it is easy to forget that. We could soar to 12,500 tomorrow on George Soros saying Bitcoin is the future. Remember how internet analysts could move stocks back in 1999-2000? But eventually it is going to move on its utility as a currency.
7. Markets at all time highs trade differently. They are special. They can run up much farther than you think. Up until the drop today yesterday there was not a single person who was down money from any purchase point. This gives unbelievable rocket fuel because all the "sell when I get back to even people" simply do not exist. Once we retrace more for a significant period of time rather than price a market accumulates a lot of these. And this make new highs much tougher.
8. If things work perfectly there is still much that can go wrong. As I have thought about Bitcoin the last few days I thought maybe a good best case comparison is Amazon. The internet was completely disruptive technology. I don't think even the most bullish Bitcoin person could think Bitcoin is more revolutionary and transformative than the internet. We'll call Amazon the cream of the original internet crop. It has risen from virtually nothing to nearly 1200 USD per share. However between March of 2000 and Oct 2001, Amazon dropped from over $75 to 5.5. It lost over 90% of it's value. And it was the perfect internet company. If you don't like stock comparisons go to currencies. Although not as dire as stocks 30-50 percent moves are certainly possible. So build that into your risk profile. A 50-90% move is not only possible it is probable. And it doesn't mean anything is wrong or bad, it is just moving like every other tradable instrument in the universe.
I wish all of you really good trading . If it is just the first of a huge leg up to 25000, I really do hope you all catch it. If your understanding of this unfamiliar technology allows you to understand an intrinsic value of 100,000 I really hope you have the fortitude and patience to ride it out. But please take some money all the way out along the way.