Welcome to the third and final part of this chapter.submitted by getmrmarket to Forex [link] [comments]
Thank you all for the 100s of comments and upvotes - maybe this post will take us above 1,000 for this topic!
Keep any feedback or questions coming in the replies below.
Before you read this note, please start with Part I and then Part II so it hangs together and makes sense.
Squeezes and other risksWe are going to cover three common risks that traders face: events; squeezes, asymmetric bets.
EventsEconomic releases can cause large short-term volatility. The most famous is Non Farm Payrolls, which is the most widely watched measure of US employment levels and affects the price of many instruments.On an NFP announcement currencies like EURUSD might jump (or drop) 100 pips no problem.
This is fine and there are trading strategies that one may employ around this but the key thing is to be aware of these releases.You can find economic calendars all over the internet - including on this site - and you need only check if there are any major releases each day or week.
For example, if you are trading off some intraday chart and scalping a few pips here and there it would be highly sensible to go into a known data release flat as it is pure coin-toss and not the reason for your trading. It only takes five minutes each day to plan for the day ahead so do not get caught out by this. Many retail traders get stopped out on such events when price volatility is at its peak.
SqueezesShort squeezes bring a lot of danger and perhaps some opportunity.
The story of VW and Porsche is the best short squeeze ever. Throughout these articles we've used FX examples wherever possible but in this one instance the concept (which is also highly relevant in FX) is best illustrated with an historical lesson from a different asset class.
A short squeeze is when a participant ends up in a short position they are forced to cover. Especially when the rest of the market knows that this participant can be bullied into stopping out at terrible levels, provided the market can briefly drive the price into their pain zone.
There's a reason for the car, don't worry
Hedge funds had been shorting VW stock. However the amount of VW stock available to buy in the open market was actually quite limited. The local government owned a chunk and Porsche itself had bought and locked away around 30%. Neither of these would sell to the hedge-funds so a good amount of the stock was un-buyable at any price.
If you sell or short a stock you must be prepared to buy it back to go flat at some point.
To cut a long story short, Porsche bought a lot of call options on VW stock. These options gave them the right to purchase VW stock from banks at slightly above market price.
Eventually the banks who had sold these options realised there was no VW stock to go out and buy since the German government wouldn’t sell its allocation and Porsche wouldn’t either. If Porsche called in the options the banks were in trouble.
Porsche called in the options which forced the shorts to buy stock - at whatever price they could get it.
The price squeezed higher as those that were short got massively squeezed and stopped out. For one brief moment in 2008, VW was the world’s most valuable company. Shorts were burned hard.
Porsche apparently made $11.5 billion on the trade. The BBC described Porsche as “a hedge fund with a carmaker attached.”
If this all seems exotic then know that the same thing happens in FX all the time. If everyone in the market is talking about a key level in EURUSD being 1.2050 then you can bet the market will try to push through 1.2050 just to take out any short stops at that level. Whether it then rallies higher or fails and trades back lower is a different matter entirely.
This brings us on to the matter of crowded trades. We will look at positioning in more detail in the next section. Crowded trades are dangerous for PNL. If everyone believes EURUSD is going down and has already sold EURUSD then you run the risk of a short squeeze.
For additional selling to take place you need a very good reason for people to add to their position whereas a move in the other direction could force mass buying to cover their shorts.
A trading mentor when I worked at the investment bank once advised me:
Always think about which move would cause the maximum people the maximum pain. That move is precisely what you should be watching out for at all times.
Asymmetric lossesAlso known as picking up pennies in front of a steamroller. This risk has caught out many a retail trader. Sometimes it is referred to as a "negative skew" strategy.
Ideally what you are looking for is asymmetric risk trade set-ups: that is where the downside is clearly defined and smaller than the upside. What you want to avoid is the opposite.
A famous example of this going wrong was the Swiss National Bank de-peg in 2012.
The Swiss National Bank had said they would defend the price of EURCHF so that it did not go below 1.2. Many people believed it could never go below 1.2 due to this. Many retail traders therefore opted for a strategy that some describe as ‘picking up pennies in front of a steam-roller’.
They would would buy EURCHF above the peg level and hope for a tiny rally of several pips before selling them back and keep doing this repeatedly. Often they were highly leveraged at 100:1 so that they could amplify the profit of the tiny 5-10 pip rally.
Then this happened.
Something that changed FX markets forever
The SNB suddenly did the unthinkable. They stopped defending the price. CHF jumped and so EURCHF (the number of CHF per 1 EUR) dropped to new lows very fast. Clearly, this trade had horrific risk : reward asymmetry: you risked 30% to make 0.05%.
Other strategies like naively selling options have the same result. You win a small amount of money each day and then spectacularly blow up at some point down the line.
Market positioningWe have talked about short squeezes. But how do you know what the market position is? And should you care?
Let’s start with the first. You should definitely care.
Let’s imagine the entire market is exceptionally long EURUSD and positioning reaches extreme levels. This makes EURUSD very vulnerable.
To keep the price going higher EURUSD needs to attract fresh buy orders. If everyone is already long and has no room to add, what can incentivise people to keep buying? The news flow might be good. They may believe EURUSD goes higher. But they have already bought and have their maximum position on.
On the flip side, if there’s an unexpected event and EURUSD gaps lower you will have the entire market trying to exit the position at the same time. Like a herd of cows running through a single doorway. Messy.
We are going to look at this in more detail in a later chapter, where we discuss ‘carry’ trades. For now this TRYJPY chart might provide some idea of what a rush to the exits of a crowded position looks like.
A carry trade position clear-out in action
Knowing if the market is currently at extreme levels of long or short can therefore be helpful.
The CFTC makes available a weekly report, which details the overall positions of speculative traders “Non Commercial Traders” in some of the major futures products. This includes futures tied to deliverable FX pairs such as EURUSD as well as products such as gold. The report is called “CFTC Commitments of Traders” ("COT").
This is a great benchmark. It is far more representative of the overall market than the proprietary ones offered by retail brokers as it covers a far larger cross-section of the institutional market.
Generally market participants will not pay a lot of attention to commercial hedgers, which are also detailed in the report. This data is worth tracking but these folks are simply hedging real-world transactions rather than speculating so their activity is far less revealing and far more noisy.
You can find the data online for free and download it directly here.
Raw format is kinda hard to work with
However, many websites will chart this for you free of charge and you may find it more convenient to look at it that way. Just google “CFTC positioning charts”.
But you can easily get visualisations
You can visually spot extreme positioning. It is extremely powerful.
Bear in mind the reports come out Friday afternoon US time and the report is a snapshot up to the prior Tuesday. That means it is a lagged report - by the time it is released it is a few days out of date. For longer term trades where you hold positions for weeks this is of course still pretty helpful information.
As well as the absolute level (is the speculative market net long or short) you can also use this to pick up on changes in positioning.
For example if bad news comes out how much does the net short increase? If good news comes out, the market may remain net short but how much did they buy back?
A lot of traders ask themselves “Does the market have this trade on?” The positioning data is a good method for answering this. It provides a good finger on the pulse of the wider market sentiment and activity.
For example you might say: “There was lots of noise about the good employment numbers in the US. However, there wasn’t actually a lot of position change on the back of it. Maybe everyone who wants to buy already has. What would happen now if bad news came out?”
In general traders will be wary of entering a crowded position because it will be hard to attract additional buyers or sellers and there could be an aggressive exit.
If you want to enter a trade that is showing extreme levels of positioning you must think carefully about this dynamic.
Bet correlationRetail traders often drastically underestimate how correlated their bets are.
Through bitter experience, I have learned that a mistake in position correlation is the root of some of the most serious problems in trading. If you have eight highly correlated positions, then you are really trading one position that is eight times as large.
Bruce Kovner of hedge fund, Caxton Associates
For example, if you are trading a bunch of pairs against the USD you will end up with a simply huge USD exposure. A single USD-trigger can ruin all your bets. Your ideal scenario — and it isn’t always possible — would be to have a highly diversified portfolio of bets that do not move in tandem.
Look at this chart. Inverted USD index (DXY) is green. AUDUSD is orange. EURUSD is blue.
Chart from TradingView
So the whole thing is just one big USD trade! If you are long AUDUSD, long EURUSD, and short DXY you have three anti USD bets that are all likely to work or fail together.
The more diversified your portfolio of bets are, the more risk you can take on each.
There’s a really good video, explaining the benefits of diversification from Ray Dalio.
A systematic fund with access to an investable universe of 10,000 instruments has more opportunity to make a better risk-adjusted return than a trader who only focuses on three symbols. Diversification really is the closest thing to a free lunch in finance.
But let’s be pragmatic and realistic. Human retail traders don’t have capacity to run even one hundred bets at a time. More realistic would be an average of 2-3 trades on simultaneously. So what can be done?
The key thing is to start thinking about a portfolio of bets and what each new trade offers to your existing portfolio of risk. Will it diversify or amplify a current exposure?
Crap trades, timeouts and monthly limitsOne common mistake is to get bored and restless and put on crap trades. This just means trades in which you have low conviction.
It is perfectly fine not to trade. If you feel like you do not understand the market at a particular point, simply choose not to trade.
Flat is a position.
Do not waste your bullets on rubbish trades. Only enter a trade when you have carefully considered it from all angles and feel good about the risk. This will make it far easier to hold onto the trade if it moves against you at any point. You actually believe in it.
Equally, you need to set monthly limits. A standard limit might be a 10% account balance stop per month. At that point you close all your positions immediately and stop trading till next month.
Be strict with yourself and walk away
Let’s assume you started the year with $100k and made 5% in January so enter Feb with $105k balance. Your stop is therefore 10% of $105k or $10.5k . If your account balance dips to $94.5k ($105k-$10.5k) then you stop yourself out and don’t resume trading till March the first.
Having monthly calendar breaks is nice for another reason. Say you made a load of money in January. You don’t want to start February feeling you are up 5% or it is too tempting to avoid trading all month and protect the existing win. Each month and each year should feel like a clean slate and an independent period.
Everyone has trading slumps. It is perfectly normal. It will definitely happen to you at some stage. The trick is to take a break and refocus. Conserve your capital by not trading a lot whilst you are on a losing streak. This period will be much harder for you emotionally and you’ll end up making suboptimal decisions. An enforced break will help you see the bigger picture.
Put in place a process before you start trading and then it’ll be easy to follow and will feel much less emotional. Remember: the market doesn’t care if you win or lose, it is nothing personal.
When your head has cooled and you feel calm you return the next month and begin the task of building back your account balance.
That's a wrap on risk managementThanks for taking time to read this three-part chapter on risk management. I hope you enjoyed it. Do comment in the replies if you have any questions or feedback.
Remember: the most important part of trading is not making money. It is not losing money. Always start with that principle. I hope these three notes have provided some food for thought on how you might approach risk management and are of practical use to you when trading. Avoiding mistakes is not a sexy tagline but it is an effective and reliable way to improve results.
Next up I will be writing about an exciting topic I think many traders should look at rather differently: news trading. Please follow on here to receive notifications and the broad outline is below.
News Trading Part I
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis（中国债务/GDP 占比图）
Ah, but maybe you want to look around a bit and see how China’s total debt is compared with other economies, like this?
"crypto ?(trading|investing)","(should(| I)|could(| I)|can(| I)|how to|is it worth) (buy|sell|mine|min)(|ing) (btc|btcs|bitcoin|ether|etherium|eth|litecoin|ripple|altcoin)"
|Let's say someone was looking for a stay at home computer job, would you recommend doing what you do? Is it something you can hop into, or is it something a lot of time must be put into before considerable income comes?||You handle risk and pressure well, and you don't let your emotions guide your decision-making. Professional Poker and TCG players often develop this skillset.|
|You have experience working with stocks, bonds, derivatives, foreign exchange, or other financial instruments. If you have a strong mathematical background, that would also likely fulfill this.|
|You can invest significant capital into trading while remaining financially secure if it all suddenly vanishes.|
|You are capable of constantly monitoring a situation, waking up in the middle of the night if an alarm goes off, etc. It requires serious dedication.|
|You are good at keeping up with news, understanding market psychology, and "feeling" shifts in attitude and perception among other market participants.|
|Of those, I'd be most cautious if you don't meet no. 3. Going bust is a real possibility--day-trading a volatile commodity is inherently extremely high-risk. Nos. 2 and 4 are the easiest to learn or force through routine. No. 1 requires a person who approaches things in an emotionally detached manner. No. 5 is something that comes with investing enough time.|
|Second question: I'm answering this after that big block of text because this answer will come off like a get-rich-quick scheme. Yes, you can hop into it very quickly, and you can start making very high profits very quickly. I put in a small initial investment to test the waters, and made 10% on it in a few days. If you have the right skillset, composure, and resources, yes. It is a potentially very lucrative and exciting stay-at-home job. It is not for everyone, though.|
|As much as it would be beneficial for me (being in the industry and all), to tell everyone it's easy and that it will help them provide for themselves I feel that people need to know the real risks that are involved.||Regardless, that's all a little irrelevant. We're not playing the house, and we're not flipping coins. We're playing other investors, and we're making actual decisions. You keep saying things like "98% lose money" and "Go onto any FOREX forum, and you will see from the users posts that they pretty much all lose money" but you don't back it up. Cool, yeah, it's a zero-sum game with a rake: a little more than half of the players will lose. That's expected. They'll probably complain about it, too, huh?|
|Retrospect can have a very positive effect. Got any real account trading statements I can have a look at? Let's see how fast you can come up with excuses not to show me ;)||I only have and need one: I have chosen not to disclose my personal valuation for privacy reasons. Same reason I've had all along. I instead publicly disclose my trades, as they happen, on my website. The posts are timestamped, and the ones that are the start of a position contain the price I entered at. Go check the posts, then go check the charts, then go check my archive. But feel free to continue to arbitrarily call my credibility into question--that makes your argument better!|
|What leverage do you use? In Australia the leverage is typically 100:1, perhaps that's why your not seeing how risky I deem it to be.||First, our argument so far has had nothing to do with risk. Second, I told you I am leveraged 2.5:1, two posts ago. Third, you realize I'm trading Bitcoin, not ForEx, correct? And that no one in their right mind would offer 100:1 leverage on Bitcoin due to its volatility?|
|What's your last year's hourly salary?||A year ago I was finishing up college and extricating myself from the TCG business I'd co-founded. I took very little in take-home pay over that period, but kept part ownership of the continuing business. Money isn't just about the number on your bank account--it's also about residual future income.|
|How many hours a week are you typically on a computer?||On a computer, probably 50-55, if you add in time I spend on my phone, I'd say 65-70. Day trading takes constant watchfulness. I imagine it's like an easier version of taking care of a baby.|
|What are your favorite to sources of news besides waiting for it to get to the front/hot page of /Bitcoin when it's several hours old?||I have an IFTTT for /BitcoinMarkets and /Bitcoin that notifies me early on about some posts.|
|What's the weirdest thing about your mom?||She started a bookselling business online in her 50s and makes more money than me.|
|She's a little old lady who loves gadgets and technology.|
|What are your thoughts on Dogecoin and other bitcoin competitors? Do you think any have staying value?||LTC.|
|Coins that offer something different or that have a strong community to them can be valuable prospects.|
|LTC is the first-mover scrypt coin - DOGE has the most non-techies interested in its success and is spreading quickly as a result - NXT is a cool generation two coin that has a lot of features BTC doesn't have - VTC is ASIC-resistant|
|Ok, let me spell it out to you. The retail forex market only makes up 5% of the total forex markets liquidity. The other 95% is from hedge funds and institutions. Therefore, 99% of the retail market losing their money is very possible, as that only makes up 4.95% of the whole market. Is it possible that 4.95% of the market generally loses? Yes. How is that infeasible?||Nope. That's a false equivalence. It is possible that 4.95% of the market loses. It is not feasible, that, say, 99% of people with blue eyes lose. What, exactly, in empirical terms, is the difference between retail investors and hedge/institutions that causes this INCREDIBLE disparity? Would you care to respond to my above empirical argument that demonstrates that a zero-decision system is flipping a losing coin? Do you consider it feasible for 99% of people playing a 45-55 game to lose?|
|Are there options and/or futures markets for Bitcoin?||Not really yet, but there will be more prominent ones soon. I hear about a new one pretty regularly, it seems, but nothing that seems truly legitimate has come out. I'm certainly excited for them, though.|
|Eventually, once Mr. Lawsky and co. get things sorted out, I'm certain we'll see a big-name investment bank start offering them.|
|From the time you started trading until today, what is your overall percentage return?||In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.|
|In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.|
|Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.|
|Ben, i told you I'd be here and asking about Hearthstone first. If there's one class that needs a bit of tuning, up or down, which is it and why?||I think Mage needs basic, class-level tuning. I'm not sure what needs to be done exactly, but I don't like what the Mage class power does to gameplay. I've thought some about how different it would be if it could only hit minions, and I'd want to know if Blizzard had tried that out. The Mage power is too versatile, and over the long-term I think it will prove to be problematic.|
|What's your favorite card?||Lord Jaraxxus is my favorite card. He has a truly legendary feel to him when you play him, but your opponent can still win, even though he's very powerful.|
|So, where do you think we go from here?||I'm currently short, but I don't expect to be so for a lot longer. I don't think we'll get past 550. I also don't expect this drop to hold on for a really long time.|
|I haven't seen a good, substantive rationale for what the MtGox situation really has to do with Bitcoin price. Yes, it looks bad, it certainly doesn't help with our legitimacy, but is it really worth the incredible price declines we continue to see? I don't think so. I think we are seeing these impressive declines because the price on MtGox (which is a reflection of trust in MtGox relative to Bitcoin price, not just Bitcoin price) has been declining heavily. I don't expect it to continue forever, especially not with things like the Winkdex and the accompanying ETF launching.|
|MtGox is basically dead to me, for now at least. The sooner everyone stops paying attention to it, the sooner we can all get back on track, which I, for one, will be quite happy about.|
|Do you think that it's a good thing for a game when the developers of that game discourage certain playing styles (e.g. mill decks or decks that try to win in unconventional manners) whether in hearthstone, MTG, or other TCGs?||It can be. I don't want the developers metaphorically over my shoulder outlawing strategies, but I don't mind if the strategies that are "less fun" for your opponent (Draw/Go, Mill, or Hard Combo from MTG, for example) are also less powerful. Most players prefer a game where the best decks are also among the most fun, because it means that they are playing against fun decks more often. Clearly the 2-cost 3/3 will be played most often. If you fix this by making both 2-cost guys 2/2s or 3/3s, or by making one a 2/3 and the other a 3/2, then you've done something--but it's not that interesting. If you instead make the 2-cost 2/2 have text that says "While you control the 3-cost 3/3, this gets +2/+2" and you give the 3 cost 3/3 text that says "While you control the 2-cost 2/2, it has Taunt" you now have more complex cards that reward players for doing something other than just playing the best stand-alone card.|
|Which do you think is a better option to encourage diversity in TCGs; improving/buffing cards/decks that hardly see any play versus weakening/nerfing cards that are overwhelmingly played?||This is obviously a very simplistic example, but I hope it makes the point. Games are more fun when you give players more relevant choices: buffing and nerfing cards tends not to do that as well as promoting synergies does.|
|Where/what is the actual money behind bitcoin? If it does exist.||You might need to rephrase your question for me to understand what you're asking. If you're asking why a Bitcoin has value, the answer is the same as any other good: because someone is willing to pay it.|
|If you're asking why someone is willing to pay that amount, my answer would be utility.|
|I just got started on Bitfinex (using your referral link) and am a little intimidated. What types of trades would I recommend I try as a beginner?||From there, just keep careful watch, and see what happens. Be neutral and objective toward your own hypothesis, just like in science. Don't be biased by your hopes, be focused on the reality.|
|So far I've only done a liquidity swap offer to try it since it seemed (nearly) risk free. Have you done any liquidity swap or is it too low in profit?||If I'm not going to be able to check my computer for a day or two, or I'm uncertain of what's going to happen the next few days, I do use the liquidity swap function. It's actually very profitable, relative to traditional investments. And you're right, it is low-risk. I'm a fan. Good job selecting it if you were intimidated--that's a good place to start. As far as actually starting trading, do science. Start with a hypothesis. If you were up at 5 AM today when MtGox published their announcement, a good hypothesis might have been something like: "This announcement is going to be a blow to their credibility, and might panic the markets. We'll probably drop by some amount as a result." Invest based on it, figure out around what price you want to take profits, and at what price you'll cut your losses and get out. Stick to those determinations unless something substantive changes. The time you tell yourself you can afford to not close your position because it will "rebound" back to where you want is also the time you lose your shirt.|
|Is it true that you like Balloons?||No, I <3 them.|
|Lol to the question about your mom... Ben, from my understanding Bitcoin is anonymous, does this mean that you can avoid taxation when receiving payment?||Bitcoin isn't anonymous. That's actually a common misconception. It's actually pseudonymous, like Reddit. You end up with an online identity--a wallet address--that you use with Bitcoin.|
|If I walk up to you on a street corner and buy Bitcoin with cash, then I'm pretty much anonymous. If I buy it from a large institution like Coinbase or some other company, they will have records of the address my Bitcoin was bought for. As a result, you can trace them down, generally speaking.|
|As for avoiding taxation, that's a general no.|
|What do you think Bitcoin's biggest hurdle is and how do you think it can be overcome? Are there any misconceptions about Bitcoin that you think people have?||The biggest hurdle for Bitcoin to overcome is governments. Governments have a variety of reasons not to want an alternative currency. We seem to have done pretty well on that front here in the US, but for other countries (China) that is not the case. Past that, the other major hurdle is something I consider an inevitability: consumer adoption. Business adoption has begun in earnest, consumer adoption hasn't. It will when enough businesses take Bitcoin to give it sufficient utility for the average customer.|
|What trading platform do you use to daytrade Bitcoin? What is the standard margin that Bitcoin brokers offer? what's the typical ask/bid spread?||I primarily use Bitfinex.|
|Very few Bitcoin brokers currently offer leverage, Bitfinex offers 2.5:1. Over time, I anticipate it will become more like current Forex, where 10:1 or greater leverage is common.|
|It varies by exchange depending on their fees. Huobi charges 0% fees, so their spread is generally tiny. Some exchanges can be as wide as 1.5%. Typically, I see spreads between .5 and .7%.|
|Do you invest in any other type of cryptocurrency? if so, which is your favorite besides bitcoin?||I currently have no other holdings, but I've held DOGE and LTC at points and am considering VTC and NXT. DOGE is probably my favorite, because if the community can keep this up for a little longer it will snowball into amaze.|
|Can you trade me a Jace?||TMS WWK, TMS FTV, Beleren, MA, or AoT?|
|Beleren.||M10, M11, LOR, JVC, JVCJPN, or Book Promo?|
|M10 and if not possible then M11.||Sure.|
|I've been reading your blog for quite some time and especially like your summaries for recent events. Keep up the good work! Do you use strict stop-loss orders for your trades? When do you decide to close a trade? Especially in situations where you can basically see you profit/loss grow by the minute. When is enough? Do you have a longterm bitcoin investment you don't touch or do you use everything you have for trading?||I do use relatively strict stop losses, but they're not stop loss orders. My conditions usually aren't just the price hitting a certain point, but instead it sustaining for a brief period, or hitting it with a certain volume, or with a certain amount of resistance to retreat. I don't want my stop loss to be triggered by some idiot who dumps 300 BTC and temporarily drops the price 15, but only ends up really dropping it 3. I am very strict with myself about this, though, generally speaking--if I can't trust promises I make to myself, what good am I?|
|Let's say for example you have a sum x dollar and a sum y bitcoin on your trading account. How much % of x or y do you risk at every trade? I've seen a formula for the max. amount of investment and read numerous times that traders shouldn't risk more than one or two percent of their "bankroll". Do you generally have dollar and btc or just one of them at any given time?||100% of funds in every trade, so long as all funds are easily moved into the position. Common exceptions are lack of liquidity and funds being on other exchanges. My reasoning for being all-in all-the-time is that it's a profit-maximizing move. It is also risk-maximizing. My risk tolerance is infinite; most people's isn't. Only ever one. Generally BTC if I'm long, dollar if I'm short. I prefer to double-dip, as otherwise it would be in contradiction to the 100% plan. I use everything I have for trading. Again, profit-maximization, infinite risk tolerance.|
|I decide a closing price when I'm near either my stop loss or my profit aim. I place a limit order or multiple limit orders wherever I need to. I avoid market orders whenever possible. Enough is when I hit my goals or my loss tolerance. I decide these at the start, but I frequently re-evaluate them as news and market conditions develop.|
|What is a typical bid/ask spread for Bitcoin?||It depends what exchange you're looking at, but generally .5-.7%.|
|What's the best way to popularize Bitcoin among the masses? Add your own but would love your thoughts on: -microtransactions developing nations -gift economy (tipping)||I would suggest just running around shouting "You get to be your own bank" is probably the best way.|
|In all seriousness, though--we don't need to try. It's going to happen on its own from now on, as the news media slowly starts to pick up the story. People will start appearing on TV talking about it with more and more frequency. Things like the Dogelympic teams are great PR and help boost it up, as well, of course, but in general it's just going to follow the adoption curve of every other technology.|
|If it picks up in a few developing nations that have stable internet, it will be a massive revolution for them. Self-banking can do a huge amount of good for an economy like theirs. We might see reports on that. If a major newspaper decides to run a permanent paywall like what the Sun-Times tested recently, that could be big as well. The slow PR from tipping on Reddit is another way, to be honest. Every bit helps, but the cryptocurrency community is now large enough that we're going to do a significant amount of organic, word-of-mouth style growth.|
|Do you think that a magic game could beat harthstone?||If they do a good job, absolutely. They have to focus on the right things. It needs to be mobile-available, easy to pick up and play, and fun.|
|Is there a good crypto currency to get in on now, before it explodes like bitcoin did?||There are plenty of options. Check out coinmarketcap.com. Fair warning, there are plenty of horrible things there--treat it kind of like penny stocks. I like BTC, LTC, DOGE, NXT, and VTC.|
|Also, why is it such a pain in the ass to buy them with actual money? Like you have to have bitcoins to buy other crypto currency.||It's such a pain to buy them with USD because no one has made a good system to do it on, like Coinbase. If you think there's a desire, go do it!|
|Well the way I look at it, is how the hell else would you be able to buy them? Not everyone has piles of bitcoins lying around and I really don't want to spend $600+ on a single bitcoin just to buy some other currencies.||Ah, I see the problem! You can buy fractions of a Bitcoin using Coinbase--I think .01BTC (~$6) is their minimum.|
|The March 2013 appreciation was from American and European investors and November 2013 was mainly from Chinese investors. Which group of people do you think will be the next to buy (I hate using the word invest when talking about bitcoin) bitcoin for investment purposes?||American institutional and hobby investors. That is, Wall Street and people who pay attention to Wall Street.|
|Which do you think will be a better long term (~5 years) investment, Bitcoins, Litecoins, Dogecoins, Fetch Lands, Shock Lands, or Original Dual Lands? Does it change for ~10 years?||Either Bitcoin or Fetch lands for 5 years. For 10 years, Bitcoin. I'd be worried about the 10-year view for paper MTG.|
|Ive been mining Bitcoins for years now, i have a good sum im my wallet but i never plan to use them. Does this make me a bad person?||Approximately yes.|
|Ben, I should've simultaneously copied and pasted all of my questions from the Spreecast over to here but here are a few... It seems like the conspiracy crowd has really latched onto the idea of Bitcoin as being a discreet form of currency. If Bitcoin is backed up by the internet why would people choose having a currency that's being tracked over say cash, gold, different commodities?||Having a currency be tracked has negatives and positives, but it's overwhelmingly positive for the average consumer. Because it's tracked, you don't need to pay someone to move your money for you. There also are no chargebacks, which means merchants aren't getting scammed and passing those costs onto consumers. Theft costs everyone money. It's also very fast--transactions confirm in just 10 minutes, regardless of size or where it's going. Transferring dollars from here to China is very difficult--transferring Bitcoin? Just as easy as from anywhere else to anywhere.|
|My job is a mix of voodoo, intuition, science, and news.||In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.|
|No, just gambling.||In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.|
|Anyway, how have the profits been from start to finish compared to the market?||Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.|
|Are you willing to disclose how much you have in your trading portfolio/what kind of profit you turn both % and $ wise?||In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.|
|In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.|
|Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.|
|What would you say is the easiest method of shorting bitcoin or any other coin?||For shorting Bitcoin or Litecoin, check here.|
|For other coins, there isn't really a good way yet, to the best of my knowledge. A few exchanges have plans to add short-selling, but Bitfinex is really the only one I know of that has.|
|What did you have for breakfast today.||Didn't breakfast, was delicious.|
|Hey Ben, I know next to nothing about Bitcoin. I went to /bitcoin after seeing this AMA on your FB, and I noticed that everyone is going apeshit over "Gox". I have no idea what that means or why everyone is so sad/angry/suicidal.||MtGox (which originally stood for Magic the Gathering Online eXchange) was the first prominent Bitcoin exchange. They've been going through some rather rough times lately, some of which I was an early cataloguer of here. In short, everyone is freaking out because the exchange may be insolvent. It's not really a big deal to Bitcoin as a whole, but it's certainly an obvious blow to credibility. In my view, people are primarily upset because MtGox has been a part of Bitcoin for a very long time, and it can be hard to let go of what we're used to. I expect that they will either fix the issues or will go out of business officially very soon.|
|Please explain what happened.|
|Tell me every artist in your iTunes.||Daft Punk, detektivbyrån, Kid Cudi, Matisyahu, The White Panda.|
|Spotify for life, yo.|
|Follow up question, what % are you in BTC vs Fiat and when you are on the losing side of a trade do you find your self dumping in more to get right or do you pull the cord||Unless my positions are on different exchanges or in different coins, they're all always 100% of what I'll put into that trade at entrance and exit. As a result, I end up with a binary choice: stay or reduce/close. I very rarely reduce position size, nearly always preferring to just end the position instead.|
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