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Author Topic: Advice for investing bitcoin  (Read 2918 times)
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June 28, 2015, 09:10:02 PM

Benjamin Graham= value investing, or buying a company that is valued by the market at less than it is worth.  An example could be something that owns land like a car dealership or factory that bought the land, or even something like walmart.  If investors in general don't factor in the value of land then you can sometimes get the stock at a discount, sometimes at a significant discount.  There is more to it, but that is the basic idea.

Peter Lynch= growth investing.  His approach generally speaking is to buy companies that have lots of room to grow.  So try and find companies like amazon before they get big, that sort of thing.  Generally speaking his strategy is buying small and mid cap companies that have great potential for growth.

They are two different strategies, but the point is to look for good investments whether they are small cap, undervalued, growth stocks, turn around candidates, etc.  FWIW it is pretty hard to find undervalued companies right now.

And yes, those two are "fundamental analysis" guys.  My strategy with stocks is always long term.  Once in a while I will swing trade when I see a good opportunity.  I only use basic technical analysis, and dont put much faith into it.  Its not that it is useless, it is that if you are buying a stock with a long term investment horizon then you don't really need to sweat the current cost too much.  If it is well priced, and the research indicates to me it is a buy, then I am not going to try and time an entry.  I just buy it.  the interesting thing about technical analysis is that whether or not it works, lots and lots of people think that it works.  So when the ema crosses and indicates a buy/sell, lots of people all over the world will act on that indicator, sort of making it a self fulfilling prophecy.

I could day trade, but the thing is I wouldn't really get a better return versus long term trading, and it is a whole lot more work than long term trading.  I prefer to do the work once, sit back, and check on the company every few months to make sure nothing is going south.  Ok so maybe I keep an eye on them every day, but I would like to only check every few months Tongue

I don't day trade bitcons/alt coins much, although I am dabbling with very small amounts of money to learn.  And I still don't put much effort into technical analysis.  I don't need to.  You can see the order books (something I don't have access to for stocks) and that alone is powerful.  But for alt coins the market caps are so small, and the volumes so low, that in a few cases I could clear the order book with 3-5 btc.  Not that I would because it would be too risky.  Who cares if the price goes to the moon?  If I have no one to sell to then the point is moot.  In case you are wondering I have lost money so far with trading alts, but the amount is so insignificant that it might as well be paper trading.  This is a great way to learn how to trade, learn from mistakes, and not really expose yourself to risk.  Just use a small amount that you don't mind losing, and if you win even better.

If I said 3% in 7 days that was a typo.  I meant 10 days.  Either way it is a good return.

I did my own research into cloud mining companies.  I have determined that hasnest is legit.  But you are right to not take my word for it, you should do your own research into the matter.  I could very easily be wrong.  But hasnest is owned by Bitmain, and they let you buy hardware and house it in their warehouse.  They don't promise any returns, and the maintenance fee is 50% of the revenue (for the s5).  You can get the s5 you bought shipped to you.  There are other things, but for me everything points toward it being a legit mining site.

The "roi" on hashnest was something like 250 days when I bought in.  However this is a little misleading.  The hash there has an inverse relationship to the price of bitcoins.  So I bought in at btc=~238.  Recently btc went way down to 220 or so.  This means that the bitcoins are less powerful and hash becomes more expensive.  The really cool thing is that the market on hashnest lags the price of bitcoin a bit.  IMO this is because the volume is low and also because they are not listed on exchanges, they run their own exchange.  Anyway I collected interest for ~15 days or so, and when the price of hash shot up (like I knew it would because it lags) I sold my hash at a ~6% profit.  The market there has no transaction fees so you can do fun stuff like trade the gap.  But the really cool thing is that if you are trading the price oscillations, when you are holding hash you get to collect the inome it earns while you hold it.  Then you can sell it any time you want.  You if bitcoin goes up you sell at a "loss", if it goes down you sell at a "profit."  I put these in quotes because the price of hash is related to the price of fiat.  However if you are holding bitcoins and, like me, do not plan to sell them any time soon (or ever) then you don't have to worry about the price of fiat.  This gives me a really interesting way to win when the price of bitcoins goes down.  Anyway I have not been on hashnest for very long, and the trade I mentioned could have been handled better.  However I made ~10% in a pretty short time span.  Its not so easy to make 10% on stocks in less than a month.  Most people consider 10% a year on stocks to be very a very good average to shoot for, so you can maybe understand why I am so excited to do this in 15 days (or so).  Now the interesting thing is that if the price of bitcoin stays low for much longer then I would have been better off not selling my hash but holding it and collecting the interest.  This is a risk I guess, but imo it is all a learning process and I am bound to make mistakes.  I don't worry about optimizing trades because that is impossible: it requires predicting the future.  Rather I focus on not losing my capital investment.  I think this is a much healthier way of looking at things.  So anyway what I mean when I say that the roi is misleading is that you can sell your hash at any time, and because it lags the price of bitcoin there is little chance that you will get wiped out.

And yes I know very well what difficulty is, but historically this tends to change at reasonable rates.  Sure this can cut into returns but I am not worried about that, I am worried about getting wiped out.  Even if they ship the s6/7 soon, and it is 10x better than the s5, it will still take time to ship them, install them, and get them mining.  This will give me time to decide if I want to liquidate or not.  Barring either a massively disrupting mining technology on the order of gpu->asic, or a REAL whale spending billions on a mining center, the difficulty change should be reasonable enough.

There are basically two different types of cloud miners:  duration (x years for a price) and buying has (like hashnest,, etc).  The thing that makes hashnest so attractive is that I can cash out at any time.  Thus I don't have to wait 250 days or whatever for roi.  I get a % and can take my money out at any time.  Also the hash never expires unless it does not cover mantenence for 10 days in a row.  This is a huge advantage.

Thank you for your comprehensive explaination.

I checked out technical analysis quite some bit already. And i second your words about it. It works because people believe it works. Its a self fullfilling prophecy. Another thing is panic, the move of the masses, though one could say it can be seen in TA too. So at the end its possible to have an advantage above the 50-50 chance of a stock rising or lowing in value. (If the underlying values are already matching.)

And yes, its VERY time consuming, not to say stressing. And you need to get a way to keep your emotions under control. There is really much to learn. At the end i would prefer finding a good way to trade and then fuel a bot with that trading technique. I could safe time and i dont have all the stress. Though again... even creating that is time consuming.  Roll Eyes

What do you look at the orderbooks at? I see the prices and volume might mean something. Its easier to push in one or another direction. Or the spread is high and you might be lucky that you get some cheap coins at the lower end. Though it sounds risky. What do you look after?

What i wonder is... trading altcoins might make it very easy to manipulate the price. If it really works fine to manipulate the bitcoin price then it should be possible with altcoins too. And one could check out and learn it there. Though im really not sure about that. If there are no leverage traded altcoins or option papers it sounds like a high risk with uncertain outcome. Do you think differently about that?

And yes, i tried to trade margin on okcoin. Though i only learn with around $20. I lost already before so i learned it the hard way.

You if bitcoin goes up you sell at a "loss", if it goes down you sell at a "profit."  I put these in quotes because the price of hash is related to the price of fiat.

About hashnest... i see you meant profit from trading the contracts then. I believe there was another website like that before, though at one point people couldnt sell at a profit anymore because the bitcoin price went down.

So do i understand your sentence correctly that you mean the profit bitcoin wise? If price goes down then the more bitcoins you have to pay for a hash, that means you can sell it higher. In this direction? It would be interesting to know the profit fiat wise at the end, since thats more to the real value (buying bread value).

It sounds like you use hashnest for hedging against the bitcoin price then. You might have sold your coins and rebuy them when the price of bitcoin is lower then. But youre right, there is the income from mining too. I wonder how this relates to the overall profit, since the hash prices relate not only to bitcoin price but to difficulty too, which means holding hashes over time will mean these hashes will lower their value. So a possible selling price too.

But the timespan between price movements is something interesting you mentioned. Smiley

Personally i would never buy mining hardware again that is not available instantly. The risks are way too high. If youre lucky you get a "partly" refund, its simply not worth it to take the little risk. If of course there would be a jump between FPGA to ASIC again, then i surely would give one or two promising projects a chance. Thats different. Though i wonder if there arent too many too rich now so that they can build their own hardware without public founding.

I admint what you wrote about hashnest sounds interesting. Guess ill check them out when i have some time. Bitcoin is really interesting... so much happening left and right... its really like the gold rush and the wild west somehow. I wonder if i will see something like that again in my life. Smiley

Hi sorry for the late response.  I look in the order book to see the strength of the orders.  If the price of a coin is 1000 satoshis, but both the ask and bid sides have very small bot orders, then you know that the price can move on very low volume.  This means that a huge price movement, even something like 50% gain, is not always that great.  If there is no volume and no orders on the books, then you can make 1000% profit, but you can only do so with .05 btc or whatever.  So the order books are not the only thing to look at, but it gives you a really good chance to see the health of that particular market before you buy/sell that coin.

Yes, the altcoin market can be very easy to manipulate, and it happens all the time.  Look at a coin with a daily volume of under 10 btc, and usually you will see activity spikes.  Usually these spikes are preceded with a slow rise in volume.  You can look at the order book to see how far you can bring a coin.  Lets look at a coin I got recently because of its bot: Quatloo.  Looking at the order books you can see that today, you can bring the price to 3500 sats all the way from 1573 with 5btc of buys.  That is more than double the price!  Now you will also need to place support along the way, otherwise the buy side will still be around 1500.  But you also need new people to enter the market, otherwise you will have no one to sell to and the price will drop quickly.  I have not tried this because I am too chicken to risk that much to manipulate the markets, but it happens all the time.  If you see a disproportionate buy or sell wall, then likely someone is planning something.  Here is an interesting video that I think you should watch:  The thing I find interesting is that someone like me, who does not have all that many resources (I am not even close to being a "whale"), can move the markets with relatively small purchases and sales.  So with the 5 btc example, you can double the market with ~$1200.  In the stock market you could use 120,000 dollars and not move the market.  Well, not that much anyways, you certainly would not double the stock.  It is interesting to me but I think that there are safer ways to make money in altcoins.  I am pretty new to alt coin trading, so take this with a grain of salt, but I like coins with decent volume, and regular price movements.  This means that there is a continued interest in the coin.  Alts that do not have a steady volume, but have occasional volume spikes, may be good too if you can figure out when it is being manipulated, but I feel that this is much riskier.

There are some leverage options, like at poloniex, but I would be very careful:  it can be super easy to get a margin call.  Personally I don't play with margin trading, although I might once I get more experienced with it.

Yeah it really is like the gold rush.  All the stuff stock traders can do to make money but we can't do, we CAN do in these markets.  I really like hashnest because the payout is great imo, and you can get out when you want.  The ups and downs of the prices are great for making a little extra money, but right now I just put it back into hash.  The nice thing about hashnest is that the price movements are usually pretty slow, giving you plenty of time to cash in.  And the upkeep cost of the s5 is ~50%, and BTC would have to drop all the way down to ~120$ for the contract to freeze.  S3 and 4 hash has a better payout right now, but there is less margin for the price of btc to fall: $195 for s3 and $165 for s4.  Plus the trading volume on those markets is less, so it would be harder to sell back hash compared to the s5 markets.
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