I used the last dip to lighten my safety short and profit a bit. The dip was welcome, because my short entry point was drifting towards unprofitability as the price raised.
Now I'm waiting to rebuild the missing part a bit at a time, scalping the small waves as we get back to where we were, around 8.5-8.6k. When will it be? I don't know, of course. That's the unnerving nursing/babysitting part.
My ultimate goal is having a short that tracks the current price, ideally an inch higher up from it (wishful thinking, and impossible on maxima. I know).
When I'm set or near-set, let them moon it - I'll drop it when the pain exceeds my threshold. Let them swamp it - I'll get richer than I were without my safety short.
Certainly, one thing that you are attempting that is quite different from me (and jbreher I believe - and quite a few quys and perhaps gal are leery of such) is that you are incorporating margin dynamics into your plays that make them more complicated. Therefore, if you are able to describe systematic ways to employ margin, then you will be able to contribute to the space in your own unique ways.
By the way, I have concluded that in bitcoin it can be very very very profitable merely playing with strategies that involve straight trading and no margins, so therefore margin trading is not necessary in order to get very rich from bitcoin. It would take quite a bit to convince me to employ margin trading or that I would acknowledge that such is necessary - however, if you are able to present clear and simple techniques that are easily understandable, then I for one might be willing to attempt your strategy, if it makes sense to me and seems that there is a way that I can use it to make myself feel more comfortable (rather than less comfortable because of such employment of it).
Margin trading and derivatives are double-edged swords. They can be used to get rekt, much too easily.
However, the original function of futures was that of guaranteeing certainty of price to sellers or buyers of the underlying commodity (e.g., wheat).
When used in moderation, with ample safety bands on either side, these instruments can be useful to hedge against unfavorable conditions - that's what I'm trying to do here. Nothing new under the sun, I guess.
By having my safety short on leveraged margin, I am risking just a small fraction of my stash (that is, part of my play money) to get insurance against a price drop. E.g., to short 1 btc, you can spend as little as 0.1 btc (on 10x leverage). Of course, any price movement gets amplified 10x, so careful! Safety bands around your position!
Now the technical question is: how do I decide where, how much to short? The answer comes in the form of a working method: use the 2J-ladder to build the position starting small, small, small, and try to bring it higher and smaller.
Well, smaller - within reason. If the position (and the underlying "wheat", which is actually corn in our case) goes UP, it can and should grow little by little, as long as it doesn't get so large that a sudden move UP blows you off or becomes too much of a weight on your "insurance costs".
Poll
