Hey guys, have you ever done some trading on both sides? That is, if you enter Long, do you protect your position in Short with some leverage? This Spanish-speaking Trader did it, the video is from 2018, but it seems to me that the adrenaline he feels is a lot! more when you do it with 100k!
https://talkimg.com/images/2023/05/16/blob873964a73c82023e.pngSource:
https://www.youtube.com/watch?v=T7p5UTPNPIs&t=14sAs Jesse Livermore did, it is a way to always be in the market, no matter which direction you are going.
Do you think it is convenient to do it right now in the market? Since the price is expected to increase, but if it falls, protect your position.
Obviously, to do this you have to have a lot of experience and try to suppress emotions to the fullest.
let's play it simple without leverage just 1 BTC positions in USD.
bid price is 8200
ask price is 8250
spread is 50
you sell (sl -250) at 8250 - from start it equals to -50 in profit
you buy (sl -250) at 8200 - from start it equals to -50 in profit
price goes to 8400 - sell liquidated with -250 profit - buy with +150 in profit
price must go to 8500 to be break-even (w/o fees for both positions)
or
price goes to 8000 - buy liquidated with -250 profit - sell with +150 in profit
price must go to 7900 to be break-even (w/o fees for both positions)
it's kind of break-out system with a range of
500 600 (w/o fees for both positions). there MUST be a range break-out > 300 to be profitable and ranging withing the range will increase the losses every time a sl is hit.
*correct me please if I did a calculation error
EDIT: in my eyes it's a poor system. better you have a range defined and buy above the range and sell below the range because then you will not add several losses if there is no break-out of the range for a specific time.
Sorry, I don't undertand your example.
first of all, if bitcoin quotes like you stated:
bid price is 8200
ask price is 8250
spread is 50
You cannot buy at 8,200 and sell at 8,250.
You can sell at 8,200 and buy at 8,250. So you lock a 50 USD negative spread (the so called bid/ask spread).
You can potentially place an order to buy at 8,200 and place an order to sell at 8,250. But it is not granted you get both of them executed. You are taking some risk here, that eventually will allow you to lock a 50 USD gain.
But let's think you are good enough, or lucky, to buy and sell locking a 50 dollar profit
you bought a bitcoin at 8,200 and sold a bitcoin at 8,2500.
So you situation is:
+1 BTC @8,200
-1 BTC @8,250
What happens if BTC goes to 8,300?
Your buy is in the money of 100 usd: P&L (unrealised): +100
Your sell is out the money of 50 usd: P&L (unrealised): -50
Total P&L (unrealised):+ 50
What happens if BTC goes to 8,400?
Your buy is in the money of 200 usd: P&L (unrealised): +200
Your sell is out the money of 150 usd: P&L (unrealised): -150
Total P&L (unrealised):+ 50
What happens if BTC goes to 8,050?
Your buy is out the money of 150 usd: P&L (unrealised): -150
Your sell is out the money of 200 usd: P&L (unrealised): +200
Total P&L (unrealised):+ 50
See?
Your p&l is always 50: this leads to me to think that you are not long a bitcoin and short a bitcoin: you are flat, you have NO bitcoin, and you just gained 50 dollar from your market making 1 bitcoin at the start (buying and selling the initial bitcoin- also in the opposite order- at the start of this trade).
I don't event think (but i am not expert specifically on those platform) to get long and short on the same account. If a platform is allowing to go short and long at the same time they're actually stealing you money.
Your example go on with liquidations,
those don't change the thing dramatically, but I can't go on , because i lost your calculations as they appear all wrong to me:
you sell (sl -250) at 8250 - from start it equals to -50 in profit
price goes to 8400 - sell liquidated with -250 profit - buy with +150 in profit
If you sell at 8,250, and price goes to 8,400 your sell is liquidated with 150 loss.
Even in highly volatile environment Mark To market is the best way to think of your trading position, because MtM has to do with the current price, so it has to do with the future movements.
You assume P&L is instantly real, since current price is the best possible estimate of future price. Which it could be
if there were a universal way to price risk and opportunity cost. Which I assume there isn't.
My own assumptions? "I'll never hit that wall because I keep my gameplay far from the sidelines." Taken to extremes: if I had infinite capital, I would not worry a bit. In other words: my bankroll is finite so I do worry of course, but I have low (negative?) opportunity cost for my play stash - it's better for me to use it to get moar btc at good odds than to collect dust in the freezer. As for the risk, I can't quantify it precisely, but it's bounded by the play stash amount if I stick to my rules.
If we had infinite capital, infinite time we would all be rich.
Capital is finite and time is finite. I don't know if it is better this way, but it surely so much more funny.
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