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Author Topic: I'm having difficulty seperating % gain from $ gain....advice appreciated  (Read 112 times)
HodorHodl (OP)
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January 25, 2018, 08:16:13 PM
 #1

Hi all,

So as the title says, I am having difficulty squaring off percentage gain with pair/fiat-gain on altcoins.

On the one hand, I can see that 50% is 50% is 50%, no matter what way you spin the maths of it. And therefore every quid put in can give you back one and a half.

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

I suspect that I am mentally falling prey to some kind of gambler's fallacy here, but there are so many examples....

Anyone got a good source/video/article etc that might be able to help me out?

In a nutshell, I have some Eth, I want to trade, but I am not sure whether to take a massive punt on the shitcoins, or go slower and steadier with the established ones. My instinct is to take the punt. But it's only that - instinct. I have a gambly streak Tongue

Advice appreciated.
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AdolfinWolf
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January 25, 2018, 08:25:24 PM
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 #2

Hi all,

So as the title says, I am having difficulty squaring off percentage gain with pair/fiat-gain on altcoins.

On the one hand, I can see that 50% is 50% is 50%, no matter what way you spin the maths of it. And therefore every quid put in can give you back one and a half.

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

I suspect that I am mentally falling prey to some kind of gambler's fallacy here, but there are so many examples....

Anyone got a good source/video/article etc that might be able to help me out?

In a nutshell, I have some Eth, I want to trade, but I am not sure whether to take a massive punt on the shitcoins, or go slower and steadier with the established ones. My instinct is to take the punt. But it's only that - instinct. I have a gambly streak Tongue

Advice appreciated.

Yes, but the interest in said coin is also going to be much lower.
You're right that it would indeed be way easier for the "shitcoin" to go up x5-x10, but that doesn't mean it is more likely to happen.

There's over 1800 coins, chances that all of the lower ranking coins would all go up is extremely small, ( or even a small % of them.) while investing in something like XLM/ETH/ZEC might be less profitable, but the risk associated with them is much, much lower.

Not to mention that the volumes of these low cap coins is often so small that you on your own would be able to "crash" the market. I believe that on average only ~2-3% of the market supply is actively being traded.

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However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

Not if the supply is bigger. Tron is a prime example of this, while it is only 0.06$$, it has a marketcap of ~5billion dollars.

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January 25, 2018, 11:05:07 PM
 #3

Good point about the volume, but to be honest, I'm kinda looking at how to make that work for me. A small volume market is going to be more easily swayed by any real move. If it nosedives, there's not far to fall, but if it gets pushed by a few whales, there's a long way to go up. Still, you're not wrong about the amount of crapcoins banking on this. Hard to select one Smiley

With regard to market cap, you're 100% right. I need to pay more attention to supply of the coins. My bad.

Thanks for the advice Smiley
yo_mama
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January 25, 2018, 11:25:59 PM
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The more important factor regarding potential gain is market cap, not price.
Reference price = market cap / number of circulating coins.
So low market cap coins are easier to get higher gains. Suppose there are 2 coins with market cap of $50M and $500M. If market cap both increase by $100M, the $50M coin will see a price increase of 200%, while the $500M coin only 20%.

Although price does have a little effect: some new inexperienced traders would prefer buying coins with low unit price, because they think it's "cheap" and inappropriately assume that cheap price means higher potential gain. But this is not decisive compared to the effect of market cap.

And this is the reason I'm not buying Cardano. Price is "cheap" ~$0.5 but market cap is already top 10.

Liquidity also matters. If most of the people are holding a coin without trading it, the "effective" circulating supply actually being traded will be low, and price manipulation on exchanges (either up or down) is much easier for those whales. That's a bad thing about HODL.
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January 25, 2018, 11:46:52 PM
Last edit: January 26, 2018, 09:16:33 AM by odolvlobo
 #5

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

That is somewhat of a fallacy, of course. You are making some hidden assumptions. You are assuming that the alt coin will eventually be as big like Bitcoin. You are assuming that the supply of the alt coin is the same.

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January 26, 2018, 05:27:53 AM
 #6

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

That is somewhat of a fallacy, of course. You are making some hidden assumptions. You are assuming that the alt coin will eventually be as big like Bitcoin. You are assuming that the supply of the alt coin is cheaper is the same.

no actually i say that statement is 100% accurate. he didn't say it will. he said it can (it is easier). and they are different. being able to go from $0.01 to $0.05 is not the same as going up that much.

and it is in fact easier for a low-price altcoin to have that kind of rise than there is for a high-price cryptocurrency to have that kind of big rise. you can look at shitcoins such as Ripple. it had a massive pump last year from $0.005 to $0.5 and that is because they are much easier to pump.
there was a coin (i forgot its name) at the bottom of the tables which was worth 0.003 satoshi and it was pumped to 30 satoshi in 2 weeks with a ridiculous high volume near the end (999,900%)

and as far as trading strategies go, this is a high risk strategy but it can also be profitable.

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HodorHodl (OP)
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January 26, 2018, 09:41:22 AM
 #7

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

That is somewhat of a fallacy, of course. You are making some hidden assumptions. You are assuming that the alt coin will eventually be as big like Bitcoin. You are assuming that the supply of the alt coin is the same.

Well, I wasn't assuming that any coin would ever get as big as Bitcoin (although I have good feelings about Eth), but you are right about the supply - I still have a lot to learn.

What I am trying to do ultimately is identify fast trade opportunities to increase my position overall. Perhaps an example is easier. Here's my plan:

- Identify coin
- Buy x amount
- Sell limit 30% @ x3 (i.e. my capital back)
- Sell limit 20% @ x6 (more capital)
- Other 50% will be hodl or further sell limits, depending on whether I determine it's in for the longer haul or a PnD.

Does that make sense? It does in my head, but it's tricky to explain here Smiley
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January 26, 2018, 08:28:42 PM
 #8

However, I favour a very aggressive trading strategy (possibly not a wonderful idea, but hey, my money Smiley ), and I'm being draw to the idea that it's much easier for a $0.01 coin to go to say $0.05, than it is for a higher market-cap asset like BTC to go from 10K to 50K.

That is somewhat of a fallacy, of course. You are making some hidden assumptions. You are assuming that the alt coin will eventually be as big like Bitcoin. You are assuming that the supply of the alt coin is the same.

Well, I wasn't assuming that any coin would ever get as big as Bitcoin (although I have good feelings about Eth), but you are right about the supply - I still have a lot to learn.

My main point (which I unfortunately neglected to make) is that you can't judge the potential of a coin by its price. The price is somewhat arbitrary. For example, does Bitcoin have more potential if 1 BTC is $10,000 or if 1 satoshi is $0.0001?

What matters is the discounted future value adjusted for risk compared to the current price. If the discounted future value adjusted for risk of BTC is $100,000, then buying BTC is smart, even though the price is high. If the current price of a coin is $0.0001 and the discounted future value adjusted for risk is $0.00001, then that coin is crap even though it is cheap.

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