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Author Topic: (SSS) - A Sane and Simple bitcoin Savings plan  (Read 80512 times)
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JayJuanGee
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April 19, 2014, 06:51:48 PM
 #161

Thanks to OP for outlining the SSS plan and discussing the various advantages of having a rake plan.

I like this b/c I do NOT consider myself to be an all or nothing investor, and I can apply several of the principles to my own BTC investment situation.

I have been inspired to outline my own variation of such a plan, which in essence embodies the concept of small amounts of rake for the purposes of trading that are going to be triggered at increments of 10% rises in BTC prices - and also based on my average price per BTC and then periodic larger amounts of rake triggered (more permanent) at the doubling of my investment - to take off the table up to 10% on the first doubling and likely to take off nearly all of my invested capital by the second doubling of BTC prices  (which hopefully, some day will come).

I will probably play around with Excel to provide me with various categories to monitor my investment using variables that I like to monitor, such as my average price per BTC.

Currently, my average price per BTC is $607 (including transaction fees), so it is very likely that various 1% trading rakes will be triggered this year between about $670 and $1,140.  And, then a more permanent 10% rake will be triggered around $1,214 - hopefully by possibly 2015, but i am o.k. if it takes a bit longer, if that is what is in the BTC cards (which seems unlikely but possible).  I am still considering the possibility of skipping the permanent rake on the first doubling of BTC in order to take my complete investment back upon the second doubling - which would be 25% on the second doubling.

Regarding strategic forms of dollar cost averaging, I am a true believer in that practice of dollar cost averaging for a couple of reasons: 1) when prices of the asset are going down - especially after a recent bullrun (which was the case in NOvember 2013), it would be better to get in slowly and then to increase capital at lower BTC prices rather than going all in at that point in time - which was the case with me in November 2013 (I could have been invested in BTC at $1200 per BTC, and instead, currently, I am invested at $607 per BTC b/c I followed a form of hybrid DCA) 2) a person may NOT have a lump sum to invest when s/he first becomes interested in making the investment, and may be forced to buy into the investment as his/her salary comes in.  

On the other hand, if the asset is surely way under priced, as seems to be the current BTC situation (as compared with late November 2013), it may be better to be a little more aggressive on the front-loading of the investment rather than DCA in order NOT to miss the boat when or if the boat leaves the loading station... or the train or rocket or whatever leaves.

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April 19, 2014, 06:58:55 PM
 #162

You might be interested in this article of mine, where I mention the rule above (that I dub "10/200 rule") and add some more about day-trading.

Investment strategy - 10/200 and trailing stop (blog, most recent version)
Investment strategy - 10/200 and trailing stop (forum, outdated version)

I'd appreciate any inputs.

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April 19, 2014, 07:16:42 PM
 #163

You might be interested in this article of mine, where I mention the rule above (that I dub "10/200 rule") and add some more about day-trading.

Investment strategy - 10/200 and trailing stop (blog, most recent version)
Investment strategy - 10/200 and trailing stop (forum, outdated version)

I'd appreciate any inputs.

AT this point, I am NOT planning to implement that level of BTC trading, and I will only be trading with the portions that I rake in about 10% increments of BTC appreciation and only 1% of my total  BTC investment by using preset values that I calculate and input into trading at the time that the rakes are triggered. 

At this point, I view my plan as somewhat in the hypothetical b/c my BTC portfolio has been pretty much in the red since I started with BTC since November 2013 - however, once my BTC portfolio is in the black and my trading rake and trading plan are triggered and I play around with it for a while, I will likely provide more details.

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April 19, 2014, 10:59:32 PM
 #164

Why doesn't somebody already prepare a spreadsheet to test this theory (based on various start dates would be nice)Huh??

 I believe this theory is stupid, but I would like data to show what the results would be.
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April 19, 2014, 11:10:54 PM
 #165

Why doesn't somebody already prepare a spreadsheet to test this theory (based on various start dates would be nice)Huh??

 I believe this theory is stupid, but I would like data to show what the results would be.

You mean SSS? Go ahead: http://bitcoinsavingsplan.com/

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April 19, 2014, 11:29:52 PM
 #166

I believe this theory is stupid, but I would like data to show what the results would be.

What in your opinion would be a non-stupid theory?

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April 20, 2014, 01:16:59 PM
 #167

I know I posted that I will start selling @1000 USD, but took another look at my spreadsheet today and considering to wait until 2000 USD.
Breaking the current all time high is, in my opinion, a sure thing. So it does not really makes sense for me to start selling @1000 USD.

Selling in "uncharted territory" makes more sense, because the volatility and uncertainty is higher.
still tweaking my personal SSS plan. I want to be prepared when the next bubble starts.

The difficult part for me will be not postponing my sell orders. I am such a bitcoin bull that I become a little greedy when everything is shouting "2 d@ M00N !!!" Wink
Therefore, I will place my sell orders in advance.

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April 20, 2014, 01:34:20 PM
 #168

I have been watching the adjusted transaction quantities reported by Blockchain.info for a reversal. I believe price is leading transaction quantity, to the extent that price and transaction quantity are weakly independent. There is a hint now of a reversal to confirm what we have seen in price action for a few days.

https://blockchain.info/charts/n-transactions-excluding-popular?showDataPoints=true&timespan=30days&daysAverageString=1&scale=1&address=

Chart display options include a 7 day average, and also a longer duration of data.

I find it interesting to note that the number of transactions (ex. popular addresses) moves in 7 day cycles and hitting its low point without fail on Sundays.

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April 20, 2014, 03:12:01 PM
 #169

I know I posted that I will start selling @1000 USD, but took another look at my spreadsheet today and considering to wait until 2000 USD.
Breaking the current all time high is, in my opinion, a sure thing. So it does not really makes sense for me to start selling @1000 USD.

Selling in "uncharted territory" makes more sense, because the volatility and uncertainty is higher.
still tweaking my personal SSS plan. I want to be prepared when the next bubble starts.

The difficult part for me will be not postponing my sell orders. I am such a bitcoin bull that I become a little greedy when everything is shouting "2 d@ M00N !!!" Wink
Therefore, I will place my sell orders in advance.

It is actually hard not to do that when the price is skyrocketing.  This is why having a plan is so important.  We can make more logical decisions this way that are not based entirely on emotions.  It seems when our emotions are involved we have a much greater chance of getting burned somehow. 

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April 24, 2014, 11:48:20 AM
 #170

I'd like to mention that if you tweak this system by selling bitcoins gradually the cash you'll get will be lower than if you sell only when the price doubles. When you divide your 10% of BTC to 10 equal parts and sell 1st part  at 1100, 2nd at 1200 and the last part at 2000 it means that you sell your 10% of BTC for average price of 1550 instead of 2000 which is 77.5% of the price you could get if you didn't split.
Splitting to 2 parts means that you sell half of your 10% holdings at 1500 and another half at 2000. Average price you get is 1750 which is 87.5% of the price if you don't split.
The last extreme example is when you divide your 10% to 100 parts and sell them at 1010, 1020, 1030.. 2000. Average price you get is 1505 which is around 75% of the price if you don't split.
I think splitting makes sense only if you don't believe that the price will actually double at all, or when you already have plenty of bitcoins and every cashout you make gives you some real money and peace of mind.
If the cashouts are small and you don't risk much money holding bitcoins it's better to wait for the price to double or even miss a few cashouts to build your BTC value quicker.
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April 24, 2014, 02:03:50 PM
 #171

I'd like to mention that if you tweak this system by selling bitcoins gradually the cash you'll get will be lower than if you sell only when the price doubles. When you divide your 10% of BTC to 10 equal parts and sell 1st part  at 1100, 2nd at 1200 and the last part at 2000 it means that you sell your 10% of BTC for average price of 1550 instead of 2000 which is 77.5% of the price you could get if you didn't split.
Splitting to 2 parts means that you sell half of your 10% holdings at 1500 and another half at 2000. Average price you get is 1750 which is 87.5% of the price if you don't split.
The last extreme example is when you divide your 10% to 100 parts and sell them at 1010, 1020, 1030.. 2000. Average price you get is 1505 which is around 75% of the price if you don't split.
I think splitting makes sense only if you don't believe that the price will actually double at all, or when you already have plenty of bitcoins and every cashout you make gives you some real money and peace of mind.
If the cashouts are small and you don't risk much money holding bitcoins it's better to wait for the price to double or even miss a few cashouts to build your BTC value quicker.
Another option is to sell in small increments with the intention of buying back in whenever the price drops. Depending on volatility, this could actually give more total bitcoin and fiat than simply selling on doubles. Worst case scenario with that strategy is that the price goes up and never comes back down, so timing would still be somewhat important. Undecided if I will go for this.

There is no bubble.
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April 24, 2014, 02:59:37 PM
 #172

I'd like to mention that if you tweak this system by selling bitcoins gradually the cash you'll get will be lower than if you sell only when the price doubles. When you divide your 10% of BTC to 10 equal parts and sell 1st part  at 1100, 2nd at 1200 and the last part at 2000 it means that you sell your 10% of BTC for average price of 1550 instead of 2000 which is 77.5% of the price you could get if you didn't split.
Splitting to 2 parts means that you sell half of your 10% holdings at 1500 and another half at 2000. Average price you get is 1750 which is 87.5% of the price if you don't split.
The last extreme example is when you divide your 10% to 100 parts and sell them at 1010, 1020, 1030.. 2000. Average price you get is 1505 which is around 75% of the price if you don't split.
I think splitting makes sense only if you don't believe that the price will actually double at all, or when you already have plenty of bitcoins and every cashout you make gives you some real money and peace of mind.
If the cashouts are small and you don't risk much money holding bitcoins it's better to wait for the price to double or even miss a few cashouts to build your BTC value quicker.

This is not really true, you can reduce the rake to compensate.

I realize this ruins the "simple" part of the plan, but I'm thinking about adding a component that considers how far above or below the trend the price is at the time of the sale.  So sell more than the usual rake when it's above the trend, and less when it's below.  That would allow you to then buy back (if you choose) when the price goes down well below the trend.
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April 24, 2014, 03:50:13 PM
 #173

I'm thinking about adding a component that considers how far above or below the trend the price is at the time of the sale.  So sell more than the usual rake when it's above the trend, and less when it's below.  That would allow you to then buy back (if you choose) when the price goes down well below the trend.

Practically always when it makes new ATH's, it is also above the trend. So this correction would not be very practical, because you never sell unless it goes to uncharted territory, and when it does, it is typically overbought already.

A separate matter which is not really part of the SSS ideology at all (but which I subscribe to myself) is to use the exponential trendline sell signals with the intention to buy back cheaper later. This speculation should imo be conceptually different from SSS, so that SSS winnings are not used for buyback, only the proceeds from the speculative selling at the bubble top.

Just don't drown in all the money you suddenly make at the bubble top with these various plans  Wink
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May 19, 2014, 09:14:14 PM
 #174

I just want to thank you again, rpietilla

I did some small investments in an altcoin and price exploded today. I had my sell orders in place based on your SSS plan
with one djustment: to avoid panic sells, I would only start the plan when I had my invested BTC back Wink

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May 27, 2014, 10:16:08 PM
 #175

I quote these two Risto's posts because they deserve to be remembered it in this thread:



For most people, holding 100% of the initial amount is not a wise choice. It is good to diversify by selling into strength to account for the possibility of a black swan event in Bitcoin technology. This way you steadily accumulate also non-BTC assets, and can learn how to handle wealth. You sleep better and don't see dips in price as an opportunity to panic, but rather an opportunity to buy back if you really feel like so. The selling plan must be based on percentages, which means that no matter how high bitcoin goes, you still have more value in your remaining BTC.

If you have BTC1,000 and you absolutely want to have the same number when it hits $million, then it is best to just bury the paper wallet into ground and wake up when you are a billionaire. Trading only makes you lose the most of it over time with no gain. But it is not healthy for anyone to suddenly become a billionaire.

If instead, you flex your Excel muscle and devise a plan to sell BTC900 in decreasing increments at exponentially rising price points, you will already be rich and well-established when bitcoin hits $1 million, and totally content with the idea that your remaining stash is still worth a cool $100M.




I was quoting prices is dollars for convenience, because this is a large forum where most readers do not use bitcoin as their accounting unit.

Wealth is the same, regardless whether it is measured in bitcoins or dollars, because (in any point of time), bitcoin is a fixed multiple of dollar.

I do advocate using dollar as your accounting unit, since its value (purchasing power) is relatively constant, whereas Bitcoin's purchasing power increases tenfold every year. It is just handy.

But I also encourage to carefully consider that every one of your bitcoins is increasingly likely to reach $1 million in value quite soon. It should be treated as an inheritance, not to be wasted away. Every bitcoin you give away must give you more value than an extra $ one million would have given you in a few years of time. This is accomplished by selling only so little that the remaining amount is worth more (more dollars, houses, or gold) than the whole stash was in the previous stage.

How you allocate the non-bitcoin part of your portfolio is up to you. I do not advocate holding dollars as any % of it, unless you do arbitrage or something. The value converted from bitcoin should be used to buy silver, gold, castles with apple gardens, businesses, etc.

If you are a world dominator, then it makes sense to acquire as many bitcoins as possible and not care about the above. But who wants in that kind of game anyway...

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June 05, 2014, 08:57:29 AM
 #176

I love you SSS plan http://bitcoinsavingsplan.comSmiley I am using it for Nxt now. Too bad there is not an option to add other crypto's like Nxt.

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June 05, 2014, 10:10:22 PM
 #177

[I find it interesting to note that the number of transactions (ex. popular addresses) moves in 7 day cycles and hitting its low point without fail on Sundays.

Because payments to miners from pools occur every day, I suppose the day-of-week variation is due to consumer and investor behavior. Likewise bitcoin exchange volume drops on weekends.
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June 06, 2014, 12:26:28 AM
 #178

I love you SSS plan http://bitcoinsavingsplan.comSmiley I am using it for Nxt now. Too bad there is not an option to add other crypto's like Nxt.

Thanks, I think it should still work fine as long as you ignore the BTC units  Smiley

I just updated it today based on some requests to be able to modify the "doubling" to other values.  You can now modify the cycle multiplier to trigger a sell on 2x, 1.5x, 1.1x, etc.

Also, if you want to set up a fixed withdrawal rate in fiat, there is an option under the cycle multiplier to calculate that for you based on a given rake %.

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June 06, 2014, 06:27:37 AM
 #179

Hi rpietila,

congrats on a great savings plan. Really nice one.  Smiley


I have another one if you would like to comment. It is intended for people who already save some money every month.
They could save a small part of that (say $100 per month) into bitcoin.
The difference would be that they wouldn't have to suffer inflation but rather deflation for the bitcoin part of their savings.

If for example over a 30 year period we have 5% yearly inflation, while bitcoin has 3% monthly deflation (being ultra conservative here),
the difference after 30 years would be astonishing!!!

Please feel free to comment. Or whoever else wishes to.



Can someone do up an example of this scenario with US$1K over 10 years?

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June 06, 2014, 11:23:18 AM
 #180

Hi rpietila,

congrats on a great savings plan. Really nice one.  Smiley


I have another one if you would like to comment. It is intended for people who already save some money every month.
They could save a small part of that (say $100 per month) into bitcoin.
The difference would be that they wouldn't have to suffer inflation but rather deflation for the bitcoin part of their savings.

If for example over a 30 year period we have 5% yearly inflation, while bitcoin has 3% monthly deflation (being ultra conservative here),
the difference after 30 years would be astonishing!!!

Please feel free to comment. Or whoever else wishes to.



Can someone do up an example of this scenario with US$1K over 10 years?

Just go here: http://bitcoinsavingsplan.com/ and play with the numbers. Best easiest and fastest way to learn and get a feel for this.

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