How do you manage Bitcoin price risk?

[el kaka22]

I do DCA and it helps me get better results in the long run. Obviously if you end up buying at low and selling at high you are going to make a much much bigger profit, this way you are buying from low but buying from high as well and you end up with some average price, but this works out much better when price falls and you do not lose too much money compared to other people who constantly bleed out losses during the same period.

If you learn what DCA is and try to mimic that for a long period of time, you will definitely drop the risk to a very low level as well. https://academy.binance.com/en/glossary/dollar-cost-averaging . Check this out, it is from binance so you know it is a good source and you could learn everything you need to learn about DCA from here.

[RealMalatesta]

People are mistaking the purpose of bitcoin and that upsets a lot of people when the price drops. The purpose of bitcoin is not to make you rich, it never was. Do you really think satoshi created bitcoin so that you can get rich from it? That was never the case and some people assume that is the thing that makes bitcoin great. The real idea was something totally different but the idea made it so great that everyone wanted it and when people wanted it the price went higher as well, which made bitcoin something to get rich, it was like a side effect of bitcoin instead of the main purpose.

However that side effect was so strong that sometimes people started to use it as the main thing and this is why we have topics like these. If you are afraid of the price, do not get involved at all because you are not going to like it at all.

[as.exchange]

I do DCA and it helps me get better results in the long run. Obviously if you end up buying at low and selling at high you are going to make a much much bigger profit, this way you are buying from low but buying from high as well and you end up with some average price, but this works out much better when price falls and you do not lose too much money compared to other people who constantly bleed out losses during the same period.

If you learn what DCA is and try to mimic that for a long period of time, you will definitely drop the risk to a very low level as well. https://academy.binance.com/en/glossary/dollar-cost-averaging . Check this out, it is from binance so you know it is a good source and you could learn everything you need to learn about DCA from here.

Sure, DCA is very common easy to implement, and relatively cheap way to actively managing your portfolio of assets / investments. However, based on history, other portfolio management strategies perform better than DCA. For example by simply implementing different ways of rebalancing portfolio, depending on market stage, you can get way better results than with DCA. And that's not to mention different types of financial products or more advanced financial strategies.

Here you can learn more about different "easy" ways of dynamic portfolio management strategies (buy&hold, constant proportion, constant mix) from Stanfrod: https://web.stanford.edu/class/msande348/papers/PeroldSharpe.pdf

People are mistaking the purpose of bitcoin and that upsets a lot of people when the price drops. The purpose of bitcoin is not to make you rich, it never was. Do you really think satoshi created bitcoin so that you can get rich from it? That was never the case and some people assume that is the thing that makes bitcoin great. The real idea was something totally different but the idea made it so great that everyone wanted it and when people wanted it the price went higher as well, which made bitcoin something to get rich, it was like a side effect of bitcoin instead of the main purpose.

However that side effect was so strong that sometimes people started to use it as the main thing and this is why we have topics like these. If you are afraid of the price, do not get involved at all because you are not going to like it at all.

You are absolutely correct about the true purpose of BTC. However, two points to be made - 1) we don't know what Satoshi had actually in mind (maybe it was a smart way to create new asset for trading? (I know sounds ridiculous, but it's possible)), 2) even with traditional currencies (USD, EUR, JPY, CNY, SDR) and commodities (gold, silver, etc.) - they are not created for making anyone rich... but because of supply & demand imbalances and market inefficiencies - they will eventually make someone super rich, and someone super poor. Same with Bitcoin. So it's like when you fall down in river, and just lay there and say "whatever happens is okay, otherwise it's too complicated trying to get out / to survive / not to "earn" / dealing with side-effects".

Furthermore, there's a great article about Bitcoin tech/economics together: http://coinmetrics.io/bitcoin-an-unprecedented-experiment-in-fair-distribution No matter what Satoshi's vision was, this is the reality that took place, and people will either suffer from side-effects (eventually they become the main effects), or will take active role in managing own wealth and earn/lose with it.

[bunglor]

the topic is a little bit deep, but to answer the question "how do you manage bitcoin price risk" well there always a feature in exchange called stop limit option well to manage the risk in bitcoin i always set stop limit option so if i sleep and the price crash in few hours while i'm sleeping well at least i already jump out of the crash.

[as.exchange]

the topic is a little bit deep, but to answer the question "how do you manage bitcoin price risk" well there always a feature in exchange called stop limit option well to manage the risk in bitcoin i always set stop limit option so if i sleep and the price crash in few hours while i'm sleeping well at least i already jump out of the crash.

Yes, that's one of the ways, but in such case you also lose (even though you can estimate how much you can lose), but what if the price slips and passes your stop limit without getting executed? Especially with flash crashes (which increase in frequency due to algo-trading activity (not only in crypto, but also stocks)) - stop limits typically don't save people. As for regular trading activity, it might be good, but in long-term holding BTC, wouldn't using call / put option be beneficial?

[sujonali1819]

To be honest, personally, I don't try to manage bitcoin price risk except the way of holdings. That means I always hold my bitcoin when I see it did go down a little bit. and wait for the time when it will come back. But I believe it may be a very weak way to recover lose or reduce risk.

Btw I really like your concern to know the people's opinion in this case. keep ahead and build your platform better.

[ChrisPop]

I think what you want is a crystal ball. In my opinion future's and options offer more than enough flexibility to maneuver your position exactly how you want. To use them at their full potential you need knowledge and practice.

To manage your Bitcoin stack against price swings try to set yourself a stop-loss and re-enter area. You need a plan, a strategy whether you are a trader or a long-term investor. 😉

[pawanjain]

With great profits comes greater risks. I don't have to manage price risk because I am a long term hodler.
I am estimating to hold at least for next 15 - 20 years provided bitcoin is not attacked by someone or something unexpected happens.
I wonder how much bitcoin would increase in price by then 
Yes, I know we have lots of opportunities to increase our capital if we trade in the swings but I have tried that and it didn't work for me well.
I lost more than I gained and so I decided to hold for long term and so far it's going good.

[as.exchange]

To be honest, personally, I don't try to manage bitcoin price risk except the way of holdings. That means I always hold my bitcoin when I see it did go down a little bit. and wait for the time when it will come back. But I believe it may be a very weak way to recover lose or reduce risk.

Btw I really like your concern to know the people's opinion in this case. keep ahead and build your platform better.

I assume that's because holding is just the easiest way for now. There should be someone like Robinhood but for crypto-derivatives to allow more people know about how to profit from various market opportunities in easy and simple way.

And thank you for your kind comment If you will have any recommendations or suggestions, please let me know - we will be happy to not just offer "build by traders for traders" but "by professionals for everyone", with what common people and everyone wants and understands.

I think what you want is a crystal ball. In my opinion future's and options offer more than enough flexibility to maneuver your position exactly how you want. To use them at their full potential you need knowledge and practice.

To manage your Bitcoin stack against price swings try to set yourself a stop-loss and re-enter area. You need a plan, a strategy whether you are a trader or a long-term investor. 😉

No need for crystal ball at all. For example people could benefit not from "futures", but also forwards? from principal-protected products (call option combined with risk free asset)? from BTC-linked maturing swaps? cross-crypto swaps? there are many many other opportunities in fact, that are currently overlooked and ignored. But they could really benefit common people (with proper explanation of course). And apart from that there's something even more interesting that is being launched than those "well-known derivatives"😉

As for strategy, plan, etc. - you are right! But that exactly limits the "entry-level" for people. - too complicated, too hard, too risky, too volatile, too ... Shouldn't there be a pimplier way for common people to understand what it is and be able to get what they want?

With great profits comes greater risks. I don't have to manage price risk because I am a long term hodler.
I am estimating to hold at least for next 15 - 20 years provided bitcoin is not attacked by someone or something unexpected happens.
I wonder how much bitcoin would increase in price by then 
Yes, I know we have lots of opportunities to increase our capital if we trade in the swings but I have tried that and it didn't work for me well.
I lost more than I gained and so I decided to hold for long term and so far it's going good.

Great profits = great risks, indeed mostly is the true case and known from finance theory, that expected return is compensation for taken risk. And I believe earlier in this tread I mentioned why even with long-term risk management is important. It's like with pension funds - they have very long investment horizon, but they take active approach in managing their risks. And art investors also take good care of their asset. Don't just throw painting of Picasso to the garage and say "I will come to check you after 15-20 years"

I totally didn't mean new ways of trading or new trading strategies - that's indeed a different topic (skill vs. luck vs. insight information vs. tools vs. products vs. strartegies), but I meant about new products (including what I mentioned above about principal protected notes).

[Akiko]

the topic is a little bit deep, but to answer the question "how do you manage bitcoin price risk" well there always a feature in exchange called stop limit option well to manage the risk in bitcoin i always set stop limit option so if i sleep and the price crash in few hours while i'm sleeping well at least i already jump out of the crash.

Yes, that's one of the ways, but in such case you also lose (even though you can estimate how much you can lose), but what if the price slips and passes your stop limit without getting executed? Especially with flash crashes (which increase in frequency due to algo-trading activity (not only in crypto, but also stocks)) - stop limits typically don't save people. As for regular trading activity, it might be good, but in long-term holding BTC, wouldn't using call / put option be beneficial?

Truth stop limit will not work the same as you like to use it many people use it and think they will save their trade for more losing streak  . Many traders lost a lot because of this function, due to its very volatile price it is easier to hit your stop limit than your price target.  volatility is the main problem of Bitcoin and  that's why it's not good suggestions to always have this option it can easily break your stop limit many times . Risk management and good entry is the best option to enter in the market with low leverage if your in the future trading .

[Stedsm]

They do offer the old-fashioned and traditional products but what's more interesting is the fact that the amount of liquidations happening every now and then are extremely higher as compared to what we see in forex and commodity derivative markets. I'm happy with what's already being provided but will definitely love to see something new rolling in so the old things get a competition. About price risk, how is it not pleasant to see our BTC's "price growth"? When the value of our BTC will remain the exact same in BTC since we hold it, it doesn't make any difference.

[as.exchange]

Truth stop limit will not work the same as you like to use it many people use it and think they will save their trade for more losing streak  . Many traders lost a lot because of this function, due to its very volatile price it is easier to hit your stop limit than your price target.  volatility is the main problem of Bitcoin and  that's why it's not good suggestions to always have this option it can easily break your stop limit many times . Risk management and good entry is the best option to enter in the market with low leverage if your in the future trading .

Yes, that's why with actual trading strategies and risk management techniques there's no sustainable method of getting rid of price risk. Those will just try to make sure that "on average" you don't lose all your money. But average is just all valued divided by N, and you never know if the next value will become so extremely negative, that it will destroy all your previous small positive values, yet still on average keeping you with modest positive returns.

They do offer the old-fashioned and traditional products but what's more interesting is the fact that the amount of liquidations happening every now and then are extremely higher as compared to what we see in forex and commodity derivative markets. I'm happy with what's already being provided but will definitely love to see something new rolling in so the old things get a competition. About price risk, how is it not pleasant to see our BTC's "price growth"? When the value of our BTC will remain the exact same in BTC since we hold it, it doesn't make any difference.

Yes, you made very good point about liquidations. The reason behind that is simple. First, it's at the core of those exchanges' business model - to get you liquidated (most of the times it will happen) - then it's exchange's earnings, and you just lost everything. I saw a lot of exchanges that survive entirely on this "liquidate all" model (sometimes manipulating numbers also - to get you liquidated). Of course not everyone is like that, but the majority is. Second, with FOREX and commodities - they are more regulated, people entering there overall are moree educated (by % of total capital in FOREX + commodity vs. crypto) thus they know more about what they are doing. And those people actually try to invest, as opposed many newcomers in crypto who know nothing about leverage or Bitcoin, but heard in the news that Bitcoin always goes up, and see leverage of 100x and think "Im gonna become next Bill Gates tomorrow with this". Once crypto truly becomes mainstream (I believe it will eventually) the trend for liquidations will somewhat balance for FOREX, commodities and crypto.

As for the new products, I would really appreciate your, and other's opinion about this, where we describe a new type of financial product (new not only for crypto, but for any other market you can imagine; not advertisement, but truly appreciate all your comments and opinion on this): https://bitcointalk.org/index.php?topic=5299655.msg55829101#msg55829101

And yes, when BTC price keeps growing - everyone is happy (apart for shorters of BTC ), but once it reverses (and you never know when it will start - maybe after few minutes you check the price) - then here comes the downside which most of the people didn't bother to / didn't know how to protect. And the value of BTC is very unlikely to stay same - back in 2018 you could buy 1 apartment in Russia (and even in Moscow), apart from other cities. Then in 2019 - you couldn't buy even half. Now you can buy part of it probably - that's the issue with price risk.

[Rasel5209]

Always i worried about bitcoin when i trade btc to usd. Another i don't worried bitcoin i try to only growth satoshi alt coin buy sell.

[as.exchange]

Always i worried about bitcoin when i trade btc to usd. Another i don't worried bitcoin i try to only growth satoshi alt coin buy sell.

Aren't you worried with altcoins more about price risk? There it's well possible for price to quickly collapse if you don't know the actual situation when you enter in position.

[so98nn]

Honestly I am not that great trader as to know those terms or use them in reality. I have been literally normal trader all the time and the kind who just holds bitcoin and get some profits when bitcoin's volatility shows some upward moves. The one who buy at bitcoin's lowest possible point of that month or quarter and hold for few months and take the action as soon as it goes up.

However, it's always been hard decision as to when to enter into crypto. Bitcoin is hard bitch, and just now the market gone up by 10%+ in few hours. So it's very hard to decide whether I should get in or just wait for the market to drop. These kind of decisions are still hard for me to make all by myself.

I am very interested in this thread and will see what others has to say about this.

[passwordnow]

Being in the market for a couple of years, I don't manage bitcoin's price risk anymore. I'm looking to it as something positive just as its volatility will make my investment someday higher than what I'm expecting. Just as you've said that a forever hold guy, I think I belong to that group.
No worries even if the market swings from top to bottom and vice versa, what's important to me is that I'll see someday the bitcoin I've got will rise in an unexpected price. Although it's a tough game for holders, patience is really one of the key to overcome those market swings. With the experience and witnessing and enduring several bears, it made my feeling numb as I look at the price.

[newdevices]

Bitcoin volatility is indeed very high, this is what makes investors and traders think of buying bitcoin,
but take it easy, there are strategies to minimize that risk, you just need to buy gradually if the price of Bitcoin has decreased or dumped,
then your capital will be maintained.

[Hamphser]

Bitcoin volatility is indeed very high, this is what makes investors and traders think of buying bitcoin,
but take it easy, there are strategies to minimize that risk, you just need to buy gradually if the price of Bitcoin has decreased or dumped,
then your capital will be maintained.

It will vary on someones goal because there are people who do focuses on making some accumulation and aiming for long term and there are people who do really
make out some active trades in short span of time for them to make out some money out of those volatility or movements.Risking is always been part and
managing it wont really be that easy because it will really be affected on someones emotion when it comes on decision making.So experience will really be
the key and a strict self discipline regarding on how you do deal on such situation.If you know that you are already on gains then better to secure it.

[stomachgrowls]

managing it is quite easy, you can accumulate Bitcoin when there is a correction, and hold,
remember, don't buy when the Bitcoin price flies high, it can make your capital decrease, better wait below.

Easy to say but really hard to be done.I would ask you if you do able to spot out which is the bottom and which is the peak price?

If this thing is something that can be known or to be handled then lots of us traders are making serious profits now since we can able to handle
out those price volatility which is the most impossible thing to be done as a trader.

Managing risk will particularly talks about on how you gonna handle your capital and making yourself sustainable into this market.

[Fredomago]

managing it is quite easy, you can accumulate Bitcoin when there is a correction, and hold,
remember, don't buy when the Bitcoin price flies high, it can make your capital decrease, better wait below.

Easy to say but really hard to be done.I would ask you if you do able to spot out which is the bottom and which is the peak price?

If this thing is something that can be known or to be handled then lots of us traders are making serious profits now since we can able to handle
out those price volatility which is the most impossible thing to be done as a trader.

Managing risk will particularly talks about on how you gonna handle your capital and making yourself sustainable into this market.

It takes time before you'll be able to master any strategy that you'll going to use inside this market, if what he's said is just simple and really being followed then logically most traders are gainers,

But in reality, this principle is not that easy even how you tried to established your position, there's a time that ongoing trends will hit you up to cope up with the situation.

Very important to deal with every decision that you take. Fund management is a type of skill that not anyone have, by managing it right your position inside any market is much better in the long run.