Read our case study trades to learn from real bitcoin traders and improve your own trading ability.BackgroundThere are two main trading opportunities that are covered in this article. Firstly, there was a rally following the announcement of Coinbase’s exchange on the 26th of January. Then later in February, there was another sizable rally on Valentine’s Day.
Click here to read our previous post on the January price crash.These trades are not the most profitable recorded, but the trades that others can best learn from.
10. Buying the RumorThis trader opened two simultaneous positions.
Position 1:
Open: 247.64 USD
Direction: Buy
Close: 285.16 USD
Profit: 4.20 BTC / 109.73%
Position 2:
Open: 247.88 USD
Direction: Buy
Close: 285.03 USD
Profit: 4.22 BTC / 108.62%
This trader entered two long positions on Bitfinex, with 10x leverage, before Coinbase’s exchanged was announced. After the grand reveal, their 7.7 BTC deposit produced a substantial 8.44 BTC profit the next morning.
The risk / reward balance of our trader is very impressive. To begin with, they did not instantly sell for a small profit immediately after their position was opened. Instead they held out to see what the market would do. When a major spike did occur, they did not get greedy and closed their position while they were in a profit.
9. The Panic SellerOpen: 254.88 USD
Direction: Buy
Close: 262.46 USD
Profit: 1.12 BTC / 12.03%
Unlike the previous trader, this speculator was not so quick to take their profits. They opened a long with 5x leverage while the rally was gaining momentum. When the trader closed the position, their 9.33 BTC deposit produced a respectable 1.12 BTC profit.
The timing of their opening was impeccable, however their returns could have been considerably higher by closing earlier. It was not until the price dropped significantly that they sold in panic. If you need to improve your trade opens, consider watching the
MACD to identify significant trends to follow. But remember to take your profits, like our the previous trader, to realize your hard-earned bitcoin.
8. Following MomentumOpen: 258.88 USD
Direction: Buy
Close: 297.15 USD
Profit: 0.1 BTC / 107.53%
Let’s take a look at a trader that was also following momentum, but remained prudent enough to take their profits. This time we have a smaller trader with a 0.096 BTC deposit, but using 10x leverage allowed them to generate a hefty 0.1 BTC profit.
Unlike the last trader, this person almost perfectly timed their position close. If you need to work on taking your profits, consider setting price targets that you will close at — this helps prevent trading on emotions.
7. Selling the NewsOpen: 306.03 USD
Direction: Sell
Close: 232.42 USD
Profit: 1.96 BTC / 263.93%
A trend that has been prevalent over the last 9 months with bitcoin trading is for the price to rally on major news, but then return to pre-news levels. This can be seen with
PayPal’s bitcoin partnerships,
Microsoft accepting bitcoin and now with Coinbase’s exchange.
Identifying this trend helped our trader turn a 0.74 BTC deposit into a 1.96 BTC profit. While accurately calling the top may require a bit of luck, they did a great job of managing their open position for several days.
As the price was retracing over several days, it made financial sense to keep their position open and incur interest charges on the funds
BTC.sx provide for 10x leverage.
A general rule of thumb is to consider closing unprofitable positions within 24 hours to avoid paying interest. However, the market was moving in their favor — more than compensating for the interest charge. The end result was making approximately 90% ROI for every day their position was open.
6. Missing the BoatOpen: 280.12 USD
Direction: Buy
Close: 237.00 USD
Profit: -0.96 BTC / -75.81%
Unfortunately, unprofitable trades from time to time. But these are actually valuable learning experiences. This is certainly the case for our trader that ‘missed the boat’ when both opening and closing their position.
This trader was slightly slower than the earlier momentum traders and went long at 280.12 USD with 5x leverage. Their potential profit would have been higher had they entered a position sooner, but this was initially not too much of a problem when they quickly became profitable.
However, they failed to realize their profit while they had the chance to do so. In fact, they only closed after the spike to cut their losses. Quite clearly, if they had entered the position sooner, their loss would have been much smaller. Or even better, if they did not miss the boat to close above ~283 USD, they would have made a profit.
Now Let’s Look at the Lessons to be Learnt from the Valentine’s Day Traders
5. “Honey, can you please stop trading bitcoin for 10 minutes?”Open: 234.66 USD
Direction: Buy
Close: 258.37 USD
Profit: 0.18 BTC / 76.47%
With 24/7 markets, bitcoin waits for no one. This trader was not going to let their Valentine’s Day plans get in the way of making a profit. Here we have a trader going long at 234.66 USD, with 10x leverage, then closing the position on Valentines Day evening to lock-in a 76.47% ROI.
As covered above, this trade demonstrates the effectiveness of both following momentum and taking profits sooner rather than later.
4. The Sneaky Mid-Date TradeOpen: 256.66 USD
Direction: Sell
Close: 236.50 USD
Profit: 0.09 BTC / 71.04%
Being a trader it can be hard to stop price-watching sometimes. Here we have a BTC.sx user taking an opportunity to short bitcoin will the price rallied during Valentine’s Day evening. By entering a 0.13 BTC short position, at 10x leverage, they set themselves up to profit from a price fall.
Our simple user interface also allows trades to be made on mobile devices for those moments when you cannot get to a computer.
A great lesson to be learnt here is to not set stop losses too small. Initially the market moved against the trader. However, our trader had a large stop loss to allow the price to move higher, before heading down, where a 71.04% ROI was later generated.
3. The DumperOpen: 243.95 USD
Direction: Sell
Close: 234.24 USD
Profit: 0.02 BTC / 34.54%
Following momentum also works when shorting bitcoin. Shown by this trader, a sell was made 10x leverage, helping drive the price lower and generate a profit. At
BTC.sx, all positions are executed on exchange order books. Consequently, leveraged trades help move markets in your favor, with greater influence than just an unleveraged buy or sell.
Following the dump to 227 USD, our trader failed to take his profits and the market crept back up over several days. On the 17th February, their profit even turned into a small loss. However, as the market fell lower the following day they were able to finally close their position in a profit.
2. The Coin TossOpen: 243.38 USD
Direction: Buy
Close: 234.19 USD
Profit: -0.20 BTC / -32.72%
All trades should be based on research and technical analysis. Simply placing a trade, without a justified reason, reduces your chances of making a profit to the toss of a coin. This trader found out the hard way when the market moved against them with a 10x leveraged buy, resulting in a -32.72% ROI.
In this scenario it was more likely that the price was going to head downwards for several reasons. For one, by looking at the above chart it is easy to see that there is
price resistance around $244, indicating limited upside potential. Additionally, volume was declining at this point which means that a significant breakthrough is unlikely. Lastly, the
MACD showed the upward movement was loosing momentum, indicative of a trend reversal.
1. The TechnicianOpen: 245.05 USD
Direction: Sell
Close: 235.53 USD
Profit: 0.01 BTC / 33.68%
Over at Bitstamp, one of our traders made a similar trade, but went short instead of long. By correctly identifying the price resistance, declining volume and declining momentum, they concluded a price drop was likely. Their analysis produced a well-deserved 33.68% ROI.
This shows that, even in a seemingly flat market, there are opportunities to be found by trading one step ahead of the market to profit from when a price swing does come. And in bitcoin, that price swing is inevitable.
Conclusion
While it may seem obvious, the best traders on our platform always tend to have an objective and a clear reason for trading. This shows the more informed traders will always have that slight advantage over the rest of the market.
Another common pitfall is not taking profits sooner. Although hindsight is 20/20, it is generally more profitable to close a position too soon, rather than too late.
If you want to use the power of leverage / margin trading to increase your potential returns, check out BTC.sx. We offer up to 10x leverage on Bitfinex, Bitstamp and itBit.
