Cryptotrader/Poloniex Cryptocurrency Trading
Update and Lessons Learned
It has been a while since the 1st installment on cryptocurrency trading using the Cryptotrader’s automated trading bot platform. While it was the intention to add to this piece, informing every one of exactly how well the crypto trader platform worked, I quickly discovered that I had a lot to learn when it comes to trading in crypto currencies.
If you ask the question, “what is the goal of cryptocurrency trading?”, The answer is pretty simple: to sell one currency for another in the hopes of making a profit on the sale. Seems pretty cut and dry, and using that blanket statement, it actually is. However, how you get to that point where you’re making a profit is the real trick. When selling a tangible items or services, you set a price that is higher than the actual value of the item or service in question, and therefore you make a profit. In crypto currency trading there is a lot more to it than that. And it took learning the hard way, slowing down, and relearning everything that I thought I knew all over again.
Cryptocurrency Trading: Learning the Hard Way
To begin the daunting task of cryptocurrency trading and testing the crypto trader platform along with Poloniex cryptocurrency trading exchange, starting with the 2 Bitcoin balance. I quickly chose a cryptocurrency trading strategy, input the settings that I thought were optimum. And away we went. It did not take long for me to panic, shut down the back, scratch my head and say what just happened? All of a sudden, there is .03 Bitcoin gone, a total loss, and I could not figure out how it was possible.
Cryptocurrency Trading Lesson 1
Poloniex and all other cryptocurrency trading exchanges charge fees on every by and on every cell that you are a participant in. The fees, on Poloniex, are either of 0.15% or a 0.25% fee taken off of the crypto currency you are receiving. If you are buying the crypto currency, you will be charged the 0.25% fee. If, on the other hand, you are selling the crypto currency, you will be charged the 0.15% fee. Now, neither 0.25% nor 0.15% seem like a large amount of money. You have to remember however, you are dealing with crypto currencies, Bitcoin mainly, that is valued at $8000 USD. So even though it may not seem like a lot, that 0.15% and more so the 0.25% fees can relate to up to $20 in fees on a single trade. So, if you are trading in a small amount, and you do not consider this fee, the $11 or $12 profit you just thought you made is actually an $8 to $9 loss. Get a few of these, and quickly realize that you haven’t been making money at all but rather have been losing it even though you were selling for a profit.
So, the lesson learned here, was to only sell after increasing the price high enough to cover both fees. 0.25+0.15 equals 0.4. If the crypto currency is bought at 0.0021 Bitcoin’s, an additional .00001 must be added to cover the fees alone. Once this has been added then is the time to increase it by the percentage of profit that you would like to earn.
Cryptocurrency Trading Lesson 2
If you were to look at the charts on Poloniex or any other cryptocurrency trading exchange, and saw that Ethereum was heading down, you would naturally think that it was losing value. Most of the time you would be correct. But do not make the mistake, as I did, and think that that is always the truth. The one thing to remember is this: as Bitcoin goes up, it takes less of those Bitcoin to equal the value of the Ether. As an example, if you bought Ether at a price of .037, then logged in later and saw that the price was at .035, you would naturally assume that you had just taken a loss on the Ether at this point. However, let’s look at a situation that actually occurred.
The Ether is bought at 0.037. At the time it was bought Bitcoin was worth $5687. Upon looking later, Ether was in the red, down to only 0.033. Naturally, it was assumed that Ether was at a loss and looking at the charts did not look like it was going to rebound anytime soon. The one thing that was missed, in the whole relationship to Bitcoin, was that now Bitcoin was trading at closer to $7100. Had that been noticed, prior to panicking and selling, a substantial profit could have been made.
Bitcoin trading $5687 with Ether value at 0.037 Bitcoins made the price of Ether in USD, $210.42. When Bitcoin at $7100, 0.033 Ether, even though of lower overall Bitcoin value was now worth $234.30. So, while the charts, the value in Bitcoin and everything else pointed towards either losing money, it was actually up nearly $24 from where it had been when purchased.
Slow Down and Take a Minute
At this point it was decided that I needed to learn just a bit more on cryptocurrency trading or just trading currencies in general. I could not wrap my head around the idea of how to figure it all out, so that I could make a profit with the fees, and take in consideration the value of the Bitcoin trading between Bitcoin and other crypto currencies. So, with all these questions, doubts and other uncertainties I turned to the one place that anyone in my situation would turn to: YouTube.
Time for A Cryptocurrency Trading Education
One thing that can be said about YouTube is that there is literally a video anything you search for. Cryptocurrency trading and regular currency trading are no exception to this rule. There is a plethora and wealth of information to be found on YouTube regarding trading in currencies and crypto currency specifically. It is here that I spent the next several weeks, figuring out how to profit the most trading on Poloniex. Out of everything that I learned, the most important thing that I learned was that I still haven’t learned anything in comparison to the amount of information that is available or needed to successfully trade on Poloniex.
That is not to say, that there wasn’t information gleaned and learned that has been put to use successfully. It is only meant to let the reader know that no matter how much you take in, there is always more to know. During my self-education, I did visit other sites related to both Forex and cryptocurrency trading. When it was offered, the financial experts, trading gurus and others with much more experience than me all had the same basic message: no matter how many years they each had in their respective industries, they still haven’t learned half of everything that they needed to know.
Taking Another Run at Cryptocurrency Trading
During my time at YouTube financial University, I slowly played with things on Poloniex, implementing the new techniques, strategies, and information into each and every one of my trades. Of course, by now I was gun shy. I didn’t want to take any large chances, and to be honest, I didn’t want to take any small chances. The average trade that I was making was not much more than $10-$20 USD in value.
One thing I learned, that I did put into play, was that until I had a better handle on the price fluctuations in Bitcoin and how it affected the other crypto currencies directly, trading Bitcoin to USDT was Much easier to understand. By doing this, it got me used to the differencing in the pricing of Bitcoin, and as such, allowed me to start seeing the benefit of trading between the 2 separate markets, Bitcoin and USDT.
While I was implementing the cryptocurrency trading things that I learned, I still was losing money. The 2 Bitcoin site originally started with were now 1.43. With Bitcoin being at $7000, that is a substantial loss of money. But I did not give up, and was determined to make this work.
The Comeback of a Lifetime
With a 1.43 balance, Bitcoin on the decline in Bitcoin Cash on the rise, I broke from my fears and begin trading in more substantial amounts. I traded these amounts on the USDT market. Before I began I made sure that I had everything in order. That meant that I had my chart, which I made myself, that allowed me quickly to reference how much the fees would be at certain dollar amounts. I took a deep breath, and sold all 1.43 Bitcoin for US dollar tokens.
Staring at the screen feverishly, I watched the value of Bitcoin, the value of Bitcoin Cash and although it took all of my willpower I begin making trades between the 2 crypto currencies and the US Dollar token. After only 4 ½ hours I held nothing but Bitcoin once again. The balance of the Bitcoin was 2.0121.
Now whether the sense of being a loss at this point, since Bitcoin was down, I have no idea. I stepped back, close the Poloniex window, and consider the fact that the Bitcoin balance was once again over 2 a success. At the time of this writing, the balance in Poloniex is the same and Bitcoin is over $8200 in value. So, whether or not it was a win at the time, it sure is a win now.
Cryptocurrency Trading: In Retrospect
If I were to go back in time to the moments before I initiated those mistakes of cryptocurrency trading that started this whole endeavor, I do not believe that I would actually change anything. The reason is, it gave me an opportunity to learn in a way that I most likely never would have otherwise. Now I feel confident comfortable enough, to trade with minimal risk. In no way do I feel that I am any kind of financial expert, crypto currency trading guru, or anyone that another person should take advice from on the subject. But for the purposes of this ongoing piece, I can safely test crypto trader and write about it here to provide you with the information you need to know on the platform itself, and whether or not the trading strategies work as described.
So again, I apologize for the delay in the next installment of cryptocurrency trading on the crypto trader platform articles. At this point, the strategies I have tried, the platform itself and the feasibility of using it have not had any direct negative impact and have worked perfectly as stated and intended by the developers on crypto trader. Full testing on specific strategy should begin shortly, and future articles on this topic should be forthcoming in a more timely manner.
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