Bitcoin Boat

I’m going to be honest, I missed the bitcoin boat, I did not turn a thousand dollars into hundreds of thousands as it seems some might have. Being in the finance space it’s a hard pill to swallow that I may have missed the earliest stages of the largest bull market of a generation. Now it’s 2018 and I do own bitcoin however at this point I don’t see myself getting ridiculously rich off cryptocurrency. But what I do see is an incredible opportunity to trade bitcoin.

Maybe you too have come to a similar conclusion. You missed the early move you are now kicking yourself in the head and at the same time still, want a piece of the action. The question we must ask ourselves going forward is how to trade bitcoin? You have the outright product the underlying coin, you now have a futures product with both the CBOE and CME and then you have what I consider to be my favorite for active trading, Nadex.

Both the CME and CBOE futures products contain leverage, leverage normally doesn’t scare me I’m a futures trader by heart. But with the explosive moves in BTC, we saw in 2017 the futures leverage of bitcoin scares me. I want to be active to trade both sides of bitcoin. To the outside eye it seems like the easiest thing to do is trade bitcoin from the long side only, but in my opinion, there is such an incredible range that I believe both sides of the market short and long have their opportunities to trade. In fact, since the futures launch from the CME bitcoin has not seen a new high and has fallen over 8,000 per coin. Making shorting bitcoin the best trade since the highs of december 2017.

The CME futures contract represents 5 coins a notional value of $74,350 at its current price of $14870 which is a little too big for my liking. On top of that, the daily Average True Range (ATR) is just under $2,000. Which means $10,000 prices swings every single day if you have just one CME futures contact. I have a traders stomach but that would make me puke.

Our other option to trade bitcoin is the underlying coin, which can be done with the most popular US based brokerage called Coinbase. But Coinbase does not have limit orders, how are you going to trade bitcoin without limit orders? Not to mention its a minimum $20 transaction fee every time, even more mature trading platforms such as GDAX that have limit orders can still be confusing. Many of them are based outside of the U.S. such as Binacne and the only way to get your money into them is to first transfer cash into BTC then transfer your BTC from your Bitcoin wallet to another third party using a BTC address. Miss one digit and your money is sent into the cyber world and may never be seen again. And oh yea the wallets are 32 digits long, don’t screw up that copy and paste or you will be out serious coin. Pun intended. The security of bitcoin adds to the complexity of the infrastructure. Of course, it can all be done with a little homework like anything, but what is the easiest way to begin trading BTC.

In my opinion, it is through Nadex, ever heard of them? Well if you haven’t let me break it down for you. Nadex is a U.S. based exchange regulated by the CFTC. Nadex provides two different types of options trading. Binary options and option spreads. As of right now, you can just trade weekly spreads in BTC on Nadex. Nadex is the first CFTC regulated exchange to offer an option derivative of BTC. Spreads have both a floor and a ceiling which represent the maximum and minimum value the product can trade. The Bitcoin spread on Nadex is 14,000 points wide. With the floor being 7800 and the ceiling being 22800. The price of the spread moves in 5 point increments, example 14315-14320-14325. The total contract value is $1400 which means that each 5 point move in the underlying contract equals $0.50. Here is a simple math example if you were to buy 1 Nadex BTC spread contract at 7900 the actual cost would be $10.00 (price 7900 – floor 7800 = 100 or points at risk. Each point BTC moves is technically worth ten cents per contract or $10 for $100 bitcoin moves. If bitcoin then rallies to $22,800 by the end of its expiration on Friday you would net $1390 per contract. How likely is that to happen? Not very likely, but I was just using this example to help you understand how the Nadex BTC spreads move. The advantages of trading BTC on Nadex are the biggest when trading from the short side. Since there is a max capped loss at the ceiling of 22800. Other benefits include lower commission cost, a contract that is 1/10 the cost of one bitcoin, and is a regulated exchange based in the U.S. Nadex also has a mobile application that lets you trade on a DEMO account so you can fully understand how this market functions before ever risking any capital.

Bitcoin isn’t going anywhere anytime soon, and the opportunity to turn 100 into 70,000,000 is far gone. But with the volatility that comes with trading the first 24/7 global digital currency. It’s time you start looking into the different options when it comes to trading bitcoin. Traders are a different breed and if you have spent the time to read this article you are already ahead of the pack on learning how to trade bitcoin. Each market has its own advantages and disadvantages when it comes to execution, trade management, risk management and commission structure. If you are serious about trading Bitcoin you should look into all the available options at your disposal. With all of the bitcoin news and ads on social media, this market is becoming extremely hard to ignore. This is the first hyper bull market we have seen since the dotcom boom of the late nineties. Will it all end in a terribly horrific crash…probably but in the meantime, there is money to be made. At this point in the game, it’s the educated traders who understand risk and markets that will make out better than those Cryptocurrency die-hard revolutionist holding on to their coins for dear life. HODLers as they are better known on the internet. I think it’s time you decide to trade bitcoin. If you have interest in trading Cryptocurrency check out www.youtube.com/majorleaguecrypto

Jack Gleason

Jack is a 26 year old day trader from Chicago primarly focusing on the S&P futures . Jack got his start in the markets at age 15....Continue