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Warning Signal?

We are currently in the 2nd longest bull market run in the history of the US stock markets. And although anything that you might have purchased might have gone up and made good profits so far, its time to be cautious as we go forward. Lets look at how it ended the last time the markets were riding a great bull up, specifically the last 7 times.

Longest bull market run
Considering we have seen at least an average of a 50% drop after, this time might not be very different from that figure considering we saw a 57% crash in the most recent episode in the 2008 financial crisis. Although the numbers are scary, it does not have to be panicky as long as you know how to prepare and be positioned right for this once in a lifetime wealth transfer. Remember stock markets are a zero-some game meaning your profits are someone else’s losses and vice versa. Its only a matter of the $$ changing hands and a great opportunity for us. Even when you look at the charts below of the precious metals ( gold and silver ) futures – we notice that the volume has gone up considerably in the last couple of years where people are trying to hedge for the impending correction.

GC Futures 20Y chart SI Futures 20Y chart

And during the same time, the S&P 500 futures contract has been losing volume and been on a unexpected, unsustainable run up. This is hanging by a thread and the slightest of the triggers could lead to the start of the crash. Although its hard to predict when the crash will happen, we can be prepared for what is to come.

S&P Futures 20Y chart

For those who have attended my coaching or training, you know I always talk about buying precious metals especially more SILVER than GOLD for various reasons that will make this post way too long. I am not a big fan of holding the FIAT currency but I constantly use it to generate more $$ and buy ASSETS with real value using it. Because only these will stand the test of time, and now that we are in a precarious time, would you not want to buy insurance for your stocks? Yes its possible through the purchase of put options and it will help mitigate the risk in case there is a crash TOMORROW. You or I can’t predict when exactly its going to happen, but we can certainly PREPARE for it.

If you are new to the world of OPTIONS and do not understand how they work – I highly suggest that you start spending some time towards learning it – as the returns from it are far grateful than what you can imagine. In fact I have broken down the basics of options into small understandable modules that is easy for anyone to consume, and I highly suggest you start with it. Click here to get access to this course right away! You don’t want to wait on this – See you there!

Intro Course Outline

2018 Guide to Trade Bitcoin Futures

I’d like to wish all of you a very happy and prosperous new year and one of the goals I have for 2018 is to explore things I did not do in 2017. What better way to start than by getting my feet wet in BTC trading? I had put away trading bitcoins for some time as I did not want to open separate trading accounts just for these crypto-currencies. I just logged into my TD Ameritrade account to find out that they are offering both the CBOE and CME Bitcoin Futures for retail investors to trade. And now that its finally trading on the US Stock Markets, I decided to give this a try on the first trading day of 2018.

My First Trade on BITCOIN

xbt long 02-jan-2018
Screenshot of /XBT Chart  from TD Ameritrade

I traded on a single contract of /XBT and went long at 13,360 as there was minor support at that level. This was a slightly aggressive trade with a tight stop loss, and the trade started working in my direction. Usually I would have scaled up this position on the way up, but with the high margin and trying out a new product for the first time, I decided to stick to just the 1 contract and exited at 14,090 when the underlying hit the 200SMA on the 15min chart.

Profit per contract: $14,090-$13,360 = $730
Time in Trade: A little over 7 hours

CONTRACT Specifications

For those of you wondering about the differences in the two Futures Contracts, here are the summaries of both of them.

btc
Click here for CME Contract Specifcations!

xbt
Click here for CBOE Contract Specifcations!

Things to Note:

1. Spread Size: Because these futures contracts are still very new and not even a month old, the volume in these is quite low. So when you are trading these, its important to note that your STOP LOSSes can’t be too tight because you will be taken out very early. Also right when you enter the trade, you will see an open loss on the position as the spread is about $50-100. So you would need to make at least a profit of the spread size to break even and if you want to close your position immediately after opening it, you will be definitely looking at a loss.

2. Margin Calculations: Margin is calculated based on what BTC is currently trading at right now. So if you want to take a position in these for a long term, make sure you factor this into your calculation before getting into it. So this means that its a dynamic value and you need to make sure you have enough cash in your portfolio to be trading these futures. Because if it goes onto a strong rally, and we have seen this to happen within a day, you might be required now to put up a lot more margin than what you had originally used to get into the position. On the flip side, your margin could also drastically reduce, if the BTC falls as margin is always calculated as a percentage of what BTC is trading at right now. Also exact margin amounts will be different for different brokers. The ones mentioned above are what my broker is offering which is TD Ameritrade.

3: Volatility: Finally, if you can’t be making money trading S&P 500 Futures (/ES), Gold (/GC) or crude oil (/CL) you should not even be thinking about this. BTC is a lot more volatile than any of these underlyings, and so unless you are consistently able to make profits trading these underlyings, it would be foolish to try the BITCOIN futures. The daily range of BTC from what I saw in the chart of the last few weeks is easily a few thousand dollars – and you are never ever going to get that kind of volatility in trading S&P or Gold Futures.

BITCOIN ETFs

If you do not want to trade the futures, “ARKW” is an ETF that is attractive which has some exposure to Bitcoin. In fact the top weighted holdings in this fund is for “GBTC” and holds other tech giants like Amazon, Twitter and Netflix. Here are the top 10 holdings,

ARKW
Source: https://ark-funds.com/arkw

And if you need more information on what GBTC is, you can use the link here to read up more on their website here,
What is GBTC?

What CRYPTOS should I consider?

If you want to be trading or investing in any other crypto-currencies, make sure you look at the market cap and invest in the ones with the largest market caps. Here are the top 10,

top 10 cryptos by market cap
Source: https://coinmarketcap.com/

BITCOIN Scams

Finally there are a lot of scams out there, now that everyone is talking about it. So make sure the next BITCOIN related thing you hear that can make you an overnight millionaire and that it can give you passive income and guarantee you 1% per day and at least 140% in 6 months is all a big load of BS. So learn how to invest in the coins directly or trade them through the futures. Here is a list,

bitcoin scams
Source: http://badbitcoin.org/thebadlist/index.htm

 That is all I had to share at this point about my experiences with BITCOIN trading so far. If you found value in it – please do like, comment and share it with all your friends. Happy 2018!