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!

23 replies
  1. Udit Mehrotra
    Udit Mehrotra says:

    Thanks for the ETF recommendation. Any others you recommend which are more heavily weighted in Bitcoin or other crypto expsoure?

    • Trade$hifu
      Trade$hifu says:

      Hi Udit. You can consider GBTC as well, but it is a lot more volatile. These are the only two I have found from my research so far. If there are more, I will update this post with the details! Good luck trading!

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