Fill in the details and press Add Card. That will add the card as a payment method and you’ll be returned to the main account page, now showing 3 of 4 steps complete:
Coinbase Payment added (Bitcoin-Investors.co.uk)
Next select Buy crypto then Continue and trade crypto:
Coinbase Trade crypto (Bitcoin-Investors.co.uk)
At this point you will be required to pass a quiz on crypto to show you understand what you’re doing – rather ‘nanny state’ but that’s where we are. It’s best to select Read our crypto guide and then learn the basics about crypto:
Coinbase Crypto quiz (Bitcoin-Investors.co.uk)
There are then a dozen screens like the following to read through:
Coinbase Crypto quiz 2 (Bitcoin-Investors.co.uk)
On the last one select Take the test:
Coinbase Crypto quiz 3 (Bitcoin-Investors.co.uk)
There are then half a dozen quiz questions like the following – in most cases you will be right if you choose the most pessimistic or negative response!
Coinbase Crypto quiz 4 (Bitcoin-Investors.co.uk)
Once you’ve passed, select Continue and trade crypto:
Coinbase Crypto quiz 5 (Bitcoin-Investors.co.uk)
You’ll finally get to the Buy screen – in future you can just select this from the main account page menu. Here the pound option has been selected (to spend so many pounds on Bitcoin) but you can instead select the Bitcoin (to buy so much Bitcoin, e.g. 0.1, and be told how many pounds this will cost). Enter the amount required. Note the card you entered will be shown at the bottom, with a credit limit:
And you’ve bought your first Bitcoin! Note that the value of your Bitcoin will be shown at the bottom, and it will be less than asked for – there are always trading fees, buying and selling so you’ll get used to this. Coinbase fees are quite high (here £100 bought £95 of Bitcoin, so nearly 5%!). There are ways to reduce this – but that’s beyond the scope of this article (if you’re going to spend a lot of money, do investigate Coinbase One – but you will have to learn how to do trading). Click on View details to get taken to the Bitcoin Primary balance page (in future you can select this from your main account page):
This shows your current holdings of Bitcoin and the pound sterling equivalent. For a more general overview, return to Home:
Coinbase Account home (Bitcoin-Investors.co.uk)
Also note that if you buy multiple cryptocurrencies (e.g. Ethereum, USDC, etc.) you can see the balance of each coin, plus the total value of your portfolio, via the My assets menu and page:
Coinbase Assets page (Bitcoin-Investors.co.uk)
Welcome to cryptocurrency and Bitcoin – you are no longer a Nocoiner!
This is an introduction to buying Bitcoin for those new to cryptocurrencies in general and to Bitcoin in particular. The first step is to create an account on a website where you can buy some crypto (elsewhere we’ll look at how to hold your cryptocurrency in your own ‘wallet’).
Here I’ll show you how to create an account at Coinbase.com. It claims to be “the most trusted platform in the UK for buying, selling and trading crypto” and is certainly very well known worldwide. As well as being popular it is also easy to use. It is not the cheapest nor the most fully featured platform and so we’ll look at other platforms later (like Nexo.com) for those more experienced with cryptocurrencies. Coinbase is, however, good for newcomers.
The process has got more onerous over the years, unfortunately, probably due to the UK government’s increasing requirements for financial institutions to follow Know Your Customer (KYC) rules. If you look through the process below in advance you’ll understand what you need to do before you get on the Coinbase website.
When you follow that link you’ll see a webpage like the following:
Coinbase UK Home Page (Bitcoin-Investors.co.uk)
Then go through the following steps.
Click on the Sign up button, enter your email address and click Continue:
Coinbase Sign Up Page (Bitcoin-Investors.co.uk)
3. Enter your first and last name and a secure password.
A good place to get a password is PasswordsGenerator – choose a length of 16 characters and include symbols, numbers and upper and lowercase characters. Make sure at this point that you record the password somewhere, e.g. in a new document. You will need a lot of passwords when dealing with cryptocurrency and the general rule is that if you lose the password you can lose the money! Get into careful organisation now.
If your password is suitably secure you will see the green lines below the password box as shown below. Make sure the check box is ticked, and press Create free account. You may need to pass a Captcha at this point.
5. You should now be able to login to Coinbase with the email and password you provided:
Coinbase Sign In (Bitcoin-Investors.co.uk)
At which point you may be emailed a code to enter:
Coinbase Sign In Code (Bitcoin-Investors.co.uk)
7. Once logged in you will have a bunch more questions to answer:
Coinbase Sign In email option (Bitcoin-Investors.co.uk)Coinbase Sign In phone (Bitcoin-Investors.co.uk)Coinbase Sign In citizenship (Bitcoin-Investors.co.uk)
8. Enter your date of birth and home address and answer some questions:
Coinbase Sign In personal information (Bitcoin-Investors.co.uk)Coinbase Sign In personal information (Bitcoin-Investors.co.uk)
9. Next we have to get through all the KYC and ‘be careful crypto is dangerous’ warnings and questions. Most people reading this will be Restricted Investors:
Coinbase Sign In KYC (Bitcoin-Investors.co.uk)Coinbase Sign In KYC 1 (Bitcoin-Investors.co.uk)Coinbase Sign In KYC 2 (Bitcoin-Investors.co.uk)Coinbase Sign In KYC 3 (Bitcoin-Investors.co.uk)
10. Finally, if you have had the patience, you will have got through all the KYC requirements:
Coinbase Sign Up (Bitcoin-Investors.co.uk)
11. Next, you have to do identity verification, again most likely due to government requirements for Anti-Money Laundering (AML). For most people the simplest option is likely to be uploading a scan or photo of the back and front of their driving licence:
Coinbase Sign Up identity verification (Bitcoin-Investors.co.uk)Coinbase Sign Up identity verification 2 (Bitcoin-Investors.co.uk)Coinbase Sign Up identity verification 3 (Bitcoin-Investors.co.uk)
12. After you press the Upload button you will get an acknowledgement:
Coinbase Sign Up identity verification 4 (Bitcoin-Investors.co.uk)
It’s worth keeping this window open until it completes; if you try to sign out you may have to start again. At some point it will complete (in the example shown it took less than 5 minutes) and you will be signed into your new account on Coinbase:
Coinbase Sign Up success (Bitcoin-Investors.co.uk)
At this point let’s take a break, and we’ll continue setting up inside your account in another article. By all means now take a look around the Coinbase platform and see what features are available to you.
Having a lot of your net worth in Bitcoin can be a rollercoaster as the price of Bitcoin is so volatile. One day you’re up 20%, the next day you’re down 25%. I have bought and sold regularly in the past, very often at the wrong times, and found the whole business very stressful.
These days I mostly just Hodl, and so far that has worked well. One of the reasons I changed strategy was Stock to Flow, and that’s what I’d like to talk about today.
Like the infamous alchemists of old, most people in crypto are looking for shortcuts to wealth. Finding the cheap coins before they rise in value, looking for the trends in price, particularly the dips, etc. I’m just the same, and over the years I’ve been doing crypto I have had a particular eye out for predictions – mathematical models – of the future Bitcoin price so that I would know what was coming down the line. The thing is, with Bitcoin, such predictions may be possible and practical. While the value of most assets is at the whim of the market, and their supply can respond to changes in demand, Bitcoin is different. Its entire supply is defined in code – we know there will only ever be 21 million, and we know more are created every 10 minutes, and so on. Therefore it seems credible that its price could be predicted in the future.
I have looked into various models and many of them seem to have some value for predicting price and/or market peaks, for example:
All of these have some value but none appeared to me to be both precise enough and easy to read.
Instead the model I always return to is Stock-to-Flow. This was introduced to the community by a Dutch trader known as ‘Plan B’ (aka ‘100TrillionUSD’) through an article on Medium early in 2019: Modeling Bitcoin Value with Scarcity. It caused quite a stir with its bold claims. Firstly, that Bitcoin price could be accurately modelled into the future. Secondly, fundamentally, it was all about the rate of creation of new Bitcoins. In particular, because the rate of creation drops in half every 4 years (in events known as ‘halvings’) it was able to match and predict the four year boom-bust cycles that Bitcoin is prone to. For the details, it’s well worth reading through the article.
I have now been following this model for two years and have repeatedly found that it works, the match between prediction and reality is good enough to inform my view of the market and the way that prices are going – and that’s a very reassuring feeling. It is a logarithmic model so with its wide error bars (1 and 2 standard deviations) you have to accept that the Bitcoin price can still vary hard and fast and be within the broad range of the model. However, it always seems to get the long term trends correct. Personally I check it about once a day, and usually find it has the price about right and well within 1 standard deviation. I take note, however, if the price starts tending out of the 1sd range – something that happened at the height of the Covid panic, and a couple of times since. However, the bitcoin price has always returned to the model, and I have relaxed.
Bitcoin daily stock-to-flow and price (Image:s2f.hamal.nl)
Hodling while watching the S2F chart has worked well for me over the last year or two, and in particular has helped me to be steady through the various downturns. However, it’s worth noting two things on the S2F charts. Firstly the good news is that Bitcoin will hit a peak this summer and it will be at least $100k. Secondly the bad news is that the period approaching a peak is very volatile, and after each previous post-halving peak there has been a big crash.
In other words the real price goes above the prediction at a peak and drops below it in the months following:
Bitcoin all time price (Image: s2f.hamal.nl)
Therefore I will be looking to ‘reduce my exposure’ as the price passes $90k. That doesn’t necessarily mean I’ll sell any Bitcoin, as it has been hard to come by, but I will at least cancel the Bitcoin loans I have taken out and then hunker down for a likely tumultuous following year or so.
So that’s Bitcoin stock-to-flow (S2F) in a nutshell. I can’t tell you how you should use it, but it has worked well for me, both psychologically and financially in guiding my trades.
Before I go, for completeness, I’ll just touch on Bitcoin S2FX. A year after Plan B announced the original S2F model he introduced a refined version called Stock-to-Flow Cross Asset (S2FX); for the details see here. The new model is more attractive in a number of ways, for example giving more justification for the application of S2F theory, and also predicting a high this summer for Bitcoin near $300k. However, I find the theory less convincing and by eye I don’t think its price predictions are quite as close to real prices as the original model. Take a look, though, it may work for you. Of course it does rather muddy the waters: if Bitcoin hits $200k this summer then it could be S2FX being correct, and the value will keep going up, or it could be S2F is correct, and it’s just about to crash. But then investing in Bitcoin has never been boring!
I’m a big fan of Bitcoin and over the years made many more buys than sells – in a nutshell, my default position, whether the market has gone up or down, has been to HODL.
However, that is starting to change – despite my view that I believe Bitcoin will go up in value hugely in the future. I am a long term Bitcoin bull and think that it will beat its all time high in the next few years.
In the short term, though, there’s no getting away from the fact that Bitcoin is going down. Despite a few rallies and spikes it has been dropping pretty consistently since the New Year, and now has half the value it did then (£5k vs £10k).
2018 Bitcoin Price on Trading View (Image: BIUK)
I had got used to the price of Bitcoin going steadily down and hadn’t thought too much about it. I had bought most of mine at £1k – £3k so I wasn’t bothered. Then on 25th July everything changed for me.
Oddly what woke me from my stupor was an email from BullionByPost telling me that the Gold price was beginning to climb. Was it particularly low, I wondered? I idly looked into it and found that, incredibly, at £935/ounce (spot price) it was at the lowest it had been for 8 months, and very nearly the lowest it had been for 18 months.That woke me up. Here I was sitting on a stack of Bitcoin slowly decreasing in value while missing out on other investments. Being a keen proponent of hedging, this made no sense.
I Immediately looked into the Bitcoin price, which I had ignored for some time, and saw that it had been rising, erratically, for exactly a month to a peak of £6400 but since 6am that morning (25th) had been dropping sharply. It was now mid evening.
Bitcoin Price on Trading View from 27 June to 27 July (Image: BIUK)
I took one Bitcoin out of cold storage (on a Ledger Nano) and transferred it to Pro.Coinbase. As soon as the transaction went through, at about 1130pm, I sold it. I got £6300.
By 0020 I had bought 7 one ounce gold coins for an average of £976 each. The total was £6343. That seemed like a very good hour’s work.
Just 36 hours later the value of Bitcoin had sunk to £6000. I decided it was time to start active trading again, if only to hedge against what seemed like inevitable losses if I kept staying out of the market.
I came up with a plan to offload Bitcoin at the best price I could get, ready to buy it back once it had gone lower.
I recently attended a ‘Fast-track Forex Training Programme’ organised by Trendsignal Ltd. I have always been sceptical of Forex (‘foreign exchange’, i.e. currency) trading as a means to make money unless you’re a professional. However, a friend was already going along and there was an extra ticket so I thought I might as well give it a go.
My hope was that the day would give me useful information about trading techniques that I could apply to my cryptocurrency trading (most of which is currently done with a bot). In fact it was mostly about a particular software application called Trendsignal Plus that provides a range of indicators added to trading charts that are intended to help you know when to trade, i.e. to indicate when the market is just about to go up or down.
Forex Trading (Image: Sanandros/Wikimedia)
The agenda was as follows:
Charting techniques
Price patterns, trends and trade identification
The best markets and timeframes to trade
Effective use of trading platforms
How to manage risk and target exponential returns
Access to live trading workshops and introduction to the strategies used
Other opportunities with TrendSignal
Notwithstanding the focus on the particular software package, I found the content very interesting – and I’m a bit less sceptical than before I went about using tools to give you an ‘edge’ when trading. I have also since attended some online webinars that go into the details of trading using chart indicators.
Overall my interest in manual trading with Bitcoin and other crypto coins has been rejuvenated. While I will continue to do automated trading with Gunbot I am now actively learning about and implementing indicators on my own trading charts and will soon be testing the results to see if there is money to be made in manual trading this way.
The situation as we left it in my last post is that Gunbot had made 3 complete buy-sell trades of 0.002 BTC each using the ‘Emotionless’ strategy. It had then bought again, and hadn’t seemed to be able to sell again that day. In fact early the following day it did manage to sell, and then later that morning it bought and sold again quickly. Each trade was, naturally, profit making, though only to the tune of about 10p.
Emboldened by this I increased the stake for each trade to 0.005 BTC (about £33). Gunbot soon did another Ether trade, for a profit of about 27p, so a healthy gain of about 0.8%.
I was impatient to see more trades and profits at this point, so I increased the stake to 0.01 BTC and added further coin pairs:
Bitcoin – Bitcoin Cash (BCH)
Bitcoin – Litecoin (LTC)
Bitcoin – Ethereum Classic (ETC)
Bitcoin – Dash (DASH)
Bitcoin – Ripple (XRP)
This naturally increased the transaction volume, here’s what’s happened since:
Poloniex Trade History: Gunbot trading Ether with Emotionless Strategy – more coins (Image: BIUK)
In a nutshell, Ether trading has continued solidly but Gunbot has also regularly bought and sold Litecoin, and Ethereum Classic, and also made single completed trades with Dash and Ripple. Bitcoin Cash is nowhere to be seen.
Profits so far, in Bitcoin:
Ethereum: 0.00059094
Litecoin: 0.00032900
Ethereum Classic: 0.00032669
Dash: 0.00007898
Ripple: 0.00013795
Total: 0.00146356 (about £10)
So not a bad start having been out of bot trading for some time.
Advanced Trading
One thing I like very much about the latest Gunbot is the charts in the user interface – they pretty much reproduce what you get in Poloniex or Trading View with the addition of clear markers of where Gunbot bought and sold.
Gunbot chart with buy/sell indicators (Image: BIUK)
What this highlighted for me, though, was that the Emotionless strategy is a bit ‘literal’. What I mean is that Gunbot is selling once it achieves the profit it has been set but is missing opportunities for greater profit. For example, in the middle of the screenshot shown we can see that Gunbot sold even though the market was rising fast and if it had waited a couple more minutes the profit would have been many times greater (perhaps even 10x).
I believe this consideration of trend is part of other strategies, particularly those using Trading Stop / Stop Limit (TSSL) which wasn’t an option in my previous Gunbot version. I’m therefore going to investigate that further before changing any more Gunbot settings, in particular increasing the trading stakes.
After my previous post, creating my first Gunbot Setup in this version of Gunbot using the Bollinger Band strategy, I had a change of heart. I decided to try the Emotionless strategy instead, something I don’t remember being an option in my previously installed versions.
“The Emotionless strategy is fully tuned and ready to use, even for novice traders! It’s meant to be a relatively safe strategy, with modest but steady gains.
“With this strategy, you don’t need to think about setting the right or best parameters: it’s all there already. You only need to set the basics like your trading limit and choose on which pairs you want to trade. Optionally, you can increase GAIN slightly.
“Behind the scenes, an advanced algorithm based on the Ichimoku cloud indicator does the hard work. The specifics will not be disclosed.”
Given I haven’t used Gunbot seriously in many months this seemed like a good bet. I cancelled the run and restarted it with the strategy set to Emotionless. I kept all other settings the same.
Trading
I then went to bed, and didn’t check the results until the next morning. Success! Gunbot had bought some Ether and sold it again at a higher price during the night.
I suspect you won’t be impressed if I say the profit made was just 0.00001482 BTC (worth about 10p) but that is to miss the point. The stake, remember, was just 0.002 BTC (£13) and the setting for GAIN is 0.6, i.e. aim to make a profit of 0.6%. In fact the profit is 0.74% so the bot has done really well.
Of course, once you have gained confidence that the bot is working then you naturally increase the stake. If it were set to 1 Bitcoin, for example, then each trade would make a profit of about £50 and you could get multiple trades in one day. 10 BTC would make you £500 per trade, and so on.
In this case I left the bot running unchanged and it has now made 3 complete trades (for a total profit of 2.25%). In any other field such a gain in 2 days would be unprecedented.
Note that the bot has since gone on to buy again, but has not yet sold. It will be interesting to see if it sells successfully or if the market drops and it’s left holding Ether it can’t sell – I’ll report back once the outcome is clear.
Click on Create my first setup. For Setup Name I use the name of the exchange, also select the exchange in the Exchange dropdown. The pair of coins to trade is nearly always Bitcoin and another coin, both specified by their common abbreviation. I’m starting with Bitcoin trading against Ether, so I enter BTC-ETH. The strategy I choose is bb (‘Bollinger Band‘) because it’s the one I’m most experienced with – though I plan to try out others very soon.
Setup with a new trading pair (Image: BIUK)
Click Add pair. The new pair will appear as a tab in the lower window, with settings on the left and a Trading View window on the right. Repeat the process if you want to add more trading pairs.
A new trading pair added (Image: BIUK)
Click Create. You’ll get a message “Setup created! Go to the dashboard to preview and run your setup.” Click on Go to dashboard.
Preview and Run
You are now in the preview screen – here you can check all the settings for the setup by clicking on the triangle marker next to each set. I’ll accept the defaults, however you may want to review how much Gunbot will spend on each trade – for this go to the particular strategy you selected under strategies and review TRADING_LIMIT (this is the amount in Bitcoin). The default is 0.002 (currently about £13).
Preview screen (Image: BIUK)
Click Run Gunbot. A gunthy.exe command window will open (allow it if asked by Windows Firewall). The trading pair tab will now contain a and a trading view window and a window showing real-time output from gunthy.exe (the actual Gunbot bot).
Gunbot running (Image: BIUK)
That’s it – Gunbot is up and running and ready to trade when the conditions are right. We’ll go over the details of the trading in future posts.
I have previously described Gunbot and how it works, including how to prepare for using it. Here I cover installation and initial setup.
Installation
Download and unzip the most recent version of Gunbot from GitHub (obviously you will need to have paid for a license for it to work). I run the Windows version and have mine in a C:/Gunbot/Latest folder (and move older versions into other folders as they get replaced).
Gunbot folder and files (Image: BIUK)
Double-click on gunthy-gui.exe to run the Gunbot user interface. If you get a message about needing to get something from the Windows store, cancel it. If you get a message from Windows Defender Firewall, Allow access.
You should have a Windows command window running that says “Gunthy GUI <version> running on http://localhost:5000″.
In a new brower tab (I recommend Chrome as the browser) type in the address “localhost:5000” and enter.
Gunbot User Interface
You should now see the Gunbot interface up and running – the first time it will take you to the Login screen.
Gunbot Login screen (Image: BIUK)
If you don’t get that then you may need to open access to port 5000 through the Firewall – for more details see the official installation video.
Choose and enter a password, record it somewhere safe, then click on Create password. You are now in the main Gunbot dashboard.
Gunbot Dashboard after first login (Image: BIUK)
Assuming you are a new user, and so don’t have an existing config file, select Start without import.
On the next screen, Settings/API Keys, enter the API Key and Secret for the exchange you want to use (I use Poloniex). I have previously covered the method to get an API key for the Bitfinex exchange, but it’s a very similar process on most exchanges.
Gunbot settings screen for API keys (Image: BIUK)
With Master Key enabled, click Add. You should get the message “API Key sucessfully added!” and it should be shown in the table at the bottom of the screen.
Gunbot is an automated bot (robotic software) for trading cryptocurrencies, primarily trading Bitcoin with other crypto coins (‘altcoins’). It was coded by Gunthar De Niro (‘Gunthy‘) with support from the Bitcointalk community.
The theory for trading with Gunbot is relatively straightforward:
You deposit some Bitcoin on a trading exchange.
You request remote access to your account via an API Key and give the Key details to the bot.
You setup the bot, using particular settings to specify how you want it to trade (e.g. what level of risk/reward, etc.).
You start the bot. It runs 24/7 and when the trading conditions are right it buys and sells coins on your behalf using the Bitcoin in your account.
The intention is that it will buy an altcoin at a low price, determined by its trading history, and hold on to it until its price goes above a certain threshold (allowing for trading fees) when it will sell it.
In most cases this works well and makes a profit, and the bot is then ready to make the next trade.
In a small proportion of cases the altcoin price goes down steadily and cannot be sold (this is known as ‘holding a bag’). At that point you need to step in and, in some cases, sell the altcoin at a loss.
With good settings, and regular monitoring, in my experience trading with Gunbot will make more money than it loses and can produce a significant income over time.
Preparing to Use Gunbot
Before you use Gunbot for the first time it is worthwhile to learn about how it operates and what its features and limitations are.
Spend some time in the Gunbot Wiki to get familiar with the bot, how it runs, what strategies it uses, etc.
Read at least the last dozen or so pages of the Gunbot thread on BitcoinTalk to learn about recent changes, and any issues or bugs found. Join BitcoinTalk if you aren’t already a member.
