Category Archives: Trading

What is the Current Outlook for Bitcoin?

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).

Bitcoin Price on Trading View 2018 (Image: BIUK)
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)
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.

More to come in the next blog post.

Manual Crypto Trading 1: Forex Training

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)
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.

I’ll report back on my results here as usual.

Gunbot Crypto Trading 5: Emotionless Trading

Previous posts:

Trading So Far

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)
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)
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.

Gunbot Crypto Trading 4: Your First Gunbot Trade

Previous posts:

Strategy

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.

Emotionless is described on the Wiki as follows:

“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.

Here’s the record of transactions so far:

Poloniex Trade History: Gunbot trading Ether with Emotionless Strategy (Image: BIUK)
Poloniex Trade History: Gunbot trading Ether with Emotionless Strategy (Image: BIUK)

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.

Update: Gunbot Crypto Trading 5: Emotionless Trading

Gunbot Crypto Trading 2: Installing Gunbot

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)
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)
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)
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)
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.

Next post: Gunbot Crypto Trading 3: Your First Gunbot Setup

Buy the Bitcoin Dip Part 2 – And How to Save on Coinbase Fees

I was right about the Bitcoin Dip – and have made a tidy profit. I bought half a Bitcoin at £5500.

Of course, it should have cost me £2750 but I bought it through Coinbase with my debit card which is a pricey, though convenient, way to do it. Coinbase charged me 4%, so about £110, making the total £2850.

Bitcoin was been rising in value since as I predicted, though in its usual erratic way. I had intended to take my money out when it passed £8000 and, as I watched it last night, it did just that.

I was hesitant to sell it directly through Coinbase again because of its fees. However, I had come across some advice about selling through Coinbase’s exchange, GDAX, instead at lower fees. Here’s an example video from the excellent Coin Mastery:

I followed the advice and it worked like a charm.

GDAX Exchange Trading Screen (Image: BIUK)
GDAX Exchange Trading Screen (Image: BIUK)

This is the process if you want to save a stack on Coinbase fees:

  1. Create a GDAX account if you don’t already have one (I already did).
  2. Transfer the Bitcoin to GDAX – on GDAX click the DEPOSIT button, then in the form choose your Coinbase Account -> BTC Wallet and set the amount. Click Deposit Funds. It will appear almost immediately on GDAX and there is no charge.
  3. Select LIMIT then SELL, then set the amount. Here you need to be a bit careful and set the correct price you are prepared to sell at (double check it, because if you set it low it will sell low). At the time Bitcoin was selling for about £8010. I wanted to make sure that, if there were fees, I would clear £4000 on my 0.5 BTC so I set the value to £8050.
  4. Since the price is volatile your price will likely be hit very quickly so long as you didn’t set it too high (mine too less than a minute).
  5. The BTC sells, the money appears in your GDAX wallet – and there’s no fee!
  6. Transfer the money back to Coinbase using the WITHDRAW button, set the amount and the destination (e.g. GBP Wallet) and click WITHDRAW FUNDS. It goes back to Coinbase – no charge.

So I have proved to my own satisfaction you can sell BTC, i.e. convert it to pounds sterling, for no charge this way – and at a price slightly higher than the current market rate

Note that selling Bitcoin is called a ‘Maker’ transaction since you are putting Bitcoin into the market. Note that moving in the opposite direction has a ‘Taker’ fee of 0.25%, still not a bad deal.

I sold my 0.5BTC at £8050 so I received £4025, and that’s all now sitting in my Coinbase account.

Since I only paid £2870 for the Bitcoin less than a month ago (a profit of about £1100), I’m rather pleased with that.

 

 

How to Put Your Bitcoin on a Trading Exchange

Once you’ve got some Bitcoin what can you do to make it grow? The obvious answer is to put it on a Trading Exchange. Then you have the options of Trading, Margin Trading and Lending. These will be covered in more detail later; here we’ll look at the process of getting your Bitcoin onto an exchange.

The five biggest exchanges by trading volume are Bitfinex, Bithumb, Bittrex, GDAX and Poloniex, in that order. Here we’ll use Bitfinex.

Bitfinex Home Page (Image: BIUK)
Bitfinex Home Page (Image: BIUK)

Go to Bitfinex.com and click on Sign Up. Enter your chosen Username and Email address. Enter a strong password, e.g. from Passwords Generator. Set the Timezone (e.g. to (GMT+00:00) London). This will create you a new account.

Bitfinex Welcome Screen (Image: BIUK)
Bitfinex Welcome Screen (Image: BIUK)

Find the email you’ll be sent and verify your email address. Login at Bitfinex.com. You will start in the Trading screen, likely showing a Bitcoin – Dollar chart (‘BTC/USD’).

Bitfinex Trading View - Dark theme (Image: BIUK)
Bitfinex Trading View – Dark theme (Image: BIUK)

By default it will be dark. If you prefer a lighter colour scheme go to the top right user icon and select Interface, then Theme and choose Light.

Bitfinex Trading View - Light theme (Image: BIUK)
Bitfinex Trading View – Light theme (Image: BIUK)

To transfer some Bitcoin from your Electrum wallet into Bitfinex select Deposit -> Bitcoin. You may then get a warning about there being a fee on small deposits (less than $1000) that you need to acknowledge.

On the New Deposit screen select Bitcoin. You may then get advice to set up two-factor authentication (e.g. using your mobile phone to confirm withdrawals) – it’s a good idea but for simplicity we will ignore it at this point. You will see options for Exchange Wallet (for trading), Margin Wallet (for trading with leverage) and Funding Wallet (for lending). Under Funding Wallet select Click to generate address. This will create you a Bitcoin address where you can send funds; click on the Copy to Clipboard icon next to it.

Bitfinex Deposit Screen (Image: BIUK)
Bitfinex Deposit Screen (Image: BIUK)

Sending from an Electrum Wallet

Log into your Electrum Wallet and select the Send tab; paste in the Bitfinex address. Add an optional Description (e.g. Transfer to Bitfinex). Enter the amount of Bitcoin to transfer (or press Max if you intend all of it).

Electrum Send tab (Image: BIUK)
Electrum Send tab (Image: BIUK)

If you hover over the Fee slider you can see what the mining fee will be – moving the slider to the right will speed up the transaction and increase the fee – this can usually be left at the default. Press Send, re-enter your password to confirm. You will see a brief message about signing and then Payment Sent.

Select the History tab and you will see the transaction there. Once it has been confirmed (which may take from minutes to hours depending on how busy the network is) it will show here with a green tick.

In Bitfinex select Deposit and once confirmed the deposit transaction will also show here. Initially it will be marked Unconfirmed.

Bitfinex Deposit screen - transaction unconfirmed (Image: BIUK)
Bitfinex Deposit screen – transaction unconfirmed (Image: BIUK)

Once confirmed it will show as Completed, and the new balance will also show under Funding in the Balances area of the sidebar.

Bitfinex Deposit screen - transaction confirmed (Image: BIUK)
Bitfinex Deposit screen – transaction confirmed (Image: BIUK)

Your Bitcoin is now on the Bitfinex exchange ready for trading or lending.