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Show HN: Bitcoin investing using Dollar Cost Averaging strategy

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Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#101

Post by rothbardrand »

pdog wrote: post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

By "monthly average" you mean "trailing 30 day simple moving average price" and by 10 month you mean "trailing 300 day simple moving average" right?

In this case ,this is assuming that when the market shifts from bull to bear you can see it with a 30 day average-- or put another way, it's assuming it moves at a certain speed.

When you claim that this "significantly outperforms" is that based on measurements of bitcoin or of some other assets?

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#102

Post by charlespwd »

quantdev wrote: post #21
jstanley wrote: post #20

Earlier quoted context omitted.

Transaction fees (including the spread cost) on cryptocurrency exchanges are typically a percentage rather than a fixed amount. So it doesn't matter if you do $100 every week or $400 every four weeks.

Yes, you're correct -- my mistake. Bittrex's fees are 0.25% of each trade. My point about doing 30 trades every week manually is a lot still stands though. Maybe I'll try scripting this with Bittrex's API. It would be cool to have an option to scale each trade size by the current relative market cap, so you can have your own crypto index fund.

That's exactly what I did. I'm doing it on poloniex, but I'm pretty sure you could do the same for bittrex too. However, they are a bit limiting on the kind of orders you can make (I believe it's limit orders only). Poloniex has fill or kill orders, which makes some things easier to handle.

https://github.com/charlespwd/crypto-trader

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#103

Post by dave7 »

Slartie wrote: post #94
rtkwe wrote: post #64

Earlier quoted context omitted.

The only state action that poses a huge risk is if Chinese miners totally have >50% of the hashrate and the Chinese government took control of the miners to mess with transactions. Other than that the worst risk is them shutting down all the miners which would mainly just slow down transaction clearance which would drop the price but not catastrophically.

Nope, actually the most significant risk to Bitcoin specifically from the Chinese government would be an effective block of all Bitcoin-related traffic between China and the rest of the world. This would lead to about 50% of mining power being in China and about 50% being outside of China, both "networks" happily continuing to mine blocks (albeit a lot slower) without knowing about each other, thus confirming entirel…

If this were to happen, wouldn't one or both of the newly isolated mining collectives very quickly hard fork making the situation near-identical to the recent BCH fork?

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#104

Post by millettjon »

overcast wrote: post #92
__s wrote: post #90

Earlier quoted context omitted.

How is Bitcoin a pyramid scheme as opposed to USD?

Is that a joke? Show me the USD swinging as wildly as Bitcoin does in any time frame. There's a reason it's the standard across the world.

There are many currencies that do swing as wildly as bitcoin and we do not refer to those as pryamid schemes.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#105

Post by colonelxc »

AgentME wrote: post #72
snark42 wrote: post #66

Earlier quoted context omitted.

> Aren't taxes only applicable to the profits? If you hold for less than a year it's income, if you hold for more than a year it's capital gains. So buy and hold would possibly be advantageous in the US at least (35% vs 15% tax rates.)

>If you hold for less than a year it's income But it's the profits specifically that are taxed as income, not the whole sale value, right? If I buy and sell one Bitcoin a hundred times in a day and make $1 of profit in total, is the tax is a percentage of $1 or a percentage of 100 times the bitcoin price?

Yes, just the amount gained. You also can write off losses against any other incomes you have.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#106

Post by cvsh »

brndnmtthws wrote: post #62
netinstructions wrote: post #23

The example says they want to invest $1000 over the course of 3 months, so 1000 / (3 * 30) = 1000 / 90 = ~11$ / day. But aren't the transaction fees (at least for Bitcoin) something like ~$2 per transaction? So you'd end up only investing ~$820 instead of the target of $1000 and losing the rest. Am I missing something?

Another problem with DCA is that it's a classic case of "timing the market". If, over the course of those 3 months, the value of the asset you're purchasing consistently increases, you'll 'lose' money in the sense that your dollar will have less and less purchasing power toward the end of the period. There's a good discussion of this strategy on the Bogleheads wiki: https://www.bogleheads.org/wiki/Dollar_cost_averagi…

>A better rule, however, is: do not try to time the market. Just invest when you can.

Well, that rule assumes two things:

1. That you're investing for the long term (i.e. retirement), and more importantly,

2. That you're investing in the stock market, which has a very long track record of going up more than it goes down, such that it always goes up over the long term.

That second one, in particular, is much more of an open question when it comes to BTC.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#107

Post by fiatjaf »

kccqzy wrote: post #99
fiatjaf wrote: post #36

Earlier quoted context omitted.

How do you automate money transfers?

Simple. Just add your bank account details to your exchange account and then your exchange can draw money from there automatically.

Sorry, I live in a country where that is unthinkable.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#108

Post by icelancer »

nodesocket wrote: post #73
icelancer wrote: post #67

Earlier quoted context omitted.

Back then that was certainly true. Today it's easy and free to do using ETFs that are free to trade under certain brokers. Since I'm a boring fuddie duddie, I just rebalance my ETFs and index funds in Vanguard every so often at no cost, but I believe eTrade and some other platforms have a subset of "no commission" ETFs, Interactive Brokers has very low commissions, and if you like startups in the space, Robinhood is…

Robinhood is good for quick smaller trades, but their order fill is horrible. Every time I am shocked at the prices my orders fill at. I'm fairly positive they are making money front-running or from kickbacks from exchanges.

If the desire is to fill index-type ETFs at the market price, yeah, Robinhood is probably not smart. Vanguard is simply better for that. I wonder how the fills are at limit stops? Slower? Don't know who they clear through.

Robinhood seems like a great fit for the person who has maxed a Roth and wants a brokerage to hold on to ETFs across low-ER providers, like Charles Schwab and iShares ETFs + Vanguard ETFs as they accumulate capital.

Beyond that I can't see using it for trading or anything. If I was slanging options or speculating long/short through retail brokers, I'd be doing it on Interactive Brokers and nowhere else. (And yes, I know Robinhood doesn't do short-side work.)

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#109

Post by icelancer »

asddddd wrote: post #89
nodesocket wrote: post #73

Earlier quoted context omitted.

Robinhood is good for quick smaller trades, but their order fill is horrible. Every time I am shocked at the prices my orders fill at. I'm fairly positive they are making money front-running or from kickbacks from exchanges.

They sell flow to KCG/Citadel/etc like most all (every?) retail broker.

Pretty much. Think they route through Apex a lot as well.

Interactive Brokers is the only way to go for an intermediate person who wants to speculate and have high-powered tools for a relatively low minimum ($10k I believe, $3k or so for younger people under 25?). They refuse payment on order flow, as does Fidelity, IIRC.

Like I said I'm out of that game (minus small speculation on BTC for currency hedging purposes). I've found the love of index funds and low expense ratios.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#110

Post by 3pt14159 »

brndnmtthws wrote: post #62
netinstructions wrote: post #23

The example says they want to invest $1000 over the course of 3 months, so 1000 / (3 * 30) = 1000 / 90 = ~11$ / day. But aren't the transaction fees (at least for Bitcoin) something like ~$2 per transaction? So you'd end up only investing ~$820 instead of the target of $1000 and losing the rest. Am I missing something?

Another problem with DCA is that it's a classic case of "timing the market". If, over the course of those 3 months, the value of the asset you're purchasing consistently increases, you'll 'lose' money in the sense that your dollar will have less and less purchasing power toward the end of the period. There's a good discussion of this strategy on the Bogleheads wiki: https://www.bogleheads.org/wiki/Dollar_cost_averagi…

Yeah I prefer my way: Invest mostly in things that you would double your investment if they halved in price but that you think that that outcome is unlikely. That way if it halves in price, you get 3x the quantity, but you don't really miss out on a short term bull run because you're in for a significant amount.
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