https://twitter.com/edict3d/status/1762908372800565715
- edict3d
I woke up today feeling pretty smart.
Yesterday at 13:30 EST I noticed that Bitcoin might be doing something we haven't seen since late October: painting a very clear bull flag. Seeing as I fumbled my trade the last time around I decided that this time I'd try gambling for real. I set up a trigger that would execute an x25 short at $63333 that takes profits at $60k. If I'm right I more than double my money and if I'm wrong I lose around half of the collateral.
The reason I woke up feeling like such a baller is that my trigger order procced while I slept last night, and as we can see from that red-arrow on the chart, I picked almost the perfect level to open my short. By the time I had woken up it was already $120 in profit and quickly proceeded to be +$180 in profit after a short amount of time.
Of course as we can see from the chart above it didn't take long for me to lose all my gains and to even go into the red. This happened like an hour ago and I even thought about doubling down on the short... but I didn't and now I'm back in the green. Trading within this range is extremely volatile and stressful at x25 even though I'm only gambling a couple hundred dollars and my overall crypto stacks are up thousands (especially with Hive going up).
We can also see from the chart that the 5-minute candles aren't signaling a bull flag at all but rather an ascending wedge... which often breaks bearish but is also less predictable than a flag, so I'm still sweating it a bit. The hope is that we break downwards once the triangle is out of runway and transition back into the more predictable flag pattern. Considering these are 5-min candles I guess I'm about to find out within a couple hours.
Setting up the trigger.
I'm doing this on MEXC exchange through a VPN to avoid IP blocking. MEXC is either the last or one of the last centralized exchanges that doesn't KYC. It also has leverage which I had never had access to before, so that's fun.
After transferring a little Bitcoin from spot to the futures account we now have some collateral to play with. In this case I'm opening an isolated x25 short at $63333 with a quantity of 0.2 BTC. In addition, the trigger will Take Profit (TP) at $60011 or Stop Loss (SL) at -50% Return On Equity (ROE). On top of all this the trigger will execute as a market order and will only exist for a Valid Time of 24 hours. I basically used every option making this one of the most complex triggers possible, but it still wasn't too difficult to figure out.
Isolated vs Cross Margin
There are two different options when it comes to how collateral is treated by the platform. The first is cross-margin which is very convenient for users who want all their collateral to be stored inside the same basket. This is a good option to use if the trader has confidence that they aren't going to get liquidated... because if they do they lose the entire account and will have to trade more crypto from the spot account to the margin account if they want to continue gambling. Cross-margin is pretty good if the risks being taken are not very large or if the basket itself is full of hedge plays that balance each other out. An example of hedging would be going short on Bitcoin while longing an alt, or vice versa.
Isolated margin means that each gamble is meticulously calculated and only risks the collateral that was specifically allocated to it. In this situation I'm x25 short so isolated margin is my only option otherwise I'd be putting the entire account at risk. This would be the difference between losing $100 when the price pumps vs losing $1000.
Market order
Because this bet is so small we don't have to fuss around with setting a limit order. We plebs don't have enough money to move the market so there's no point in worrying about slippage. In theory it is possible to save some fees on a limit order if the cost of being a taker is significantly higher than being a maker, but on MEXC the fees are Maker 0% / Taker 0.01% which is essentially nothing for such a small bet.
Quantity 0.2 BTC
0.2 BTC is the amount of leverage I am borrowing to dump on the market for this short. Because I'm automatically set to x25 leverage it will allocate 0.008 BTC collateral to the position which is $507 at the $63333 price. Therefore I'm potentially risking $507, which is a little bit more than I'm comfortable with.
Stop Loss (SL)
In order to lower that $507 the trigger includes a stop-loss of 50% ROE. This cuts my risk in half from $507 to $253.50. If the price goes out of my target range to $64625 the position will liquidate itself and I'll be down around $254.
There are 2 other options for setting the SL. One is price and the other is PNL. Price allows the user to set the specific price they want to liquidate at, and PNL stands for profit and loss which allows the loss to be specified in Bitcoin rather than by percentage or a specific spot price.
Valid Time
The environment of day trading like this on 5-minute candles is extremely volatile and blows in the wind. I know that by tomorrow none of this TA is going to apply to my current strategy so just in case I forget to manually cancel the trigger this option will automatically kill it after 24 hours if it hasn't procced (which it already has I'm just going through the process).
Taking Profits (TP)
This bet is based on bull flag analysis with a midpoint at $61k. Therefore if and when the price gets just below that at $60k I want to liquidate the position automatically and take those profits off the table. If this happens I'll be up 0.011 BTC or $660 at a price of $60k, but I also assume that we will eventually bounce back up and that profit will be worth even more. If the price dips all the way down to $59k (which I expect it will) I'll set up a long position and once again bet on the bull flag to push it up to $61k or even $62k.
After all the variables are in order I hit the "open short" button and the trigger is placed. Nothing will happen until price hits $63333, which it already did last night. Now the position is open and wildly volatile. In fact while I was writing this post we broke out of the triangle and I was up over $300. It's since recovered a little bit and the position is in the green $220. Still hoping that we crash to $60k today or tomorrow and I can flip long with a similar amount. Wish me luck.
Conclusion
It's important to note that if the price of Bitcoin goes up and my position gets liquidated, it doesn't matter. This bet is a hedge. I actually lose money if this hedge wins. In fact I lose a lot of money because this is a tiny bet and I'm basically all in on crypto. This trigger is just a fun way of hedging and feeling like I win money in both directions. The ultimate slap in the face would be if we pumped and then dumped which would liquidate my position and leave me down on my primary bags as well. Hopefully that doesn't happen, but even if it does it's no big deal considering the numbers I'm working with. Still hugely up from the pump from $50k to this level.
Learning about triggers by creating my own in the field has been a fun process. I now fully understand how degenerate gamblers can blow up their margin accounts instantly on leverage. This is an advanced tool that should only be used by players who know exactly what they are doing. Otherwise the risk is simply just too high. Gamble responsibly.
