This article was written for the 21cryptos' magazine's first edition. If you liked this article, make sure to visit www.21cryptos.com or reach out to their Twitter account to find out more! As a promotion for their first edition, the magazine is going at only$10$5! Without further ado, let's get straight into the article!
Introduction Prior to trading, I played poker actively for about 6 years. When starting out and after two years of paying tuition fees, a turning point for me was when I read Dusty Schmidt’s Treat Your Poker Like A Business, that helped transition my mindset and game from one of taking uninformed gambles to taking systematic and calculated risks.
Once I started trading, I quickly realized that many of the lessons picked up from the tables were directly applicable, familiar concepts such as bankroll management, tilt, and positive expected value, come to mind.
In this article, we’ll go through 5 key concepts, explain how they are related to trading, and what we can learn from them to become better traders.
1. Managing Your Bankroll & Protecting Your Capital
The term bankroll management in poker refers to the same risk management concept in trading.
Just like how professional poker players compete at a stake where their bankroll covers at least 100 buy-ins, professional traders typically risk no more than 1% per trade. This is only a general guideline, as more aggressive players may play with just 20 buy-ins, or a trader risking up to 5% a trade.
Protect your capital! Trading takes a lot of skill, and if you think that everyone trading is making money, think again. It’s not that making money is difficult (especially in this cryptocurrency bull market), but rather, the difficulty lies in preserving capital and keeping the profits. A common saying goes, “take care of your losses, and your profits will take care of itself.”
Trading cryptocurrencies come with a high degree of exchange risk. Your capital is your inventory, and there's a huge risk not only in losing your money, but also your time invested if the site you're on shuts down tomorrow. Keep you money with reputable exchanges, spread it out over various locations, and never invest more than you can afford to lose!
2. Dealing with Variance & Playing a +EV Game
Variance is basically that which deviates from the norm, be it good or bad. And this is where the concept of expected value comes into the picture. Short term variance is part of the game, and it is important to understand that trading is a marathon, not a sprint. The difference between gamblers and professional poker players or traders, is that the latter focus on the outcome of playing the long game.
To avoid being a gambler, one must make trades that have a positive expected value. Do you know the expected value of the trades you make in the market? To really understand what are your odds of making a profit, and the expected size of that profit, requires establishing a set of rules and testing those rules over a large number of trades so you can determine the expected value of your strategy rules.
You may want to buy any coin that has strong fundamentals and a market capitalization of $10m or less, or one that has retested the 200 MA support. Sounds like a good idea, but is it? Only testing that rule over many trading examples and market conditions can really tell you if this simple approach to the market is an effective one.
Strategies do not have to be complicated. They do need to be well tested! If you approach the market without a set of trading rules and an understanding of the expected value of your trading approach, you are a gambler. Yes, you will get lucky and could make great profits. However, in the long run, the profits of the gambling trader are just short term loans.
3. Knowing Your Risk Tolerance
As Dusty Schmidt put it, “part of growing your business is coming to an understanding of how much risk you can tolerate.”
If you have a mindset that you must move up [in stakes] quickly, trade a large size, risk a large amount, and manage your bankroll liberally, you’re setting yourself up for a really big mistake in the long run. That is a gambler’s mentality with which few people can succeed long term.
I look at trading not as a gamble, but as a skill. I want to make a small business out of that skill, and like most businesses, I don’t want to risk having to close up shop. Staying open is the goal first and foremost; maximizing profit is second.
4. Determining Your Style & Knowing When You Have an Edge
Just like how there are different playing styles in poker, such as loose-aggressive, or tight-passive; there are various styles of trading and investing, such as day trading, scalping, position trading, growth investing, value investing, and many more. As an aspiring trader, it is important that you understand your own circumstances, risk preferences, goals, and develop a strategy that suits your style. Read the crypto trader’s essential starter kit here: https://alunacrypto.blogspot.sg/2017/06/essential-beginners-starter-kit-for-cryptocurrency-trading-bitcoin-altcoins-ethereum.html
To find an edge in poker is to understand who the fishes are at the table. From the Rounders movie, "listen, here's the thing. If you can't spot the sucker in your first half hour at the table, then you ARE the sucker." Also, having an edge means to play hands with positive expectancy, knowing when you have a better hand than your opponent and maximizing your profit, while minimizing losses when behind.
In trading, this is akin to first understanding the general market conditions, then taking trades with positive expectancy, that is, trades that stand to win more than they lose over the long term, so that you make more in your winning trades than lose in your losers.
A common mistake new traders make is in being myopic about technical analysis, without factoring critical overarching concepts such as the general market conditions, market cycles, trader psychology, and risk management. Why sit at a table with 8 sharks? If general market conditions are not favourable, don’t take the trade. In poker, you typically play less than 15% of your hands in a full ring table. Similarly, in trading, sit out when you don’t have an edge.
5. Managing Your Emotions
Traders who have played poker should be familiar with something called “going on tilt.” In the poker world, this refers to a state of psychological or emotional frustration or confusion that causes the player to start making decisions that are less than ideal. Usually, this means adopting overly aggressive strategies that are unlikely to work, and which the player would never use in a more psychologically sound state of mind. Poker players usually go on tilt because they are frustrated with their own mistakes, with bad luck, or with other players. Does that sound familiar?
If we are not emotionally prepared for the possibility of losing, we are more likely to be thrown by losses. We set ourselves up for the tilt state by needing and expecting to win, rather than letting probabilities play themselves out and accept that there will be winning and losing periods.
Emotional control can also be improved by understanding probability and variance, and setting long term monetary goals instead of short term ones. Respect your risk management plan, and lose your ego. When you know you are on tilt or off your A game, the faster you get off the tables (or stop trading for the day), the more money you will save in the long run.
Conclusion
There is a multitude of lessons that traders can learn from professional poker players, since both involve similar characteristics of incentive, risk taking, strategy, probability, emotions, psychology, and mental discipline. Success is determined not so much as which strategy but the determination and discipline by the trader to carry out the plan. At the end of the day, be careful not to treat trading like gambling. Remember, trading is a business more than anything!
This article was written for the 21cryptos' magazine's first edition. If you liked this article, make sure to visit www.21cryptos.com or their Twitter account, to purchase their first article at an affordable price of only $10 $5, and enjoy over 50 pages of cryptocurrecy market insights, analysis, and articles. Also make sure to look out for future editions as I continue to be a guest writer for 21cryptos.
Congratulations on owning some Bitcoins and being a part of this Global Revolution! If you don't already own one, buy one easily from an exchange like Bitstamp.net, Coinbase.com, or from someone near you at Localbitcoins.com. Once you own Bitcoins, you can easily trade them for any available Alternative Cryptocurrency from an altcoin exchange like Cryptsy. I like to use Cryptsy because they have so many available coins, and I also find them to be quite reliable.
So you've been seeing tons of people making money trading Altcoins, while you've been losing tons of Bitcoins buying high and selling low? Whether you're simply frustrated with your "bad luck", or just want to learn more & make more Bitcoins daytrading, I'm here to help! So here's an easy-to-understand guide to picking and trading Bitcoin and Altcoins profitably, and of course, more essential daytrading tips to help us all become profitable cryptocurrency traders.
I know you're all eager to make money, but keep in mind that nothing comes for free and I can only help you so much. Just because you've made 5 good trades doesn't make you a profitable trader, and neither does making 5 bad trades necessarily mean you're a lousy trader. Anyone can flip a coin and see 'heads' 5 times in a row. What we want to look for is consistency, and to do that you'll have to start forming Your Own trading strategy. Before I go on, keep these following points in mind when building up your personal Trading Strategy:
Learn the basics; read my last few blog posts, and also other trading resources to learn more about Technical Analysis and other trading tips. "I don't think that you can write music if you don't know how to play an instrument. You have to know the basics, then you can go forward." ~Alber Elbaz
Discipline is key; be patient and build up a fundamental understanding of the markets, and more importantly, hone that keen trading sense of yours. We all have it in us, just takes a little discipline and practice.
Markets are ever-evolving; don't treat it like its static because past actions are not an indication of future performance. Always be open to and learn from other's opinions, be objective about it, and constantly adapt and improve your strategy.
Lazy = poor; Nobody can help you but yourself, don't expect to be spoon-fed. Be an active learner and constantly seek new ways to improve your strategy. Reflect on what went wrong and don't make the same mistakes again. When in doubt, ask Google.
There's only so much you can learn from reading; you don't learn how to ride a bicycle by reading a book, go out there and put your knowledge into practice. Start small to test your strategy and build your confidence.
3 methods to learn wisdom: by reflection, which is noblest; by imitation, which is easiest; and by experience, which is the bitterest.
— Confucius (@ConfuciusPosts) February 7, 2014
How to Find new Altcoins?
So the first thing is to actually find new altcoins and to read up more about what it has to offer. To begin with, I always browse through the Alternative Currency announcements page on Bitcointalk to see what's popular. All new coins are definitely posted here so you shouldn't miss anything, and since threads with the newest post always appear on top, you usually don't have to look further than 2 pages. Things to look out for include the added value a coin brings (as I'll explain more in the next section), as well as the popularity and virality of the altcoin (i.e. high number of pages in a short time).
Another place to look at is Cryptocointalk where you can find a long list of altcoins available, sorted according to new coins or by algorithm. This list is not completely updated, but is organized much better if you want to find out more about a particular coin.
Secondly, you also want to cross-check your information about these coins on social media sources such as Reddit and Twitter. Start off on Reddit by doing a search for the coin, as well as looking at the number of subscribers on the altcoin's subreddit. I bought a ton of Dogecoin at 30 satoshi when I first saw the /r/Dogecoin community grow to 2500 subscribers 1 week after launch, which was way more than most other coins at that time (most new altcoin subreddits get less than 50 subscribers in 1 week). Dogecoin has even surpassed Litecoin to be the second largest cryptocurrency subreddit with over 50k rich shibes right now. I'd love to go on talking about why Dogecoin has much future, but I'll leave that for another post.
And of course, search for the altcoin on Twitter and see what other people have to say about it. If you aren't already on Twitter, I must say that you're missing out on the best available source of cryptocurrency news. Start following a few users like those listed in the Tweet below, and also follow my Bitcoin Trading Tips and Altcoin Trading lists where I try to compile the best Cryptocurrency trading advice available on Twitter. Leave a comment below or tweet me @onemanatatime& tell me who else should be on those lists!
And yes, that's all. I probably use less resources than most of you, but what's important is quality over quantity. It's crucial to learn how to spot a needle in a haystack. Make use of power of Social Media (a.k.a. Word-of-mouth on Steroids - Gary Vaynerchuk); ask the right questions, and you'll always get the right answers.
What to Look Out For?
With so many alternatives out there, we really need to be picky when choosing the next altcoin because you don't want to spread yourself too thinly. Firstly, clones of existing ideas/coins are mostly not worth holding for anything more than the short-term. In this sense, there's a few different kinds of coins with their respective leaders in each category, each with their own pros & cons:
Bitcoin; SHA-256.
Litecoin; Scrypt.
Quark; Multi-algorithm for higher security.
Dogecoin; Memecoin, also Scrypt.
Nxtcoin; 100% Proof-of-Stake coin - no mining involved.
Ethereum; A Layer/Protocol separate from Bitcoin, called Bitcoin 2.0 by some.
Mastercoin; Not really an altcoin, more like a Layer/Protocol on top of Bitcoin.
Vertcoin; Anti-ASIC, using Adaptive N-factor in Scrypt.
While their blocktimes do not really make much difference, anything below 2.5 minutes is good enough, and anything below 30 seconds is worth looking at. Special technical differences make or break an altcoin, and can really shine when they add sufficient value ontop of Bitcoin; you can see much interest in Anti-ASIC coins, Layers, 2nd generation POS coins, and (less so) Multi-Algorithm coins. Another interesting to note is that many altcoins are now updating with Kimoto Gravity Well (read the comments here for more), tl;dr difficulty readjusts after every block, improves difficulty adjustment and makes mining fairer, more secure, and smoother.
I just want to add that not all pre-mines are bad. As long as the pre-mine is well justified and actually carried out by the developers, I think it helps altcoins to better market themselves and build up a community. On the other hand, some developers use this as an excuse to insta-cash out early, so be weary. Secondly, although there's a lot of negativity surrounding insta-mines like QRK, I'd just like to point out that these coins actually help make prices much more stable more quickly, and will not be subjected to volatility as much as Bitcoin. Withholding judgement, these two instances can be seen as simply different attempts to tackle the rampant problem of unfair distribution in cryptocurrencies.
Lastly, besides the technical innovation and specifications itself, it's also important to analyze a few other Fundamental factors that may affect the price of an Altcoin. It's also important to recognize that these factors usually take longer to reflect in prices:
Branding & Marketing. The most obvious case for Branding is Dogecoin, which literally went viral just because it was already a popular online meme. On another note, I also like the WorldCoin branding, and more so their marketing efforts. Although prices have been dipping for WDC, keep in mind that so has every other altcoin (Bitcoin up, altcoins up; bitcoin down, altcoins down).
Community. This includes popularity among public, general consensus about the altcoin, as well as the supportiveness of the community. The last bit is important, and a prime example is Dogecoin's altruistic community, as well as the growing market for Dogecoin services. With no other coin can you find such a large & liquid pool of people waiting to sell all kinds of goods/services for crypto.
Developers. Just like how technical specifications make or break an altcoin, developers are the backbone of the whole cryptocurrency's ecosystem.
Infrastructure. With a good team of developers and community, infrastructure around the altcoin will quickly follow. I like to take Dogecoin as an example because they have grown so much and so quickly, but you'll see it pay off in the sense that the community and developers are working together to build all kinds of services for the Dogecoin ecosystem; USD exchanges, marketplaces, movements, apps etc.
Where to Buy?
The only way to get new coins pre-exchange is through P2P trades. High risk of getting scammed. Don't trade with new users, always trade with trusted users and gain a reputation until you can get others to send first. I've been scammed 3 times and had to learn the hard way. Best way is to totally avoid this method unless you're really dying to get a coin pre-exchange.
First few exchanges that adopt a new coin vary, but they're usually the smaller ones. Very high risk. Always try to leave funds in there for as short a time as possible. I.e. freshmarket hack etc. Look for the relevant information on the altcoin's Bitcointalk thread, Google it, or ask someone on Twitter.
Second exchanges, and they take up new coins pretty quickly too, include sites like Coinedup.com and OpenEx.pw. Thirdly, the biggest exchanges include sites like ValutOfSatoshi, Cryptsy, Coinex.pw, BTER. For a (updated but not full) list of which exchanges trade a particular altcoins, use Cryptocoincharts.info.
For new altcoins, and especially clones, all you'll need is to find a good price to buy, since there's no charts for you to do any TA yet. I found a pretty useful formula for calculating a fair price, and have found it to be pretty accurate. Use it, let me know what you think about it, and how we can improve it to apply to different coin types etc. by Tweeting me or leaving a comment below.
Here's the Secret Formula to calculate a Fair Price for new altcoins: (Total BTC Supply ÷ Total Altcoin Supply) ÷ 5000to10000. #crystalball
— Alvin Lee (@onemanatatime) February 5, 2014
Just to clear things up, by total supply, I mean maximum supply. Of course, this varies by coin type, but is a good starting point for calculating a fair value for a new altcoin. For a more accurate estimation, also compare to similar coins "of the same type", or coins with similar maximum quantities. Example:
Dogecoin & Kittehcoin - Memecoin
Quark & Particlecoin - Multi-algorithm
NXTcoin & NEMcoin - 100% PoS
Mooncoin & Astrocoin - Based off the same "to the moon" philosophy
Secondly, like it or not, you'll have to learn more Technical Analysis basics if you really want to find the sweet spot for entry/exit prices. It'll also help to have a better understand of how markets in general work, and apply the knowledge to your crypto trading.
This is why I don't buy into Hype. When others are greedy, be fearful; when others are fearful, be greedy. #LEAF#MAXcoin#BuyLowSellHigh
— Alvin Lee (@onemanatatime) February 9, 2014
How to Trade?
Obviously, the most important rule in trading is to "buy low sell high". Unfortunately, that's usually harder to execute than it sounds because of panic and greed. Haven't you learn enough from bubbles? Whatever goes up must come down. Markets will always look for a correction after a big spike. Don't chase the bubble! EVERY parabolic curve/rise is a bubble, and a chance for you to sell your altcoins for a profit. Just wait for it and always set sell positions ready to eat up those buys.
Although learning all the basic trading theories are important to give a more wholesome idea of chart reading, I really only use support/resistance to judge price levels. If you want to get more in depth into Technical Analysis, here's two very good resources and must-reads for people working in hedge funds & the financial industry (courtesy of @ActualAdviceBTC):
Trading Tips
#0: Don't join Pump & Dumps, period. For someone to make money, someone else has to lose. Don't be the one caught with the short end of the stick.
Stay away from pumps organized in twitter. Either its big and you will never get a buy in or its small and you will become a bag holder
— CryptoOracle (@CryptoOracle) February 4, 2014
#1: Always trade with a plan. Before entering a trade, plan not only your entry but also your exit. Don't fall into the trap of panic buying/selling. Once you get over that, everything will start to come together.
#2: Discipline. Be patient and wait for good setups. Plenty of opportunity everyday, don't spread too thin. On a side note, I can't wait for a margin platform for altcoins to be built. If you're building one, hit me up and let see how we can work together (I'm a Business Development and Online Marketing Major).
#3: Money management. Don't spend more than 5-10% of your entire BTC portfolio on a single Altcoin, unless you're damn sure it's gonna be profitable in the mid-long term.
#4: Understand human psychology. Here's a good 5 part series to get you started:
Buy/Sell Walls. I barely look at buy/sell walls because these can be manipulated so easily especially for lower volume altcoins. I only use this, if ever, to have a better idea of support/resistance levels, although I know many people will tell me these work wonders and I trust you too.
Market Capitalization. Market caps are nothing more than two numbers multiplied by each other; total supply and price. It gives you a good judgement of how a crypto is currently doing, but in no way does it say if an altcoin is a good buy/sell now. I think what's more important when looking for long-term buys is the total hashrate (and rate of growth) of the cryptocurrency.
Not having a plan beforehand. I can't emphasize this enough. Many people jump into buying an altcoin without thinking about their exit plan. What is your target, when you do sell and take profit, when do you sell and cut losses, or do you have more funds/positions ready to buy more if it continues to dip? Are you holding this for the short term or long term? These are all important questions to ask yourself before making a trade. If you don't have a sound and comfortable strategy before entering trades, more likely than not, you're going to end up losing Bitcoins over the (not so) long run.
Trying to predict a bottom/top. Nobody can predict exactly where the price is going next, only a better and more informed guess. I personally think this is the toughest problem to tackle, because when greed takes over, you always think "I could have made so much more if only I sold higher or bought lower".
"Great Traders never buy at the Bottom and always Sell too Early."
— Alvin Lee (@onemanatatime) February 5, 2014
Getting emotionally attached to a particular altcoin. I have to admit this is still a problem for me, and I'm still holding onto bags of WDC, ZET, EAC, MSC, that are currently unprofitable. I bought them earlier on, and didn't take profits from the bubbles. But most important thing is that we learn from our mistakes, and that's why I now like to sell some positions to get into a position to "freeroll".
Using Technical Analysis as the sole determinant for making trades. Every indicator is useless - by itself. The market is not stagnant, and prices are affected by everything we can, and cannot think of. Don't be bound by one system of analysis; use every single piece of information you can find, and objectively analyze the markets with a bird's eye view.
My Cryptocurrency Trading Strategy
Firstly, I must emphasize that I'm VERY Bullish on Bitcoin for the Long Term. I've invested every single FIAT dollar I have into Cryptocurrencies since November 2013, and I literally have to start selling Bitcoins 2 months later to pay my rent (or wait for a Bitcoin ATM to appear here). Because of this, I spend a ton of time & effort researching Bitcoin and Altcoins to constantly look for ways to grow my number of Bitcoins. I also have a high risk propensity and so not all my trades will be comfortable for you. My point basically is that nobody's situation is exactly the same, so keep in mind that you'll have to build your own strategy to suit your personal needs, risk preference, available resources, and environment.
My suggestion is to buy BTC @ Bitstamp/Coinbase. Take say 50% to daytrade in #Bitfinex. Rest look for altcoin opportunities @1badpug
— Alvin Lee (@onemanatatime) February 9, 2014
To give you a better idea of how I manage my cryptocurrency funds, I'll share a breakdown of the coins I own. I have 50% of my funds in Bitcoin, which is split into two portions. Half of them (25%) is in Bitfinex and used for Daytrading, and is also the Bitcoin I will never be selling. The other 25% of my funds is in various Bitcoin wallets/exchanges, either waiting to be traded for an Altcoin, Cryptostocks, or even for Poker on SealswithClubs. As for the rest of the 50%, I have them split over ~15 altcoins right now but I'm looking to weed out the weaker ones as soon as I find a good exit point, and hopefully only hold on to 5 or so for the longer term (and these will probably keep changing).
Super short-term strategy usually consists of Shitcoins; less than 2% investment per altcoin. Look for cheap entry price, sell portions as it increases, and I'll let go all during the first bubble that comes (sell all at a retracement after highest peak). Look to get in and out quickly. If you miss the boat, you might just end up holding a bag of coins with decreasing worth, and will probably take you months to break-even, if ever.
Short-term altcoins are usually those that offer something more than useless clones; willing to risk less than 3-5% of total portfolio. These usually include the leading clones of the 7 types of coins I mentioned in the second section from the beginning. Look for cheap entry price, and sell portions as it increases. I usually sell until I break-even my initial Bitcoin investment in the altcoin, and then freeroll the rest. Depending on the coin, I may or may not sell all my coins after we double-peaked in a bubble, and bring some coins to the mid-term.
Mid-term altcoins include those that provide various distinct and valuable features, such as NXT, VTC, DOGE, QRK. They're usually also the leader in their altcoin category, although it could be interesting to see which alternative eventually emerges as the Silver to each of these Altcoin's Gold. Layers and added protocols also for me fall under this category, and could be added to my long-term portfolio depending on how they perform (e.g. Ethereum). I'm willing to risk up to 10% of my total BTC on a single mid-term altcoin.
My long-term portfolio really only consists of Bitcoin and Litecoin, solely based on the Network Effect that these two cryptocurrencies have garnered thus far. I agree to some extent that Litecoin will remain the second to Bitcoin and eventually live out its prophecy as Silver to Bitcoin's Gold. I have 10% of my portfolio in Litecoin and I'm just holding them for the long haul. I'm just waiting to sit through my second Bitcoin bubble and make some money. I feel bad for saying this, but I can't wait for the economic meltdown.
My biggest prediction for 2014 is another huge bubble to a peak of $3-6000. Possibly June or later. Maybe China reverses Ban. @bmsmashout
— Alvin Lee (@onemanatatime) February 7, 2014
First of all, there are over 100 altcoins out there, so don't expect me to know about every coin. If it's an exactly clone of Bitcoin, Litecoin, or anything already available, chances are, it's not worth either of our time.
Secondly, read my tweets and do your own research (lazy = poor). If its worth mentioning, I probably did mention it. If you can't find it on my timeline because its too cluttered, again, do a Twitter search for the Altcoin and find out what the World has to say about it.
Thirdly, there's 100s of altcoins out there for you to choose from. Don't spread yourself too thin and buy into every possible bottom. Leave the shitcoins to die, and stick to altcoins with a stronger fundamentals.
2. If I'm holding a bag of XYZ coin, should I just wait or sell for a loss now?
Rule #1 of the game: Buy Low Sell High. But obviously easier said than done.
If you think the coin isn't going make it to the mid-term, and want to liquidate them, you have two options. Sell now and take the loss; that's the hardest thing to do, but also what every good traders knows he needs to do. Or if you think the coin has potential, buy more at where you think is a low, so your average buy price drops, and you can liquidate some/all as soon as it bounces back up. Think Martingale (doubling) strategy. Got more questions? Leave a comment below!
P.S. I recently came across an idea of a Cryptocurrency Hedge Fund; form a network/team of crypto traders to synergistically work together and achieve profitable returns. Different teams mining, selling altcoins, buying altcoins, looking for potential entry positions, trading bitcoin etc. If you'd like to discuss the idea, feel free to email me at alvinlee133(at)gmail.com or hit me up on twitter @onemanatatime.
P.P.S. This post took 5 months of hard work and research, and one full work day (with overtime) to write. Feel free to donate some coins my way on the donate link below, or send some altcoins to my Cryptsy Trade Key: 9c1e289981a685bf0b8a4e48bc00b35eb1380afa.
Cheers and hope I've helped you in some way, and hopefully more than just making money. Peace ^_^V
In light of the recent US Government Shutdown on 1st October 2013, and upcoming Debt Ceiling talks, I have decided to stop my Forex Trading with the Leo EA. If you are currently trading in the Forex or Equity markets, please be safe! Nothing is for certain in this economy.
With that said, I will be looking to move my investments towards 3 main products:
The dollar plummeted against most major currencies on Wednesday after the Federal Reserve said it was making no changes to its USD85 billion monthly bond-buying program.
GBPUSD today is close to an 8-month high, after soaring more than 1.5% over the last 10 days. This poses a problem for Forex Software Traders, who depend on the small market fluctations in stable currencies for profits. Especially for Robots that use the Martingale (doubling) system, these uncertain times could spell disaster.
My personal view is that danger is looming; diversify your portfolio into safer investments, and possibly into Gold/Silver, Bitcoin, or Chinese Yuan (RMB). My best advise is to do your own research into these opportunities and examine if they fit your overall Investment Strategy, based on your Risk Preference.
Just a little background, I was using a Forex Automated Software to trade the GBP/USD pair since November 2012. In light of the Economic Instability due to recent World Events, I have since stopped.
You can find out more about how the Forex Robot works at autoforexsg.wordpress.com. The Robot is still available for purchase, feel free to contact me if you have any questions at all. However, trade with caution!
