While I’m writing this article, the bitcoin price is crashing, but by the time you read this, it’s entirely possible that it already recovered to some extent. If you didn’t buy the dip, this article is for you.

GDAX BTCUSD trading volume 18-22 Dec 2017: 236,880 BTC
CME Bitcoin Futures trading volume 18-22 Dec 2017: 6236 = 31,180 BTC

Both the CBOE and also the CME launched bitcoin futures throughout the past fortnight, that are mercantilism at unsurprisingly low initial volumes. My theory for this explicit dip, as I’ve elaborated in many previous posts, is that thanks to the futures launch, there's not any investable attract of “getting in before Wall Street” any longer. However, I’m still optimistic on bitcoin semipermanent. As for the CBOE and CME futures, there’s still many time to urge in before the accessibility of those instruments improves. As such, this dip presents a wonderful chance to have interaction oneself in what has nearly became a mantra within the bitcoin mercantilism category of 2017; obtain the dip.

The How

One issue I struggled with as a novice merchant shopping for my 1st dips was the actual fact that I didn’t continuously have decree on exchanges to shop for the dip with. Many times, i used to be already in BTC, and if I were to wire a lot of decree to the exchanges, the dip would frequently have already got disappeared before the transfer completed. That meant that to shop for the dip, i might even have to somehow succeed at commerce the highest. That was till I learned that you simply might obtain the dip with the BTC you have already got, mistreatment leverage on derivatives exchanges or exchanges that offer margin commerce. For this text, I’ll write from the angle of BitMEX commerce, as this can be the exchange that i'm presently conducting my dip-buying activities on.

Here are the things you’ll need to be a successful BitMEX dip-buyer:

• A BitMEX account funded with a portion of your BTC

• asic knowledge of the BitMEX platform

• A plan

• Good nerves

• Discipline

A BitMEX account funded with a portion of your BTC

One of the most effective things with high-leverage exchanges is that you just will enter terribly massive positions victimisation solely atiny low portion of your stash. this suggests you’ll be exposed to a far smaller protective risk compared to once you’re commercialism on spot exchanges. Personally, I keep ninetieth of my BTC in cold storage and 100% on BitMEX alone for dip-buying functions.

Basic knowledge of the BitMEX platform

The best thanks to start with BitMEX is to use the BitMEX testnet. this enables you to trade with some pretend bitcoin to urge a sense of the way to use the interface and the way the various order varieties work.

Before you begin commerce with real, giant amounts i like to recommend that you simply scan the info pages fastidiously and make certain you'll make a case for what the subsequent means: automatic liquidation, auto-deleveraging, distinction between entry worth and mark worth, the BitMEX swap funding model and what the that means of “inverse” is in “XBTUSD inverse perpetual swap”.

A plan, good nerves, discipline

Everyone UN agency isn't mercantilism could be a sensible bargainer. It’s terribly simple to appear at the charts and picture once you would have bought and once you would have oversubscribed. It’s a lot of more durable once it’s real. the most effective thanks to handle that's to possess an inspiration merely|that you just} simply follow. you must have a concept of worth|the worth|the value} you would like to shop for in at and therefore the value you would like to shut your position at; each a price you’ll take profit at, and a value you’ll cut your losses at.

As you hone your dip-buying abilities, you’ll notice that your performance correlates with your ability to not get caught up in the heat of the moment while executing your strategy.

The When

Some individuals believe that the quickest worth movement in bitcoin is once it crashes. There’s even a saying: “Bitcoin takes the steps up and also the elevator down”. however there's one movement that's quicker than the crash, which is that the bounce. In moments of true desperation, the worth will fall thousands of greenbacks over the course of minutes. however on the bounce the order book is cleared out, therefore the worth will jump back constant quantity during a matter of seconds. that's why once you obtain the dip, you are doing it on the method down, not on the far.

This means that you have to make a guess at where you think the bottom is. Here’s a selection of tools bitcoin traders commonly use to guess bottoms:

• Technical analysis (TA) indicators such as RSI and MACD

• TA patterns such as inverse H&S, double/triple bottoms

• Fibonacci lines

• Trend lines

• Previous support levels

A few years ago, I backtested every TA indicator I could think of without finding very convincing results. I use a different strategy which is completely unscientific, but seems to work well for me. Here’s what I do:

Seeing as hodling may be a utterly fine strategy for bitcoin speculation, there's extremely no have to be compelled to get the dip unless the dip is simply too sensible to pass up. Therefore, I solely get dips if i feel the worth drop is basically exaggerated. therefore I imagine a value purpose which might feel extremely brutal, wiping out many weeks or months of gains, then some.

The second issue I do is watch the worth visit real time. throughout a crash, there’s attending to be a degree once there’ll be a red candle on the 5-minute chart that simply keeps growing and growing. On BitMEX, you’ll experience numbers within the order book showing up; these square measure alternative traders’ automatic liquidations being triggered. I’ll conjointly take a glance into chat rooms and mercantilism subreddits and check that that everybody is talking regarding the crash. Lastly, I’ll monitor the notifications on my phone and look forward to my brother to question me if bitcoin is dying and if he ought to sell. At the purpose of most pain and desperation – that’s once I purchase the dip.

Sizing: I typically use 10x leverage on BitMEX, which provides Pine Tree State headroom for one more 100% worth decrease once I’ve bought before i buy mechanically liquidated myself. I don't enter with my whole commerce balance quickly. I typically enter with 20-25% ab initio and keep increasing as we tend to go down, betting on however intense the desperation feels.

Warning: The last few weeks the BitMEX trading engine hasn’t been able to cope with the trading volumes and will sometimes not accept orders during critical moments.

Do you agree buying the dip is a succesful trading strategy? Let us know in the comments below.