Post
Topic
Board Trading Discussion
Re: What Is Bitcoin Trading and Why It's risky?
by
leeloo
on 16/01/2017, 10:52:13 UTC
Hello folks!

I'm thinking about starting to trade with Bitcoin, but I see people saying that It's risky & almost like gambling.

I think that I mis-understand the meaning of trading.

For me trading Is for EXAMPLE, buying Bitcoin when It's at 550$ and selling It when It's at 670$. This Isn't risky because If Its value doesn't Increase, you'll just have to keep It until It gets higher enough, Is this trading?

I would really appreciate If people clarified more! Thankx Wink

Trading is gambling: you work with odds, not certainties.

Markets are almost random. Now, a truly "efficient" market would be completely random, because prices would reflect objective value; winning and losing would be purely by chance, and nobody could make money. However, the markets are somewhat inefficient: news don't get incorporated into the price right away, and market participants are neither rational nor perfect computing machines; everybody has their own idea about the "perfect price" right now, and it is always different from the "true" price, which can never be actually known.

Trading is not about luck. It is coming from the above: if the markets are not completely random, then we may find a way to do better than luck.

Trading is about finding a mathematical edge: to win a little more (not necessarily more often!*) than lose, on average. The one who can guess what most of the other players think has exactly such an edge; if he exploits it well, he can win on the long run.    (*) in fact, winning too often is usually a sign of a left-tailed return distribution: a few huge losses hiding in your future

Crypto v.s. the rest. The difference between crypto trading and the "real" markets (such as equities, futures, forex, etc) lies in that crypto is an immature market, so there are a lot more inefficiencies left to still exploit.

Here's my post in another thread with sources of good info where you can learn about trading in general. Trading crypto is not fundamentally different from trading anything else, though it's like the Wild Wild West: tread carefully.