There is a lot of talk these days about six figure Bitcoin and what the world looks like in the age of seemingly endless money printing. Combine that sentiment with the lucrative and often devastating world of leveraged derivative trading and something comes up: The BTC 1x Strategy That May Just Be The Answer.
There is much folklore around leveraged derivatives trading. Some true, some patently false.
It's Risky - only if you gamble (i.e. trade with out risk management strategy).
It's Lucrative - Absolutely and can go in either direction. Double to Triple digit percentage returns in minutes during high volatility time is not uncommon along with those high percentage losses as well.
It's Complicated - The answer here is that it can be. In some ways it is akin to boiling the ocean when you only need a cup of water to all of the available indicators.
It's only for the elite and those with high amounts of resources - patently false. You can start with less than .0001 BTC. Percentage returns are percentage returns no matter the amount of starting capital. Remember that story of a penny that doubles every day for a month.
With all of the hoopla around trading, BTC, all time highs, bull markets & halving cycles, there is a much less hyped and know strategy when it comes to managing your investments. 1X is a synthetic hedge that just may be the difference in your performance.
Now if you search for synthetic hedges you will see all types of different descriptions, but what we are talking about here is that while you are filling your crypto bags and preparing for the rocketship ascents, there are inevitably short term down turns.
This is where the 1X strategy comes in to play. It can go both ways being in a short or a long position. For the purposes of this piece, we will look at the short position at 1x leverage on ByBit.
The 1x Strategy
Admittedly, when I first heard about the 1x strategy, I shook my head and said that sounds ridiculous. Why would you ever place a 1x trade on a derivatives platform when the whole point is the amplify your investment.
Here's what I found out and it's quite interesting. From the perspective of trading, most often we see what we want to see when we are doing our technical analysis.
We all have our rules whether learned or taught by which we operate and sometimes we need a shake up from time to time.
The 1X strategy in a short position is hedging your position and minimizing any loss that occurs in the short term.
Here's what we are talking about and if you want to go a little deeper, the ByBit blog has a quick and dirty article covering the topic.
As we look into this topic let's use 1 BTC for the example. I realize that's not a feasible option for many but it's easily scalable to any level you are operating at.
As of today, April 8, 2021 BTC is trading around $58k USD. I'm sure by the end of writing this article it will be 56 or maybe even 60 but's just stick with the 58 for now.
Like many who are looking to enter the run up to new All-Time-High levels, finding or averaging into a fantastic entry takes alot of work. Great work, nevertheless voluminous.
We know that in the the larger time frames there will be run ups and drops of one thousand to four maybe even 5 thousand dollars in price.
So while you are working on your entry what happens when you take a short position at the top of any one of these spikes in price.
Personally I use Market Cipher to track price action and momentum to find when there will be significant increases or decreases. There are any number of indicators out there, but MC seems to be a good fit for what I am doing.
When you take a 1X position at the top of any of the price spikes along with proper risk management, you have a really good expectation that the price will drop even in the short term. Now get that stop lost at least in minimal profit or at lest enough to break even with fees because this is where it gets interesting and lucrative.
Receive the Funding Fee Every 8 Hours
We all know that prices go up and down continuously.
With that in mind, especially during a down trend period, when you hold a short position, every 8 hours you receive the funding payments from ByBit.
Now that comes from those in long positions which incentivizes long holders to move in and out of positions very quickly.
So let's say for example the price hits somewhere around 60k and then most of the price action for the next couple days is 55-58k. If you are holding a short position from 59-60k, you are in profit, plus you are receiving the funding fees in addition.
All the while you are working on finding a lower entry to long from.
Potential and Possibilities
For a moment think about this. If the price of BTC is at 58k. What is the potential for the price to go to infinity or to go to zero. Personally I say neither for both, but what I am getting at here is that where is the potential to move towards.
Now don't misunderstand, I am extremely bullish at the moment on BTC and think upside is incredible open. But 100k v. 50k in price. That lower position could happen first and more quickly.
So what that short position does is put you in profit, extremely limits upside loss from the short position at 1X and also captures funding fees.
This is not the make 1000% in two minutes that you most likely have seen someone who has posted a 100x leverage short trade. What they don't tell you is that the risk profile is astronomical. Absolutely astronomical.
A 1X short position from near the top of a price profile in a recent down trend is incredibly powerful for a swing type of position.
If You Would Like to Learn More
Many traders use different platforms and work across different platforms. Personally, I have been using ByBit as I have found it very easy to use and to date there have been no issues with the technology.
On their site you can find a litany of different articles which also includes a brief write-up on using 1X leverage in a short position.
If you are reading this and think that it sounds a little too good to be true, just take a moment and check out the ByBit article and see if that resonates.
I know I stepped away from it for a bit to let the idea percolate and it finally started to make sense. Maybe it is the idea of transitioning headspace during a bull run.
Either way, if it looks interesting, would like to hear about your experience.
Thanks for taking a moment to check out this article. To add value, there are 3 links below.
If you are not already on ByBit, you can use the link or if you are setting up an additional profile you can use the code below which will provide varying bonus amounts after first deposits.
Use this code: wzLp8
If you haven't used Market Cipher, yet it has been a complete game changer for me. Takes away the guessing when looking at momentum and activity on the charts. If you use the link above you get an additional 5% off the already half off price.
Unfortunately Market Cipher does not have a free test period, but they do offer a full refund within 72 hours if you're not satisfied. See what you think, it might be exactly what you need.
Energized Life with BryRi
Keep irregular sleep hours? Finding different ways to keep energy in top form? Of Course you do! Like all of us, BTC never sleeps and there are days when we don't either.
Over the last year, I have been developing skills in Energetics and Alignment of resources that help all of us address the need to be a non-stop energy factory!
I have started a once a week newsletter "Energized Life with BryRi". It will take you to a splash page to put in your email and then to my website which is still a work in progress.
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