DAY TRAD­ING IS TRICKY; HERE’S WHAT MIGHT HELP

AMBCrypto Weekly - - News -

If you haven’t turned a profit in a while, well, you are not alone. In fact, a re­cent study by Brazil’s Uni­ver­sity of São Paulo found that of the share mar­ket day traders who per­sisted for more than 300 days, 97% of them lost money. Fur­ther, the study found that the top day trader among those sur­veyed turned a profit of only $310 in a day, against a risk of $2560.

Here, not only was the risk-re­ward ra­tio largely skewed to­wards a loss, but 66% of day traders quit day trad­ing within a year of start­ing.

Now, there could be sev­eral pos­si­ble rea­sons for the same, how­ever, fact re­mains that while many noted a fail­ure in turn­ing a profit and ran out to avoid fur­ther losses, oth­ers ran out of money and were un­able to con­tinue. In fact, 76% dropped out within two years while only 15% sur­vived for three years. Ba­si­cally, a vast ma­jor­ity was found to drop out at the end of years One and Two. Ergo, one can ar­gue that even ac­tive traders are known to un­der­per­form.

How­ever, con­trary to pop­u­lar opin­ion on Crypto-twitter, the re­cent se­ries of events does of­fer more op­por­tu­ni­ties than ever seen in the last 5 years.

Ac­cord­ing to data provider Skew, the CME traded $48 mil­lion worth of Op­tions dur­ing the day, the high­est daily vol­ume fig­ure since 28 July on 6 Oc­to­ber 2020. At surg­ing vol­umes, traders took strike prices at $16,000. Fur­ther, the sit­u­a­tion on the CME was con­ducive too as cor­re­spond­ing to this de­vel­op­ment, the Open In­ter­est was up as well.

What’s more in­ter­est­ing is that more and more in­sti­tu­tions are now in­clined to buy Bit­coin us­ing funds from their balance sheets, like Square Inc. and Mi­croS­trat­egy. In fact, there are other in­sti­tu­tions too, other in­sti­tu­tions that haven’t made the head­lines, since there is ac­cu­mu­la­tion at the $10.3-$10.6k-level, based on data from Whalemap.

Now, the ac­cu­mu­la­tion of Bit­coin at the afore­men­tioned price level may be an in­di­ca­tor of im­proved mar­ket ma­tu­rity and ef­fi­ciency. There are more op­por­tu­ni­ties for book­ing un­re­al­ized prof­its, when com­pared to 2018. Har­ness­ing the po­ten­tial of in­tra-mar­ket spreads, also known as calendar spreads or in­tra-de­liv­ery, is one of the strate­gies that are ef­fec­tive in a mar­ket that is in the ac­cu­mu­la­tion phase.

How­ever, to cap­i­tal­ize on the in­tra-mar­ket spread, traders need high Open In­ter­est and cur­rently, Open In­ter­est in BTC Op­tions is 3x, com­pared to a year ago.

Prof­itable or not, there are op­por­tu­ni­ties for book­ing prof­its both in the long run and short run on de­riv­a­tives ex­changes like CME, both of which are not­ing a lot of ac­tiv­ity on the part of in­sti­tu­tional traders.

Go long, or short, or go both ways - The sen­ti­ment may ap­pear neu­tral, but the ex­pec­ta­tion is that it may turn bullish in the next few weeks.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.