As part of my ongoing learning about Crypto, I've decided to put a small amount of money into coins to experiment in the market. I'll be posting each transaction and it's details in hopes that everyone can learn from my adventures.
The goal of course, is to profit from the volatility and uncertainy in the markets. These will not be "big bets" as far as drastic swings. They will be focused on small, hopefully repeatable percentage swings.
Off to the Races!
Today was my first trade. I used GDAX, which is the slightly more sophisticated platform for trading from Coinbase.
I purchased as the price fell this morning @$260, using my debit card option, which comes with a hefty 3.99% fee from Coinbase. Of course, I do not recommend this approach, but I've been waiting for 6 days for my bank transfer to finalize and just couldn't wait any longer.
The transaction broke down like this:
Total "Spend" in USD: $499.15
USD Investment: $480
ETH Purchased: 1.84 (rounded)
I immediately set a limit order to sell this again if the value of ETH rises back to $270.
Theoretically, if the price bounces back today or this week, my gains would be as follows (all numbers rounded for ease):
(potential limit order price) - (original price) = Price Difference
$260 - $270 = $9
(Price Difference) / (Original Price) = % Change
$9 / $260 = 3.5%
(% Change) * (USD Investment) = Gross Revenue
3.5% * $480 = $17
Capital Gains Tax:
(Gross Revenue) * (My Ordinary income tax bracket %) = Capital Gains Tax
$17 * (25%) = $4.25
Gross Revenue - Capital Gains Tax = Profit
$17 - $4.25 = $12.75
That's a lot for $12 sir!
It does seem to be a lot of "work" for $12, but if you set limit buy and sell orders, you don't necessarily have to watch the market every minute of the day. I also only have one pile of coins i'm buying and selling, and I'm buying and selling it all for every transaction. Thus I don't have to worry about which coins I sold at which price, nor do I have to monitor different markets for other coins (Bitcoin, Litecoin).
You might still be thinking, "What is $12 man?". Well, consider that I have recouped more than %50 of my debit card fees already (again, if the sale goes through). Also consider that with the swings in value of ETH and other coins, it's likely that the price will go back up and back down numerous times in a given day, or a given week at the least.
If I average 2 transactions a day, and set each order to make 3.5%, I would make more money for each transaction (because my $480 goes up to $480 + $12.75 = $492.75) after the first, and continues to rise with each transaction thereafter that is profitable.
You quickly enter an arena of exponential growth. You can also increase your payouts by setting limit orders for larger price swings.
I hope this has been helpful. I will post updates throughout the day.