How to Increase Your Holdings When SBD is Selling for More than $1 USD
Over the last couple of weeks, we've seen SBD break away from the $1 USD peg a couple times. These are always opportunities for those who hold SBD.
When this happens, you can increase your holdings by selling SBD on an external exchange for BTC or on the internal market for STEEM. You can watch for this at http://www.steemdollar.com/ or you can set an alert on https://www.coinigy.com/.
Usually, there's not much to it. Just transfer your SBD to whichever exchange you prefer (I've been using Poloniex and Bittrex lately). Don't bother trying to perfectly time things because if you're well above $1, you'll make money either way. Just sell at the bid or, based on the amount you want to sell, click a price deeper into the Buy Orders box to cover the full amount of SBD you want to unload.
Once that's done, set a buy order for the same amount of bitcoin you just received for selling your SBD somewhere just about $1. So far, I've found $1.03 works rather well and will get hit eventually. When it does, you'll have more SBD than you started with. Simply rinse and repeat over time to increase your holdings.
You can see here, I sold 300 SBD at 0.00102832 on 4/17/2017. I then set my buy with the same amount of bitcoin and forgot about it. It hit just a few days later at 0.00085000 giving me 362 SBD. When the price spiked again on 4/25/2017, I sold my 362 and again set my buy order which will hit sometime in the future, further increasing my SBD holdings.
This is really simple stuff which anyone can do. It just involves patience and paying attention.
As @clayop and others have mentioned, you can also use the BTC you get from selling SBD and immediately buy STEEM which you can transfer back to your Steemit account and sell on the internal market to keep the cycle going. This gets a little more tricky and will only work for a very short period of time when someone is pumping the price of SBD because the price of STEEM on the internal market will drop down below the open market price due to the temporary high demand for SBD.
Let me walk you through an example. Here's the internal market:
You see a STEEM price of $0.1843 (which is in SBD pricing). The external market is higher than that at $0.2272 (USD pricing):
Is there an opportunity here? Let's run the math and find out:
We'll call that a $1.24 price (with bitcoin around $1268.02 per BTC). Now let's compare the value of 100 STEEM on both the internal and external markets. If there's a big gap, we can increase our holdings more by buying STEEM externally, selling it internally for SBD and then selling that SBD externally to get more STEEM and repeat the process.
External Market:
100 * $0.2272 = $22.72 USD
Internal Market:
100 * $0.1843 = 18.44 SBD * $1.24 = $22.87 USD
So we see here there's about a $0.15 difference from the internal and external market per 100 STEEM. If you had enough volume, you might be able to make that work to your advantage, but you also have to keep in mind how the external exchanges charge a fee with every trade and they charge a fee when you withdraw from your exchange wallet. There's also a lot of slippage on the internal market if the volume isn't high enough to cover your orders at the amounts you want.
This is why it's usually not worth the trouble to buy STEEM on the external market so you can then buy SBD on the internal market in moments like this where SBD is being pumped. Then again, if you already have liquid STEEM in your account, and you notice the SBD pump trend on an external market before the internal market price catches up, you may have a great opportunity to buy SBD at full value with your STEEM and quickly sell it externally for a profit.
I hope that little exercise was helpful to you. The Steem Dollar ticker at http://www.steemdollar.com/ is really helpful for figuring this stuff out. The more people who take advantage of this, the closer the SBD peg will be to $1 USD. If the price of SBD falls below $1 USD, you can use the convert function in your Steemit wallet to get $1 USD worth of STEEM in three days. Don't do this when the price of SBD is above $1 USD or you'll be losing out getting less STEEM than you could by selling on the external market.
I hope you give this a try sometime and realize just how easy it is. If you do, please let me know about it!
Good luck and Steem On.
Note: This is not investing advice, only play with value you can afford to lose, yadda, yadda, you get the drill.
Edit: 4/27/2017: It seems I only had to wait two days for my buy order to hit. 362 SBD is now 479 SBD. :)
Good Stuff @lukestokes !
Thank you! I'm glad you found it helpful.
Resteemed as a reminder for myself on what to do with my SBD.
Thank you! Hopefully some day we'll have a nice, decentralized marketplace to make SBD even more useful.
Fantastic article. Have you considered creating a bot at cryptotrader.org? If I knew how to code I would set this system up and let it print money.
On an unrelated note - I love your footer - is that something you paste in every time or is there a way to automate that?
Upvoted, resteemed, and followed.
Thanks so much, @geocurt. I've been thinking a lot about creating bots, but I also know there aren't really many ways to print money. If there were, more people would be doing it. :) That said, I really am interested though. I'm a programmer, but many of the bots are done in Python which I don't really know, but I could certainly learn. I've also been thinking about creating a bot for BitShares to help increase liquidity there. I've also got my company to run and three young kids, so time is thin.
As for my footer, yes, I just paste that in every time, copying from a previous post I have saved on my computer. I use the
<div class="pull-right">and<div class="pull-left">styles.cryptotrader uses a function library called Ta-Lib.
https://cryptotrader.org/talib
There are lots of free code samples people have provided. If you have any interest at all I've done a bit of javascript and sql, enough to be dangerous, and would love to partner with you and see if we can come up with something.
And the printing money comment was tongue-in-cheek :-)
I was thinking the same thing but don't know how to do it yet.
I traded for a profit last week but I could never explain it as well as you just did!
FABULOUS!
It's great to have you as part of the Steem Team!
Thanks so much! I've been wanting to do a post like this for a while because it's taken me a long time to wrap my head around all the details. It's nice to know it got communicated well for you.
I noticed the Internal Market is generally lower than the external market during the last price move. But to buy I'd need to buy SBD and they were way too high. I also noticed today the exchange on SBD from bitcoin via Blocktrades would have cost me way too much of a loss like 30% in the conversion according to the site.
I have not really traded Cryptos yet... But want to start. Great post!
So glad you found it useful. I think Steemit will be the introduction to crypto trading for so many people. Why should only the super rich play in these markets? If there's value to be made and spread around, lets all benefit from it. I hope your first trading experiences go well.
Do you know of any good resources for someone looking to actively position trade Cryptos? Courses, books, Articles like this one here?
I have been wanting to for awhile. It kind of woke me up when I missed the big move on XRP because I had been planning to buy some for a while back when it was .004. So I'm wanting to get in now, into trading Cryptos.
I don't have anything comprehensive. I've just been watching YouTube videos, learning from others I know, and doing my own research on crypto. It's kind of a wild west. I was thinking today about possibly creating some training videos though. If you look back through the comments in my posts related to trading, some of linked to some YouTube people with great info. I've learned a lot from comments here on Steemit on other people's trading posts as well. Good luck!
Hi @lukestokes
This is a very informative post. I have never tried trading yet. Where do I find the internal market, as per your example in the post above to buy and sell steem, or are you just doing it from your wallet? (Sorry I was born before computers, BBC)
That's a really important question, thank you for asking it!
And then:
One of the best ways to learn computers/technical stuff is to click on everything. If you see a menu item, select it and see what it does. If you see a button, mouse over it and see if there's a tool tip.
Please let me know if you have any other questions.
Thank you very much for the reply, thanks for the tip to click on everything, I will start practicing it.
Now I can start practicing what you preach, trading internally.
This was very helpful to me.
Glad to hear it! :)
Let your every day be bright,
Do not quit your star,
Let joy, happiness and luck
You are always accompanied.
That's a really big picture. You may want to shrink that down a bit as some consider it a bit spammy to dominate the comments with huge images.
Many thanks for the warning. I cleaned the picture. Sorry, I did not see the real size initially.
Cool!
Interesting....
How you like dem apples?
;)
https://steemit.com/crypto/@cassidyandfranks/sbd-thirds-rule-trading
I love that idea, but this is a situation where I probably wouldn't do it in thirds. When SBD gets pumped, there's usually a small window of time before it corrects. Almost every time I've done this, it's been "do it as soon as you can to get the most profits" type situation. Any delay, and it's already correcting. That's why I don't put in orders and wait for it to meet me. It's possible you'd miss the whole movement instead of making a nice profit. As you said in your post: