If you have been following along on my journey through life you will remember that I have retired… whatever that means! Retirement means many different things to many people but to me it meant no longer feeling I had to earn money and so freeing me up to do other things – things I always wanted to do but never really had the time for. Well I have found out that this is easy to say but not so easy to do.
One of the those things that I have always wanted to do is on-line currency trading. Most of my life I have owned shares and seen them increase and decrease in price over time. I know that professional traders make good money from tracking these ups and downs, getting to understand the reasons for them and then using that understanding to anticipate the market buying when the price is low and selling when the price is high. Most casual owners of shares do not do this: they buy at whatever the price is and hold on to the shares in the hope (expectation!) that they will increase in price, often over many years, only selling when they need the cash. So from this we can deduce that there are two kinds of people that buy shares; those that trade regular and those that buy and hold.
I have always been a “buy and hold” kinda guy. I have built up over my life a small portfolio of mostly funds which I added to occasionally when I had the cash to spare. Well this portfolio has done pretty well over the years and I have always been reluctant to sell the shares as they gave me a feeling of security: they were always there to fall back on. But with the uncertainty of Brexit and other hot-spots around the world I decided a couple of years ago to pull the plug and sell my portfolio entirely which I did. The question then remained what to do with the money that was released? It wasn’t a huge amount, certainly nothing so big as to change my life, but it was more than I wanted to just sit in a bank account gathering dust.
So I wanted to do something with it; to make it work for me, to make it continue to earn for me. The banks are pointless for that right now with interest rates at 1% or so. Even an ISA isn’t much more. So what should I do? For a couple of years I have been on the lookout for somewhere to put a small pot of money, that would be safe, without risk of losing it, that would earn a sensible amount. You would think this would be easy but there are surprising few opportunities to earn money that do not also incur a risk of loss. However, after looking for ages I have finally found something that might fit the bill – Bitcoin trading.
Many of you may have heard of Bitcoin but may not know what it is so take a look here for a clear and simple explanation:
Bitcoin is a cryptocurrency. It is new having only been around since about 2013. It is a technical solution to many of the issues surrounding traditional currency and it has a few key characteristics that seem important to me:
- It is decentralised so no one country or no one person or company has control.
- Where each country has its own currency and controls its own currency supply (thereby controlling what it is worth) so Bitcoin can be seen as a common currency for the world… a Bitcoin is a Bitcoin no matter where in the world you are! No one controls it so its worth is determined solely by the market.
- It is public so everyone can see each transaction on-line and check its authenticity and legitimacy and yet it is private because in spite of the transactions being public the identities of the participants are obscured so only the participants know the identity of those involved.
- This could become the dominant currency for international transactions or even everywhere!
I ought to point out at this stage that there are other cryptocurrencies than Bitcoin… hundreds of them! But Bitcoin was the first and it is the one that has the bulk of support.
So now you know what Bitcoin is the question is why would I want to trade in Bitcoin?
I like the concept. I believe in the technology and so I believe that it will endure. Being so new, and being decentralised and with no one in control, it means that it is volatile. It has regular, and sometimes extreme, swings in value: It is these swings that offer the opportunity for profit. If I were to trade in shares or traditional currencies, then they are much more stable and offer up less opportunity to make gains in the short term. So buying Bitcoin when it is low and selling when it is high is what I am aiming to do.
Of course, if I am careful not to over-commit, then there isn’t much risk. Looking for small but frequent gains is not likely to risk significant loss and if many small gains are made throughout the day so an overall profit is clearly possible. The key to it is the simple mantra “buy low, sell high” but low and high are relative. This means that the actual price of Bitcoin to a day trader such as this is totally irrelevant. What matters is that it goes up and down and that I can benefit from the swings in price.
So that is what I am going to do. Small at first to prove the concept than when I feel happy I will ramp it up.
All of this requires me to be at my computer for much of the day to catch the highs and lows so I have come out of retirement in one arena (computers) and have drifted into another potential career as a Bitcoin day trader… how bizarre is that!