What am I trading at the moment with the fund?
Gold and Bitcoin.
To be more exact, in comparison with the US dollar.
Firstly the yellow stuff.
It is highly liquid, meaning it has no gaps on the chart—even at the lowest measurements like the one-minute bars or 100 tick bars.
Trading over the last few weeks, gold has generally traded bullish at between $1,750 and $1,900 per ounce.
I get a good read on gold with my only ‘where am I to the broader market’ indicator: the institutional volume-weighted average price or VWAP.
Beyond that and awareness of the previous day’s price action, it’s all down to traditional technical analysis.
Is it a good idea for an intermediate to trade gold? Probably not, but if they do only on the proviso that their risk management is faultless. As with any pairing but particularly gold.
Bitcoin is a very recent trading possibility because its price fell recently by 50% from some $65,000 per coin.
Today trading in the region of $36,500, bitcoin entries are available, but pockets still need to be significant.
But let us go back one.
I am a big fan of the future of bitcoin. For many reasons but mainly:
- We can buy .00000001 of a coin (it’s available to anyone).
- It is decentralised. (Presently a perceived disadvantage that I think will become a significant advantage).
- It will top out eventually at 21 million total issues of the digital coin. (Compare this to the US dollar that seems to be never-ending printed).
- It follows fixed rules.
The distribution between competitive financial assets is namely: gold, negative yield bonds and crypto.
That amounts to some £30 trillion in market cap, with bitcoin presently taking only $1 trillion. That distribution will change and, accelerated by the economic effects of the pandemic, relatively quickly.
But I get away from the intraday considerations.
Bitcoin characteristics are similar to any other highly liquid asset during the London and New York trading sessions.
However, we avoid the New York close as some significant gapped price changes at this time have occurred.
Moreover, the margin required on bitcoin is significant, which is on a so-called professional 1:500 leveraged account.
And within that large margin, sensibly, it needs to be a low percentage of one’s overall account.
So not a realistic consideration to most retail traders.
Other than that, as with gold, bitcoin seems to be represented suitably by the VWAP indicator—but it is early days to determine the VWAPS overall utility in this instance.