Trade Plan [EOS/USD] [04-Aug-17]

Trade Pattern

Growth/Momentum

Trade Alpha

  • Ethereum news has died and there is likely less fast money punting tokens (Bitcoin has stolen the show recently with its fork)
  • Crypto currency prices have somewhat stabilised on the whole
  • Tokens that were hot at ICO have started to go nuts again (take a look at OMG)
  • Theory is that price rallies now are majority real money
  • Buy breakouts in the best tokens

Absolute Worst Case Scenario And Worst Case Loss

Worst case loss is the entire value of the margined position (in the event of a liquidity crisis). This risk could be reduced by including more tokens in the trend following strategy, however this potentially dilutes possible alpha.

Fair Value Profit

To determine fair value during a price spike, we look to technical analysis. The 20d moving average was flat at approx 3.25 during the last spike. Current price is 1.81, so that would be an 80% gain. Approx 50k USD profit.

Tail Risks to Upside and Downside

An ongoing risk is the continuous supply of EOS tokens via the daily auction. Therefore this is not a long term trade, only short term. Tail risk to downside is a liquidity crisis if crypto assets in general become unpopular. Tail risk to upside is that the underlying product gains traction and a price spike isn’t just a spike but the start of something bigger

Contingent Action Plan

Long 50k worth of EOS now. Working a stop-limit order to buy another 15k if price breaks out above 1.85.

Key Dates To Watch

Every day check price action of all major crypto currencies. Watch for scheduled start of new EOS blockchain on Sep 30.
EOS.PNG

Review

Review of all aspects of the trade. Coming later!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s