Sep 5th, 2020: Cryptocurrency is wildly volatile and this makes a lot of people hesitant to accept it as a payment form. A lot can be done to temper that volatility — you don’t have to sit idly by while bitcoin vacillates between sub-$5,400 to over $12,400, as it has these past six months.
GETTING STARTED: HOW TO GET, KEEP AND NEVER LOSE YOUR Bitcoin
Skip down to the next heading if you already own and understand how to send/receive bitcoin.
All of these topics will be covered later with pictographic tutorials so you can visually follow through. For now and in brief: If you do not yet have any bitcoin, start with an easy way to never lose them and generate a 12-word “mnemonic” recovery phrase. This saves you from having to write down and store a single, long bitcoin private key — they’re easy to lose or confuse, doing either means you’re locked out of your wallet. Note: the phrase you generate on that page is done in your browser, so neither I nor anyone can intercept it. Meaning: it’s a safe way to start.
So when you first set up a wallet such as exodus.io or any modern wallet, choose to “restore from backup phrase” and enter the 12-word phrase you generated. Keep that phrase, never share or lose it, and you can always “restore” your wallet if you lose your phone, laptop or computer.
That done, you’ll want to purchase bitcoin, which we’ll go over in another post, but can be done via many services, a few being: coinbase.com, kraken.com or CashApp. You can also purchase cryptocurrencies from people like me that mine them directly. More on that, too, later.
After you purchase bitcoin — and there’s usually a frustrating, couple-week waiting period — transfer your coins into your Exodus wallet. In Exodus, choose “bitcoin” from the home screen, click on “receive” and send from your exchange to your private wallet. Always send all new incoming bitcoin to your Exodus wallet — it generates a new address for every transaction, meaning the world can’t see the totality of your holdings. It’s a privacy thing. You don’t let your bank account balance hang out there for all to see, do you? This is why you want to use a wallet that generates a new address every time you use it.
Now that you have your bitcoin, open an account on okex.com and be sure to set up “2fa” or two-factor authentication. It’s easy with Google’s Authenticator app — don’t ever skimp on security with exchanges! Use all available tools. I’ve managed to lose substantial value in coins via exchange hacks over the years — google “Mt.gox, BTC-C and/or Cryptopia” exchanges. If those stories make you fearful of leaving all your assets on an exhange: good, you should be.
HOW TO HEDGE AGAINST VOLATILITY WITH CONDITIONAL ORDERS
Once all that is done, the hard part is over. In OKex.com see the next three pictures:
- Select the upper right “Assets” drop-down and choose “Deposit”.
- Select bitcoin, click “continue”.
- Copy your address — or use the QR code with a BitPay-style wallet with scanner — and send from your wallet into okex.com.
Use the default settings for the fees — don’t try and save a buck or two or your transaction can get “stuck” for days before it barfs back to your wallet.
The rest is easy. Transfer the money into your “spot” account on okex.com, from the top menu bar under “Trade” choose the “Spot” market. On the left you’ll see the first-most column starts with “USDT USD$ CRYPTO”, choose the USDT. This stands for “US Dollar, Tether” which is a, you guessed it, peg in value to $1 US dollar. Meaning, if bitcoin is $10,000 dollars, and you exchange 1.0 bitcoin for USDT, you’ll get 10,000 of the latter. If bitcoin drops to $5,000, you can use your 10,000 USDT to buy back 2.0 bitcoin.
Here’s where the magic comes in: You can do a conditional stop-loss/take-profit order. With this type of order, you can automatically sell if bitcoin goes up to a certain amount you’re hoping for, but also automatically sell if it drops to a low value you’re dreading. Execution of either order will cancel the opposing one.
Expand the picture below and you’ll see I’ve chosen, in red, to “Sell BTC”, the TP Trigger is the “take profit trigger” or price I’m hoping it’ll hit soon, which I set to $12,000. I set the “”TP Order Price” at “market” and not fixed at 12,100 in case it’s skyrocketing quickly and goes up more before the order executes — it’ll take the highest available market price to sell.
Below that I’ve set the “SL Trigger Price” of the price I’m dreading it doesn’t drop below (indicating a huge crash) to $9,400 and again set the “SL Order Price” to market. Cryptocurrencies can crash very, very quickly if someone is selling a lot of them in bulk. Setting the stop-loss price and sell “order” price at $9,400 means it can drop far below the sell price before the order is able to execute. Thus, I set the sell price to “market”.
After that, click the bright red “Sell BTC” button and the order will queue up and wait for either price to trigger.
As long as OK Exchange isn’t hacked, it’s a set-and-forget way to keep from loosing your shirt while also automatically taking some nice profits if there’s a spike.
Of course in my crazy life, the huge amount of money I lost in the cryptopia.com hack turned out to be one of the best events of my life. I met “Nikki Jonesing” that evening…