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Great post! Very refreshing to hear about a) the honest level of effort involved in this type of endeavor, b) the amount of nonsense trading advice out there.

Great post! Very refreshing to hear about a) the honest level of effort involved in this type of endeavor, b) the amount of nonsense trading advice out there. Maybe in a future post you could discuss the security and banking side of this in more detail? In the 6ish years I’ve played around with crypto trading (and I really mean play, nothing close to your level), I’ve had 2 exchanges hacked and lose all customer funds, another 2 had major security breaches causing days of downtime but recovered, and one site seized by the FBI. Then there are the horror stories of banks freezing your account when you move funds in and out of exchanges. Luckily That hasn’t happened to me. I bet you have some good stories and perspective on that side of it, I would love to hear it.

nov272019 7y ago
The banking side is becoming more mature, I think, as many exchanges like Coinbase provide custodial cold-storage options for institutional clients. Counter-party risk always exist. > Then there are the horror stories of banks freezing your account when you move funds in and out of exchanges. Depends on the country. What happened to me is that a bank did not freeze my account. Instead, they simply reported it to the government, and asked AML questions regarding the transfer. The government, on the other hand, wanted me to provide bookkeeping records. Otherwise, they were going to assume that every transfer coming back from cryptocurrency exchange was pure profit. Basically, I was not raided, my accounts were not frozen, but the government knows my wallet addresses (and I had to pay back 4 years worth of cryptocurrency trading profits with interest applied, which also left me realize how little I had made profit in the end).
- carlsborg 7y ago
  Why did you have to pay back trading profits with interest? Do you mean taxes on trading profits with interest*? Which country?
  - nov272019 7y ago
    Yes, taxes on the profit with interest applied. Finland. Extra warning: ensure your country allows individual cryptocurrency investors to reduct losses from winnings. Without such law, if you win 100 dollars and then lose 100 dollars, you would still owe the government taxes while you are at 0. This is the case in surprisingly many countries.
    - jtx22 7y ago
      You should have run this operation out of Dubai or a similar haven.
    - Twirrim 7y ago
      There was a "fun" post on reddit with someone that made a fortune out of bitcoins a few years ago when there was that big surge, who then managed to lose it all via some poorly thought out cryptocurrency trading. He'd found himself with an enormous capital gains tax bill he couldn't pay off. It hadn't occurred to him at all that the profits on bitcoin trading would be taxable.
traK6Dcm 7y ago
Author here. Honestly, I don't have a good answer. I spread my capital across enough exchanges so that if one runs away with it gets hacked it doesn't ruin me. It's just a risk I'm taking. I'm also not trading much capital. Because the system is more on the HFT side, the actively traded capital isn't that high, and I don't care about losing it. Any profit I try to get out of the exchanges regularly. I wouldn't feel comfortable leaving large sums on those exchanges.
- account73466 7y ago
  Apart from Binance who else you trust? (of course overall no crypto exchange can be really trusted) I assume you trade alts vs (BTC or USDT). Also, when you said "market neutral", did you mean you also short (only few pairs have margin on Binance and it appeared recently).

nov272019 7y ago

The banking side is becoming more mature, I think, as many exchanges like Coinbase provide custodial cold-storage options for institutional clients. Counter-party risk always exist. > Then there are the horror stories of banks freezing your account when you move funds in and out of exchanges. Depends on the country. What happened to me is that a bank did not freeze my account. Instead, they simply reported it to the government, and asked AML questions regarding the transfer. The government, on the other hand, wanted me to provide bookkeeping records. Otherwise, they were going to assume that every transfer coming back from cryptocurrency exchange was pure profit. Basically, I was not raided, my accounts were not frozen, but the government knows my wallet addresses (and I had to pay back 4 years worth of cryptocurrency trading profits with interest applied, which also left me realize how little I had made profit in the end).

carlsborg 7y ago
Why did you have to pay back trading profits with interest? Do you mean taxes on trading profits with interest*? Which country?
- nov272019 7y ago
  Yes, taxes on the profit with interest applied. Finland. Extra warning: ensure your country allows individual cryptocurrency investors to reduct losses from winnings. Without such law, if you win 100 dollars and then lose 100 dollars, you would still owe the government taxes while you are at 0. This is the case in surprisingly many countries.
  - jtx22 7y ago
    You should have run this operation out of Dubai or a similar haven.
  - Twirrim 7y ago
    There was a "fun" post on reddit with someone that made a fortune out of bitcoins a few years ago when there was that big surge, who then managed to lose it all via some poorly thought out cryptocurrency trading. He'd found himself with an enormous capital gains tax bill he couldn't pay off. It hadn't occurred to him at all that the profits on bitcoin trading would be taxable.

traK6Dcm 7y ago

Author here. Honestly, I don't have a good answer. I spread my capital across enough exchanges so that if one runs away with it gets hacked it doesn't ruin me. It's just a risk I'm taking. I'm also not trading much capital. Because the system is more on the HFT side, the actively traded capital isn't that high, and I don't care about losing it. Any profit I try to get out of the exchanges regularly. I wouldn't feel comfortable leaving large sums on those exchanges.

account73466 7y ago
Apart from Binance who else you trust? (of course overall no crypto exchange can be really trusted) I assume you trade alts vs (BTC or USDT). Also, when you said "market neutral", did you mean you also short (only few pairs have margin on Binance and it appeared recently).