It's time to put my research and development in the back seat and just get started with what probabilities i've got, right now, in my favor. I don't have anything against US futures, stocks, indices and options, but i'm mainly interested in the relative convenience of the offshore crypto exchanges that some people refer to, derogatorily, as casinos. I'll do my best to avoid any more Scam Bankman Frauds out there, with some confidence that smart owner/operators don't have incentive to kill the goose that lays the golden egg. Thus, if an exchange is highly liquid, there is really no reason to be doing much except collect fees on trades. So, for liquidity, and for the best fees, i want to sign up with Binance, but because i come from the country-which-shall-not-be-named, i am unable to get in, unless i got hold of some fake ID. That being too much hassle right now, i get the impression that Bybit is the next best thing with liquid and fees. If anybody knows a better next-best exchange, let me know. I don't know the owner/operators very well, not nearly as well as the owner/operator of Binance. For example, i have no idea if the owners of Bybit drink Bud Light or not. But right now, i've only got enough funds on the platform to buy one six-pack of Bud Light, or two 20oz Chai Latte at my favorite coffee shop. So i don't need to know the owner/operators all that well. The plan is to keep most my funds in my own self-custody BTC wallet, and to make use of the liberal leverage available on these kinds of platforms. Ok so i'm on Bybit and am checking out the "Inverse Futures", which basically means that I'm holding my collateral in Bitcoin, rather than one of the three or four other choices, like USDT, or USDC. Interested in liquidity, i checked out the volume in the three or four other futures markets and found the USDT collateralized market to be the most liquid, with about 4.5 billion in the last 24 hours. But i would really prefer to hold BTC so i was willing to try out the Inverse market with only a half billion in volume in the past 24 hours. By the way, i'm mainly talking about the mechanics here, and whether or not my method is meeting expectations from development and research. As a rule of thumb, i should be winning 40% of the time, with a profit factor of about 1.75 due to a ratio of 2.5x unit gains per one unit lost. Given those numbers, i might be able to get away with some leverage, if i was willing to endure a possible max drawdown of 50-60%. Research and development suggests that my expected max drawdown is around 30%. This means i should not exceed 2x leverage, at least with these numbers. There may be times when i can expect a profit factor of 2.75, in which case i may be able to use up to 4x leverage. I've never been able to apply more than 6x leverage in my research an development, without a wild rollercoaster ride which eventually goes off the rails. So you can imagine how pleased i was to find Bybit offering me up to 100x leverage on the perpetual futures. But by default, the slider is positioned at 10x leverage, and if you try to go for more, a red warning message will pop up advising that you will probably fail. Ok so i turned it down to 2x leverage and applied 33% of my capital to a position. Not a market order, but either a stop or a limit. Because i am interested in capturing the deep discounts given to market makers, i was exploring my options to apply a limit order. The difference between a market "maker" and a market "taker" (Bybit futures) is .01% compared to .06%. This is huge if one's method is only producing an average gain per trade of .07%. That is all i could expect when applying my method to, lets say, five minute bars. Let's just say that the fee dictates whether it is feasible to work with five-minute bars, or whether i have to go to 15-minute bars, on up the line. At Bittrex, a US based crypto exchange where i was before, the base fee for your basic trader, even for BTC, was .35% , at least for "takers". Can't recall what makers got off hand, but it would have been imperative for me to figure out how to be a maker. This is tricky because my method is trend following, so normally i would enter on a stop which converts to a market order, trying to go in the same direction that price is perceived to be going. To be a taker, at .35%, i would have to trade on daily bars, trying to average gain 1% per trade, giving up 35% of gross profits. The question is, what is my tolerance for fees? Can i afford to give up 30% of gross profits without drastically affecting my expected max drawdown? So i'm trying to work with the shortest bars i can, while keeping my fees-to-gross-profit at 30% or less. One way around this is to work with bars that are twice as long, but instead work with two, preferably uncorrelated markets. This way i could cut down fees to 15% gross profits, but occupy the same amount of capital, and hopefully keep drawdowns under control with the portfolio effect. This journal might help to answer these questions as i earn-while-i-learn, the objective to be in the market(s) with as much capital as i dare, as confidence grows. At Bybit, right now, i don't have a problem daring to commit $15 worth of BTC, with the goal to not lose it, and to start it growing in line with the percentages my research suggests is possible. Right now it's about percentages, not dollars. If percentages can stay in line, there is more capital where that came from. Ideally, with 4x leverage, i won't even need to put in any more capital. Ok so here i am with a limit order to get into 5 BTC futures contracts if price comes down to a certain level...with 2x leverage. Apparently, each contract is worth $1 because it indicates i have an order for 5 contracts. I also notice price moving in increments of .50 cents. I want to go short. Here is where i am really pleased with the Bybit platform: I was able to set up a "conditional" order (instead of a "stop"), which first hits a "trigger" price. Once it hits that trigger price, i can invoke either a limit order, or a market order. How cool is that! So, this makes it relatively easy for me to become a market "maker" by invoking a limit order a little way away from current price (how much is optimal i don't know yet). Yes, i might miss some trades if the action is really pumping in my direction and doesn't bounce around much. This journal will note how many trades i may have missed and things like that. So as i'm sitting there watching my potential position i notice BTC jumps up .58%, or about $177 in just a few seconds. And just as fast it comes back down .36%. And here i am with my $5 potential position at 2x leverage. So i started doing some calculating and realized that my actual leverage was like {(30,000/15) x 2} = 4000x !!! Ok, if you count my capital still in my own custody, the leverage is a lot less, but it is my intention to treat my little $15 as my entire capital, which i cannot afford to lose. If i had gotten into this position, i would only have been able to withstand 15 ticks ($7.50) against me, whereas i had just seen the market move 177 x 2 = 354 ticks ( at 50 cents each), in just seconds! Somebody correct me if i'm mistaken in my calculations here. In the US regulated exchanges, you would typically not be able to even open a position without a margin of, say, 12% of the market price per contract. And you would not be able to dip below, say, a maintenance of about 10% without a "margin call". This, then, is essentially 10x leverage on the amount of capital funding the account/trade. If you have more capital stashed at home, or in a bank, then the essential leverage is even less. But here, offshore, i was able to post just 15/30,000 = .05%. I would need to post 200x more capital just to arrive at 10% of the value of One Bitcoin today. So as soon as i realized my error, i cancelled the potential position, even though it was a very cool position, and easy to move it if i was interested having it double as a trailing stop. I would rather spend the $5 on 2 But Lights. I realized that what i was really interested in was the Spot Market + Margin. It so happens that Bybit has a margin/loan program that enables spot traders to get up to 10x leverage. I am a total newb with how they work it, but there will be interest to pay on the margin loans, which may even be calculated by the hour. Of course, i don't anticipate using much more than 4x leverage (because of my potential expected drawdowns), but just for your information, here is something to remember: Spot + 10x margin is the same as Futures @ 1x leverage with 10% capital/collateral to buy one whole coin. For example, if BTC is 30,000 and you have 3,000 collaterals in the account and use 1x leverage (speaking of Bybit), you are on par with US futures brokers. And you would also be on par at Bybit if you worked with Spot given a 10x margin "loan" (with interest). Exactly how on par, i don't know because i am just now introducing myself to the small details of the Spot + Margin paradigm and will report back here when i find out more. Will i be able to work with five-minute bars? Or will i have to move up to one-hour bars? It all depends on what the fees + interest rates end up actually being. And will i even be able to go short? Stay tuned. Oh, this is my trying journal because i don't trade anything except positions, from long to short and back again. I try to invoke probabilities whenever i try to take a position. While my method is technically trend following, maybe pivot points best describes what i am trying. Each time frame has it's own pivot points. All the better if a shorter time frame bias aligns with the bias of a longer time frame, maybe 4-5x longer. Then i can get my profit factor up to maybe 2 instead of 1.75, in which case i could apply a little more leverage. I could be always in, without an official stop, and without an official target, always pivoting, intending to follow price direction, but this journal might be more about picking out spots in the probabilities where my odds might be better. I might try stops and targets within the general paradigm.