When I first started trading crypto, I often heard the first rule of crypto trading is forget about fiat and just look at BTC value. I didn't really understand this until it bit me. So, to hopefully save someone else from heartache I thought I'd make a quick post to visually show you the difference. Not long ago, I had used up my bandwidth here on steemit and needed to wait before I could submit a post or get more steem power, so I chose the quicker route. Off to an exchange I went. I wasn't concerned with the price because I wasn't going to purchase very many steem just enough to get me over the hump and continue to grow organically and since I was basically going to use the coin and not trade it I just bought without looking for a dip or a proper buy in zone. Just for kicks and the fact it's always good to keep track of all your trades I decided to add it to my blockfolio app just so I could periodically see how I did. So lets go take a look.
WOW I'm up over 17% on one and 7 on the other, if I were trading this and as volatile as it's been lately I'd take a 17% profit and run!
But wait? am I really up 17% technically in fiat value I am ........ if I was to sell it, then immediately cash out the bitcoin I received for fiat, and that is assuming that the value of bitcoin doesn't change in the mean time. So in other words if all the stars and the moons align then yup I won.
But I'm not patting myself on the back just yet, because I remembered the first rule of trading crypto currencies the hard way so lets see how I'm doing if I apply that rule and I look at only value in btc
Holy smokes If I sold now, that same 17% profit would actually be a 27% loss and that little 7% profit would be a 33% loss!!!!
You can see how this could bite you ESPECIALLY if this were a bigger trade because let's face it, nobody really sells alts to immediately cash out their btc on a regular basis, we sell it to increase our number of BTC so we can get into another trade and continue to grow our holdings and as you can see from the second photo, selling now would decrease my buying ability for the next trade.
I hope this helps visual learners like myself and keeps you from making some of the painful mistakes I made when I first started. If you found this helpful, or think it might help someone new, please upvote and re-steem .
-Harley
