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Flipping HBD:HIVE - Heres how I do it

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Hoosie
@hoosie
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I have been successfully flipping HBD and HIVE in small amounts to turn a small profit, and have been asked how I do it, so here goes.

Warning:

  • This can loose you money,
  • It can be easy to loose track of your trades,
  • Its easy to make a mistake when setting up a buy or sell order,
  • The price can make a significant shift that is not in your favour,
  • This can loose you money (yes, thats correct - said it twice).

Rule 1 - read the warnings again, and only proceed if you are confident. I'm only telling you what I do - you make your own choices and are responsible for them.

The idea

  • When the price of HIVE is low, selling HBD for HIVE can net you a good amount of HIVE,
  • When the price of HIVE is high, selling your HIVE for HBD can net you a good amount of HBD,
  • You can flip between these positions waiting for the price to rise then sell, and wait for it to fall again, and sell back.

[Credit: HIVE:HBD price graph over the last week from HiveHub.dev within an hour of making this post]

In the graph above there is a nice variation in the price of HIVE over the week. Thats what we are aiming to take advantage of. However, you could also take advantage of any variation over the week - there are clear periods where it has gone up and down in a short period of time all through the week - these are opportunities.

Here is a the same graph with some of the opportunities marked out:

Example - using the graph above - throughout we will assume that HBD is securely pegged to $1 - each number below corresponds with the numbers on the graph.

  1. At the start the week the price of Hive is $0.353, if I have 10 HBD, I could sell it at that price and get 28.32 HIVE. However, if I thought the price of HIVE was going to drop - I could instead set a sell order to sell it at a lower price, and get even more hive.
  2. As can be seen the price dropped to $0.329. If I instead sold my 10 HBD here, I would have gained 30.39 HIVE - an increase of 2.07 HIVE compared to selling it at point 1. That would be trade 1 - lets now assume we've done that, so now we have 30.39 HIVE. We now set a new sell order at a higher price to sell that HIVE back for HBD.
  3. At point 3, the price is $0.358. If we sell our 30.29 HIVE, we would now get 10.84 HBD - thats trade 2 and compared to our starting point of 10 HBD, we have gained 0.84 HBD - we are in profit !
  4. At point 4, the price is $0.337. If we sell our 10.84 HBD there, we will get 32.17 HIVE - thats trade 3 - and we now have 1.77 HIVE more than we had at trade 2.
  5. At point 5, the price of HIVE is $0.419. If we sell our 32.17 HIVE there, we will get 13.48 HBD - thats trade 5 - we now have 3.48 HBD more than we started with.
  6. At point 6, the price has dropped again to $0.384, so we want to sell our 13.48 HBD, and this time we get 35.10 HIVE - thats trade 6, and another profit.

So on each flip we made a small gain - we reinvested it all into the next flip, and so are compounding the gains, and growing our trading pot each time. The key point is, you want to the price to go down to sell HBD, and you want the price to rise to sell HIVE.

Now the example above is a bit hypothetical because I've written it as if we knew exactly what the price was going to do at each point in time - wouldn't that be great !

Reality

You dont know what the price is going to do, so you have to do some research, and then make your best guess as to which way the price will go. And no matter what anyone says, it is a guess - it cant really be predicted. With research you can make educated guesses, but thats about it, and you definitely wont get those right every time (or nearly every time)

So heres what to do:

  1. Do your research and make your guess - up or down,
  2. Plan your selling price - if up, you are selling HIVE for HBD, if down, you are selling HBD for HIVE. I do it by percentages, eg, on my next trade I want to make 5% - so simply calculate what a 5% change on the current price would be,
  3. Set your sell order, so its ready to go. I'll show you how this is done below.
  4. Sit back and wait for the price to change and hopefully for your sell order to go through,
  5. Once your order goes through then plan your next trade, which is your flip which will be in the opposite directoin,
  6. Repeat until you have enough money to buy a lambo !

I dont just have one pot of funds that I'm doing this with I have a heap that are set at different prices (to earn different percentage gains) - both up and down, so no matter which way the price goes I should make a trade, and hence make a profit. They key is to treat each pot as if it is its one thing, and dont worry about whats happening with the others - just keep flipping the ones that go through each time to make another gain.

Also the key for me is setting up the buy/sell orders in advance, so that you dont have to be online for when a pump or dump happens - your orders are already in place - so go to sleep and wake up a little bit richer.

Plus that means you are not trying to time the market. All the advice I see says dont try to time the market. Instead do you r maths set up your buy order and just let it happen . Yes, if you knew what was going to happen to the price, you could have made more money, but we dont know so forget about that.

You've probably all read about the nice pumps and dumps that keep on happening in HIVE and HBD. I havent missed a single one since around August last year - I've always had my trades set up waiting, and when they kicked in - I made a profit, and some of those profits were quite nice.

How to set up your buy and sell orders

I use HIVE wallet - because its easy - there are other options.

[Credit - HIVE Wallet within an hour of posting]

Above is a screen print of Hive Wallet, and I've set up two pretend orders:

  • The HIVE price is around $0.399,
  • On the left side of the screen (buy Hive) you can sell HBD to buy hive (when the price of HIVE is low). I have set up an order to sell 10 HBD at a lower price of $0.379 (around 5% lower) which will give 26.386 HIVE - if the price drops, the order will go through. Because you have set up the order, it will automatically happen if the price point is hit and there are enough people in the marking buying HBD (there always seems to be - atleast in the volumes I trade in),
  • On the right side of the screen (sell hive) you can sell hive to buy HBD (when the price of HIVE is high). I have set up an order to sell 25 HIVE at a higher price of $0.419 (around 5% higher) which will give 10.475 HBD - if the price of hive increases, the order will go through when it reaches the price point.

Its as simple as that - set your orders and sit back and wait.

Track your trades and pick your percentage points wisely

So hopefully that explains it all. Its a little complicated and the key is to keep track of your trades. I use a spreadsheet to log them all, and to also calculate the next sell price based on a percentage increase that I want to get. So when a sell/buy order goes through, I can simply set my next flip straight away based on what percentage I want to gain.

Picking percentages is difficult. If you set them too high, then you will wait a long time for your order to go through, and if you set them too low, and you wont make much money.

The majority of mine are in the region of say 3.5% to 8% - and I change them depending on what I think the market is going to do. So at the moment, I think the market in on a general up trend, although with a low gradient, so I'm setting my HIVE sell points at 6% up, and my HBD sell points at 3% down, so that my trading pots will move up gradually over time, along with the direction of the market.

And here some info on percentage points:

  • At 1% gain per flip, you need to make 70 flips to double your initial stake,
  • At 3% gain per flip, you need 24 flips to double your initial stake,
  • At 5% per flip, you need 15 flips to double your initial stake,
  • At 10% per flip, you need 8 flips to double your initial stake.

Also its worth noting that if a trade sits for too long without going through, it will time out after a month or so, and you will have to set it up again - so you will have to keep a check on that. But dont worry, you dont loose anything, you just get your cash back when it times out, and you just have to reset it again.

So what happens if the price shifts big time and not in your favour

For me the beauty of the HIVE:HBD relationship is that there is always an exit strategy.

Lets say I had some HBD in an order at $0.30 waiting to go through, and I will only make a profit at that price. Lets now say the price goes to $3 and will never go back to $0.30 (heres hoping !). Easy I just cancel the trade, I get my HBD back, and instead I simply put it into savings. I havent lost anything, but the opportunity is gone, and I dont want to sell it at a loss, so I'll just dump it into savings and collect 20% APR - I'm still winning !

And if its the opposite, with a high HIVE sell order that is never going to go through. Just do the same, cancel the order, power up the HIVE and enjoy better curation rewards - still winning.

Summary

  • Variation in the market prices provides the opportunity to make profit from flipping between HBD and HIVE,
  • HIVE and HBD have a very unique relationship because HBD savings and HIVE curation earnings, provide an exit strategy if things dont quite go right,
  • Because HBD should always be at peg or return to peg, you can predict its price, and are then just working on a variation with the price of HIVE,
  • It can get difficult to track things and which way you should be flipping and selling/buying - so watch out for that. I did get it wrong once and lost a little because of it. However, thats another beauty of setting your trades in advance - they dont go through at the time you set them up, and if you get it wrong, you can simply cancel the buy/sell order, and then set it correctly again- so always calculate your sell point, and what that should give you and then check that it matches your order,
  • Pick your percentages wisely - there is no point in having 100HBD sitting there not earning 20% APR because you set up a trade to make 10000% which will never happen !,
  • By setting up orders in advance you dont have to be around at the time that the price changes, the order will automatically go through for you - which is fantastic when a pump or dump happens,
  • Set a range of orders up and down with a range of profit margins, then that way you should always get something each week, and treat each one as its own trading pot of money, and when each one goes through, set the next flip ready to make another profit,
  • Remember you can loose money doing this, especially if you get mixed up and start setting things wrongly - so proceed with caution at your own risk.

Best of luck.

Posted Using LeoFinance Beta