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My First Trade

I am convinced that I will remember the day that I made my first trade for the rest of my life. It may have been more impressive if I was a graduate foreign exchange trader, or if I was shorting some obscure stock that was about to plummet in value. Unfortunately, like the rest of the general population, my first trade was a buy instruction for Bitcoin.

Honestly, I was quite hesitant to write about this for several reasons. Firstly, the dialogue around cryptocurrencies is not necessarily favourable, especially in professional financial circles. People are either avid believers in blockchain and cryptocurrencies, or think they are utterly useless and reserved for anarchists. Additionally, investors who openly speak of their cryptocurrency holdings have been known to be targeted in cyber-warfare style ambush attacks, where their phone numbers are taken over by hackers and their accounts drained. Solutions to this include using programs like Google Authenticator, password generators, encrypted wallets and tiny USB-like devices with a digital code that act as your bank vault for all your coins. If you are going to invest in cryptocurrencies, you should do it right - adopt all the safeguards, be conservative with the amounts you are investing, and like anything, do not get too greedy.

My motivation for trading cryptocurrencies was largely educational. I was determined to try my hand at trading, as saw cryptocurrencies as an excellent vehicle to do so given their low (or nonexistent) brokerage costs. I bought in on the 16th January 2018 for 18,660 AUD. The very next day, the price dropped to around 15,200 AUD. I had joked with one of my crypto-mining friends weeks earlier about putting in a very low buy offer, but after having it sit unfilled at 15,500 AUD for a week, I became restless and raised my offer instead. As I type this, the current price is 11,241 AUD and rising. While I do wish I had stuck with my low ball offer, I do not believe I would have been any happier if I had bought in at 15,500 and saw the price plummet as it has done. Ultimately, my principal investment was such a small amount that I would not be phased if the price dropped to zero.

Cryptocurrencies are about more than coins and speculative trading, though. The underlying blockchain technology presents many opportunities, despite the fact that some may find it reminiscent of peer-to-peer sharing programs like Limewire. Blockchain can record every transaction and change, forever storing this data in many different locations at once. The Australian Financial Review has a great piece on blockchain technology put into simple terms. While blockchain technology is most famous for its use in cryptocurrencies, it has also been utilised by the likes of the Estonian Government in their e-Estonia program. In my own professional role, I can see how blockchain technology may be used to track changes made within client accounts. Each transaction made on behalf of a client can be recorded in a public ledger that is not restricted to the eyes of the product provider. This could be particularly useful for compliance purposes internally (and with regulators like ASIC), but may also prove popular with clients who want to have access to every transaction made on every one of their accounts (whether that be in relation to their personal investments or their superannuation) in one decentralised ledger. Imagine if blockchain technology applied to vehicles like trusts or self-managed super funds? I am sure the Australian Tax Office would have a field day! And we cannot forget the benefits that blockchain technology could offer to social security schemes like Medicare. Ah, there are too many exciting possibilities to count!

It is safe to say that my first trade has been a failure, but it is in these situations where we learn from our mistakes. I hope my second trade has a better outcome than my first.

Sincerely,

Siomi

Categorized under: Market musings