Market Opportunities Always Exist - Aggregate Trading
The best overall strategy in my opinion (thus obviously not any type of advice) for investing is to dollar cost average and hold for a long time. With that being said, there are gains being created every day through a myriad of different types of trades.
Perhaps the ideal way to participate in the markets is some type of happy medium between the volume of times you are investing short term and investing long term. Perhaps that is a recipe for disaster, especially for those who aren't performing technical analysis and doing other charting methods.
Despite this, I watched an awesome video that highlighted the early trading strategy of Sam Bankman-Fried, the founder of the FTX crypto exchange. In this video, he basically admitted that he did not need any type of training or knowledge of the markets at all beyond a price display.
Sam did what is called aggregate trading. He essentially looked at the price of Bitcoin on an American exchange and compared it to an exchange on the other side of the world, say Japan. He would notice discrepancies often between the two prices that could end up being rather significant, he claims he saw upwards of a 10% spread at some times.
Well all he would do is buy Bitcoin where he could get more sats for one price, sell it on the more profitable exchange and pocket the difference (the spread) each time. Now this isn't to say this spread would always exist or be significant enough that it was worth paying transfer fees, but it certainly did exist enough times to make him a millionaire. The trick it seems is to have enough capital that the fees become an expense to your profits rather than an expense that makes the trade unprofitable altogether.
Now, this trading strategy is further hindered by taxes and the fact that the government now has access to every transaction you make on your centralized exchange accounts, but theoretically it is a great way to pocket money on spreads because the price of the asset is not important. The only thing that is important in that case is the difference in price between the asset on different exchanges. It doesn't matter if it is $100,000 BTC to $99,000 BTC or if it is $10 BTC to $9.90 BTC, it is still a 1% spread.
There are dozens of ways to tackle discrepancies and weaknesses in the markets in the short term, but you'll need to make sure you are doing your due-dillegence before yolo'ing into a trade. Just something to think about here.
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My name is Rob and I am a prospective law student with interests in cryptocurrency and blockchain. I have enjoyed my time thus far engaging with Web 3.0 and am looking to continue learning more and sharing what I learn through my experience
