Bitcoin Forum

http://www.mediafire.com/imageview.php?quickkey=1j0o0m1qhmfdqdn

I thought it was rather clever, considering where I think price is headed.  Whaddya think?

This photo is NOT edited, BTW...

Can't see it... redirects to a login page.

ah, lame sauce.  let me fix that

goddammit, adrive.com sucks

Best Bitcoinica strategy = owning it.

Well, that option is only available to one individual right now, who may at a later date change that option.
Being a user or not are my only other options.
So, from a user's pov.

Image should appear now.  Please let me know if it doesn't.

It doesn't... still a login page.

Perhaps, might I recommend imgur.com?

My general strategy is to take an expected future value, something simple like a linear interpolation from the past week or so. When the price jumps higher sell, when it's lower buy, but only a little bit. In the inevitable situation that the price jumps again, sell/buy more. Make sure you have enough reserves to double down 3 or 4 times. If you predict it wrong 4 times in a row, well then you lose.

Cool.  What i've done is i've created two accounts; one for my main longer term position, and another for a short position to hedge on the down spikes.  You might be able to see the photo now.  Thanks for the recommendation Matthew.  Sharing an image shouldn't be this difficult.  I need sleep badly.

That's called Martingale strategy and is an absolutely certain (probability=100%) way for anyone to go bust. Read any book on trading.

Is anyone seeing a photo, like even if you click on the link in the OP ?  Just curious... it IS my thread about my AWESOME strategy I wanted to share... ::)  ;D  ;)

You should buy back in before your profit evaporates.

I would say this is gambler's strategy.

With unlimited reserves and zero trade commissions, your overall winning is guaranteed.

With limited reserves and some trade commissions, your overall losing is guaranteed.

The chance of blind predicting wrong 4 times in a row is 1/16 and you would lose the entire investment. The profit of predicting correctly after 1, 2 or 3 jumps will always be less than 1/16 of your entire investment.

So:

P=15/16 -> profit less than 1/16
P=1/16 -> lose 1

This is a short position, I bought back all but 1 at the bottom of the spike.  The idea is to keep it open so that when we spike back up, I can sell again, then buy out when we spike down again, lather rinse repeat.
I'm hoping that I understand the forced liquidation calculations enough to keep this hedging account from getting Zhoutonged.

  The profit is not really the point here; you could say I already locked in this profit by buying back in all but one.  AT least that's the way I'm understanding it right now -- I am very sleep deprived though.

Corrections are welcome, suggestions too.

Have you ever played roulette?  On a French wheel you have approximately a 48% chance of winning by betting on red/black, high/low, etc.  I have seen someone lose 10 spins in a row.  Very unlikely, but it did occur.  Imagine if they tried to Martingale their bets.  They would either run out of money really quickly, or (100% likelyhood) hit the table's bet limit.

"In the inevitable situation that the price jumps again".  Why is it inevitable?

I was making the (sarcastic) suggestion we would be passing $18 soon.  I believe your strategy is valid, although I don't see why you don't close out your position at the bottom and convert the profits to btc.

I did close it :-)
Reducing the position to one sort of "locks in" profits up to that point, then if the market surprises you you can use that last one to scrape out additional profits  ;D

A 1 BTC short position will earn you a whole 20 cents for every 20 cent price drop.  If you believe it's the bottom, why lock in your profits in USD instead of BTC?

...assuming that jumps are random independent unrelated events. But they aren't.

Looks like you found a way to game the system.

Whats the best way to rob a bank?  Own It.

first of all congrats on what looks to have been a tremendous short from $18.

i agree with notme.  if u believe we're headed back up towards $18, why not close the 1 BTC short now, then re short @ $18?

in fact, if you had closed this 1 BTC short @ $2, you would have made an additional profits by this point.

Super n00b question...When you say "close" do you mean "liquidate"?

Liquidate, or use a limit order to achieve the same.  When your position is back to zero, profits are "realized" and added to your reserve balance.

He dint short at $18 (was bitcoinica open then?), he shorted at a much lower price and the closed out all but 1BTC

The way bitcoinica works is it recalculates the base price when you add or reduce a position.

e.g. Short 2BTC at $10, bid drops to $5
bitcoinica shows: Base price $10

Buy 1BTC @ $5
bitcoinica shows: Base Price $15

e.g. from selling down a previously leveraged long position

https://i.imgur.com/SA2AD.png

If I took this down to just 1 BTC the base price would be miniscule

thanks for the clarification.

Proudhon:  notme is correct but do realize that liquidation means you'll accept any price to get out of your position even if it means a loss.  limit orders are more safe and allows you to choose at which price you want your order executed.

Thank you.  I'm going to mess around with limit orders now.

I found all my limit orders were executed in a fast moving market at much better prices than I had booked them in for which was an unexpected bonus

edit: sry actually those were some market sell orders where I noticed this

Exactly.  The idea is to keep my base price high on this account so I can have it locked & loaded when we reach the peak.

Otoh: you have no margin balance.. how did you get that position?!
edit: never mind, it's obvious now.

He must have cashed out after he opened the position, it lets you use your profit as margin

Right -- if you think the trend won't continue, or you just want to withdraw profits without closing the position, you can sell down some of your position (buy down when going short), which will lower your base price and lock in your profits.

otoh - if you sold 28 at that price your base price goes to ~$0.029

any more and it goes negative! (don't ask me, I'm just the messenger!)

sell 242 at that price and your base price will be -$1424.41
)

Yes, this is true -- I have generated negative base prices on my own positions at times.  I don't know what this would mean, if anything -- maybe if you profit from there too much, you get Zhoutonged?  ???  ;D

thanks for the tip, I may sell another 28 if when we go over $7 again just to see, then eventually limit sale the rest all as one lot as I don't have a clue what a negative base price may result in, yep originally I opened the long position after depositing 300 BTC for margin (about $1,000 att), I sent them back to Gox once there were sufficient unrealised profits to act as margin, basically it's now a play with the house's money or more exactly zhoutonged shorter's money, less $567 I paid in to cover leveraged losses from shorting with those 300 over thanksgiving in order to play round 2 with them & I do appreciate that while I was down that much Bitcoinica let it ride & didn't foreclose my 300 BTC as it was a week or 2 before I could raise that amount of $ to cover my gambling losses there

If I have the formulas right, then it means you can't get zhoutongued. Even if the price goes to $0. Your unrealised profit and loss is greater than the max possible loss you could incur.

Of course this only apple for long positions. Short positions are always at risk of zhoutonguing! :)

My understanding of a negative base price is this: you have the bitcoins in the position for free, plus bitcoins*abs(baseprice) base profit.  Therefore, your unrealized profit is this base profit plus the value of the coins.

"Of course this only apple for long positions."

apple - is that the mac auto correct, I've just got my first one & it keeps doing this, Gox it turns in to box etc

I expect as you say it wouldn't be a problem to move in to negative base price, I've put a limit sale order in for higher up the line though as until I close out the position I am still $567 down from my previous losses, though I'd be interested in any advise about why it might be advantageous to just hold it

haha yes it must be. if i miss the 's' off applies it does become apple :)

http://damnyouautocorrect.com/images/girlscout.jpg


http://damnyouautocorrect.com/13603/the-25-funniest-autocorrects-of-dyacs-first-year/

Ah home at last & I looked out of my total piece of shit & marvelled at the amazing crap to be seen there

mac auto correct for windows & vista

this still doesn't make any sense.  if u think the price is headed to say $15, you're best off buying to cover this 1 BTC short, keeping all your profits in USD until we hit $15, then re shorting from there.

My base price isn't necessarily always this high ;-)

And that's exactly the strategy, but the way Bitcoinica works, it does not require you to close the position.

I don't understand what holding the 1btc short gains you.

It's not necessarily 1btc.  But to my way of thinking (which may be flawed, but I will find out through trial and error), it is easier to keep an open position with a known base price to work with, rather than guessing where to start.  Because I am not good at tech analysis yet ;-)

first of all, if the price goes to $18, your base price for this 1btc will come down.

if you then short 100 btc @ $18, your base price will then be less than $18, when added to the base price of the 1btc.

if u close the 1btc short now, wait until the price hits $18, then short 100 btc @ $18, your base price will then be $18.

I don't think this is correct.  Base price only changes when you buy/sell.

Displayed base price you are correct

Base price when you calculate in the loss from holding short all the way up to 18, cyperdoc is correct.

if the displayed base price doesn't change, that is misleading to the acct holder and could result in miscalculations if he doesn't know this fact.

and that doesn't change the fact that he should cover now if the price does indeed go straight up to $18.

The base price changes.
And this short account IS my cover.