42 = 42 Bitcoins
TF = TradeFortress

Something along the lines of 42.  TF had previously agreed to put up some insurance money in the form of an investment that couldn't be touched.  Doog got the coins back from there.

I think the site needs improvement. Investors might help with that. But instead of doing it the way we do it now, whoever shouts loudest on the forum or in the chat, why not let them actually vote on an issue. Weighted by their investement (and time), like I said.

Totally agree on that. I would add also a little disclaimer in red explaining what variance is.

Thanks for this answer. It gave me some insight why someone like you (highly intelligent and rational) could make such an irrational decision. Try not to care about the ups and downs of the bankroll and if you can't help yourself from caring, don't watch. It's like managing a stock portfolio and selling a stock because it is down ....

Variance can get to the best of us

I like a divestment fee and it should only kick in if you divest more than once every 10 days. 

Can we all agree that if the server seeds are compromised or (hypothetically) Dooglus is double-timing the investors (I'm not suggesting this is the case), that no amount of edge or limited max profit will save us??? Why does this keep getting brought up?

If the server is hacked, then you need to divest, period. But there is no evidence so far that it is hacked or that nakowa knows the server seeds. He simply has a huge bankroll and can take the enormous swings. That isn't to say it's not possible.

good to see that at least one is trying to think in a game theory way. and yes doog mentioned the  problem himself a few times. and I am wondering why it is not discussed here how to find a 100% way to secure also the operator and investors in a provably fair way. I just dont get it. we are talking about millions of $$$ at risk. I could in my simple words explain how I would like to see it and if it is possible why the OP and investors wouldnt like to implement it. until now they even didnt care to discuss it. I am not a genius I am just realistic and think one has to be open minded and see all possibilities.

please dont shoot me

FUD is growing: http://www.reddit.com/r/Bitcoin/comments/1nidbv/statisticsjustdice_scam_investigation_conclusion/

Care to elaborate on that?

My proposal was as follows:

rule 1: for each account, if 'divest' action within last hour, block 'invest' action.

rule 2: for each account deposit, if account deposit age < 1 hour, block 'invest' action.

A lot of the discussion about investment daytrading daygambling misses the point:

It doesn't matter if investment daytrading is long-term -EV or not (as I said before, if the site is compromised it could be +EV, because then the bets aren't random either anymor), but the real point is this:

What's the point of allowing investments in the site to be another form of gambling, when there already *is* a way to gamble if you want to do so?

Right now, a number of investors lost more than their share of the house loss because of this trading. It makes them unhappy.

So the only relevant question, in my opinion is:

Is a majority of investors in favor of daytrading (because they like to do so themselves)

or

Is a majority of investors against daytrading (because they suffered additional losses because of it)

(yes, there could be a third, indifferent group, but I'm simplifying here)

I propose we find out what the majority of investors think about this, and then bring the issue to dooglus for consideration.

As I've said before, I'm in favor of limiting investment daytrading: introduce a one hour (or so) delay to re-investing after divesting (and add additional measure to reduce the risk of circumvention via multiple accounts). The goal is not to reduce daygambling to 0%, but to limit it.

HOWEVER!!!

Watching yesterday's ridiculous action and reading the comment above from eltopo (There is no regression to the mean. If we're at +5000, we can go to +10000 as likely as to 0.) have made me realize something: while that statement is true, there is a way you can successfully daytrade because while you do not know future rolls, there is some publicly available info about the future. Bear with me:

IF:

A) You know nokawa follows a random walk, up and down, betting close to max bet, until he loses his entire last deposit OR he makes X BTC (for example, yesterday it was 2k + making up for his previous losses, so 5k)
B) You can see what his balance is (people seem to be able to do this, not sure how)
C) You can see when he is depositing again
D) All other betting going on is relatively so small that we can safely ignore it.

THEN:

A strategy where you divest when he is near losing his last deposit and invest when he is near reaching his goal, then you can make the decision to daytrade EV+ with respect to passive investing. This is because when he is near losing his entire deposit, you only stand to gain very little from him losing it all, and a lot to gain if he doesn't; similarly, when he is near his goal, you stand to lose little if he reaches his goal as compared to how much you stand to gain if he dips back down toward losing his latest deposit. Finally, because (somehow) people know how much his balance is and they see when he has incoming deposits, even if you divest and he loses another, say, 500BTC and loses his deposit, there will be a break while he reloads, so you can invest again and start a new "session".

The point is, like dooglus said, the downside to daytrading is that you might miss a huge 30k slide by nakowa at any point. But the problem with this is that you WON'T miss it (if you're paying attention and day trading), because you'll see nakowa lose his whole balance and then see the new deposit coming.


Does this make sense? So, this would push me toward being anti-daytrading being permitted, but so far I haven't heard any effective methods for preventing it given that you can open unlimited accounts.

Trolling? What part of what I wrote makes you think I'm trolling? I was just thinking out loud, playing devils advocate on the daytrading thing (I made it clear at the beginning of my post). And what does, "I cannot see why everyone here would blame a martingale 1,2,4,8" mean?

The "big investor" is Nakowa, the whole 12k belong to him. I just read the chat logs, he seems to be past his delusion. He is said aprox. 1 hour ago he just realized that there is no flaw in the site, is just that the 1% house edge is so small that he can create huge variance and end up ahead in the short term by playing with his enormous bankroll... And he also said he realized that if he keeps playing forever he will lose it everything.

This said, I also checked the thread about statistical analysis of Satoshi Dice, precisely by Dooglus. Even with a 1.9% house edge, there were months that the site lost quite a lot of money... I'm now wondering how many billion bets we will need for the 1% edge to do its thing and thus investors to profit.

Again my losses grow and my break even point increases in relation to the house profit... Yesterday at this exact point in house profit my losses were lower, and BTW my share in the house roll has been diluted dramatically.

Regarding day-trading, I have been of the opinion that it is largely irrelevant from the position of the day-trader: you have no knowledge of the next rolls, so if you believe you know when wins or losses are coming, you are falling for the same good'ole gambler's fallacy. Additionally, from the perspective of passive investors, ex-ante it's irrelevant because daytraders could just as easily divest before a huge drop as they could before a huge gain.

Also, don't forget that you're likely to only be hearing from those day traders that have done well, but not from those that do poorly. I'll break the silence of the failed daytraders right here: I tried it once and divested before a HUGE nakowa 7000btc runup, and then invested and immediately took an even bigger drop. F*ck that. So it's not all sunshine and happiness in daytrade land.

HOWEVER!!!

Watching yesterday's ridiculous action and reading the comment above from eltopo (There is no regression to the mean. If we're at +5000, we can go to +10000 as likely as to 0.) have made me realize something: while that statement is true, there is a way you can successfully daytrade because while you do not know future rolls, there is some publicly available info about the future. Bear with me:

IF:

A) You know nokawa follows a random walk, up and down, betting close to max bet, until he loses his entire last deposit OR he makes X BTC (for example, yesterday it was 2k + making up for his previous losses, so 5k)
B) You can see what his balance is (people seem to be able to do this, not sure how)
C) You can see when he is depositing again
D) All other betting going on is relatively so small that we can safely ignore it.

THEN:

A strategy where you divest when he is near losing his last deposit and invest when he is near reaching his goal, then you can make the decision to daytrade EV+ with respect to passive investing. This is because when he is near losing his entire deposit, you only stand to gain very little from him losing it all, and a lot to gain if he doesn't; similarly, when he is near his goal, you stand to lose little if he reaches his goal as compared to how much you stand to gain if he dips back down toward losing his latest deposit. Finally, because (somehow) people know how much his balance is and they see when he has incoming deposits, even if you divest and he loses another, say, 500BTC and loses his deposit, there will be a break while he reloads, so you can invest again and start a new "session".

The point is, like dooglus said, the downside to daytrading is that you might miss a huge 30k slide by nakowa at any point. But the problem with this is that you WON'T miss it (if you're paying attention and day trading), because you'll see nakowa lose his whole balance and then see the new deposit coming.


Does this make sense? So, this would push me toward being anti-daytrading being permitted, but so far I haven't heard any effective methods for preventing it given that you can open unlimited accounts.

Divesting is not a fallacy.  It is a risk management strategy.  You minimize losses but you may miss out on gains.

Have you ever heard the term take profit in investing?  This is what you're doing with the divesting strategy.

You take profits that you are content with.  You might miss out on further profits.  But if the profit goes down, you'll have limited your losses.

I'm addressing that point in my post: I said, at around bet 6000, some people decided it's a "pattern" and traded accordingly.

You also noted that I said, several times in fact, that I'm aware that in the long run, investment "trading" should be -EV, right?

But that wasn't my argument anyway: in the short run, it can be +EV. So a loss like the one we suffer now isn't distributed evenly over investors. So the losing investors will be unhappy. So the site will lose investors, which is bad for everyone.

That, in a nutshell, is my argument why invest-trading hurts j-d. And the complementary argument is: there's no good reason to *want* invest-trading: j-d already has a gambling mechanism. Investments should be just that: investments.

I think the point is us the investors should think about a solution to protect our money and push for it. If I was Dooglus I'd be happy with things as they are, he can be divested and make money only on commissions on gains, and thus the risk of the small 1% edge is on the investors and not on him.

Anyhow it's obvious that if investors make more money, he will also earn more commissions on investors gains, IMO we just have to find a balance between investors being protected and players attracted to the site.

As a first step, I'd try a 1.5% edge. It looks to me that 1% is obviously not enough. I'd also consider a commission on each divestment in order to have a bankroll that is more stable and not fluctuating like crazy like yesterday.

Opinions on this?

Given that the probabilities don't change, it wouldn't make sense to invest/divest on winning/losing streaks. That's investors fallacy.

Unless for example the hash distribution is not random, or the server seed is not safe.