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1  Economy / Speculation / Mastering Fear on: January 14, 2015, 08:34:56 PM
Fear is a powerful emotion. It is an evolutionary holdover from thousands of years ago when it was a necessary trait to survive. Have to run from a large cat? Yeah, that fear is going to get the adrenaline pumping and make you run faster and farther. Although technology has changed society, it hasn't changed humans very much. The same fears remain, sometimes brushed aside or ignored, but always there, waiting. Professional traders are well aware of this fact and through years of mastering and manipulating fear in others (and because of fierce competition within their own industry) have gained an edge over the non-educated investor. To understand how they do this will give you a greater understanding of how the markets generally work.

Fear of loss

During bear markets, there comes a point where investors can't stand the thought of further loss. This is fear. Fear of loss. Fear of being wrong. Fear of having to explain to your friends and family why the investment you made lost so much money. It results in a selling climax that accelerates and gains momentum. Soon panic selling ensues (usually near the bottom) then rebounds like a basketball. If the volume is great enough it can even change the trend from bear to bull. This happens every time, in every market throughout history. Why is that? Why doesn't the price continue to fall? The answer is that investors, having waited on the sidelines for attractive prices, stop the selling. If they didn't, the price would fall forever. The buyers of these climactic selloffs are obviously bullish on the price or they wouldn't be buying. They plan to sell back at higher prices.

Fear of missing out

The second fear is the cause of greed and jealousy. It is fear of missing out. Say your neighbor or friend got rich with a certain stock. Certainly this gives you a strong temptation to buy the same stock and profit for yourself as you are jealous and seek to improve your financial position. It's no different with Bitcoin. Having accumulated coins (or stock, it works the same way), the same investors who bought all the extra supply at wholesale prices are now holding. The selling is slowly stopped as those who are tempted to sell eventually give in and leveraged positions are covered. Once this happens, the price will have a fairly easy time going up (with a little help of course). Suddenly sentiment changes, prices soar upwards and good news abounds. Fortunes are being made. As the price shoots up, suddenly those on the sidelines begin to feel fear again: Fear of missing out. They buy back in. At some point, the fear of missing out on profit becomes too great and "the herd" panic buys, usually near the top at the point of greatest euphoria. This gives the investors a perfect opportunity to sell to "the herd" at higher prices. As the stock is distributed to the new buyers, supply floods the market in greater quantities and the price tanks. This is called a buying climax and works in opposite to a selling climax.

Having identified both fears, it's fairly easy to see how they are manipulated for profit. Bad news often accompanies bear markets for the same reason good news accompanies bull markets. They are often timed this way to maximize profits for investors. During bull markets, investors can call their friends at CNBC and unwittingly the anchors and news outlets become stock pumpers. They don't know any better, but the smart money does. Why did good news about the dollar come out recently? Because it's at the top of a bull run and those who accumulated months ago need plenty of buy orders to sell into. Good news almost always accompanies market tops to tempt "the herd" into buying through fear. Now do you understand, on this forum and others, why there are so many negative trolls during bear markets and positive trolls during bull markets? They are not there to be your friend, that's for sure!

To test this theory, look at stocks that are being "pumped" on mainstream news outlets. Note the price and return a few months later--likely it will be lower. A good example is the dollar which has been in a steady uptrend for quite some time. Check out recent news, like this gem: http://www.wsj.com/articles/dont-buck-the-dollar-trend-heard-on-the-street-1421189831. There is a chart with the words "Fly Like an Eagle." Are large investors stockpiling dollars at this price? Probably not, but they need someone to sell to, and they know the dumb-dumb public will fall for this. Understanding how this process works, again and again, and how the herd falls for it again and again, is key to understanding how markets operate.
 
2  Economy / Speculation / How a bull market begins on: January 02, 2015, 10:13:26 PM
Gentlemen. At its most basic level, the market is a mechanism for discovering price based on supply and demand.

During a bear market, when supply is in control, the price falls day after day, week after week as bagholders cannot stand their losses any longer and sell. We call these actors weak hands. They may have bought at too high of a price or are simply manipulated into selling. They are on the wrong side of the market. As the selling reaches critical mass, the price plunges strongly downward and panic ensues. This is called a selling climax and is accompanied by very high volume and bad news.

Sound familiar? We had one recently. At some point, smart money steps in and begins buying enough to stop the selling climax from progressing further. If they didn't, the price would fall even more. These buyers are generally strong hands--smart investors, professional traders or those who sold at higher prices. They are on the right side of the market. They are not necessarily working together in conspiracy, rather they are professionals who know how the game is played. When the price rebounds up, a huge number of coins have exchanged hands and the majority of weak hands have left the market.

What follows is an accumulation phase, where supply and demand are now in relative harmony. The climactic low and first reaction high define this trading range. The market now moves sideways, having found a low point for the smart money to fill their coffers. Why are they buying? Because they expect to sell at a higher price. If it is true accumulation, volume will expand near the top of the range and contract near the bottom. There will be shakeouts, preferably on low volume, as this is an easy way to test the market for supply. Remember, the smart money all know how the game is played and will accumulate slowly and stealthily as to not raise the price. They are well aware traders are driven by fear and will capitalize on this fact. They may sell parts of their stash to test the market, but the net effect will be more buying than selling. This phase can drag on for months as the last bit of available supply is squeezed from the market. Toward the end, selling volume is almost nonexistent and the price drifts up on very little effort.

Why does the smart money have to absorb so many coins? It is simple: A bull market is what it is because there is no significant selling to stop the price rise. If the smart money is bullish for the future, they need to allow for the higher prices at which they intend to sell. This price increase happens rather quickly to catch stops, squeeze shorts and discourage selling. Eventually, as the market approaches new highs, more buyers will be drawn in who will become the weak hands for the next cycle. The news will certainly be positive and bullish. The smart money is now capitalizing on another fear: The fear of missing out!

This is how and why a bull market begins. Supply must be removed for demand to take over. Now you understand why a powerful bear market is a prerequisite. And the more coins that have exchanged hands, the more significant it will be.

Since the selling climax in October, volume has fallen off sharply. There is no supply to go lower and price is drifting up on almost no effort. Dumps that used to scare the market into selling are quickly absorbed. Signs of accumulation are all around.

The question is: Are you on the right side of the market, or the wrong side?
3  Economy / Speculation / The Manbearwhale Conspiracy on: October 02, 2014, 11:13:27 PM
Those of us who have watched the ticker tape recently have probably noticed something a little odd, however not unprecedented in Bitcoin's history. We look on with raised eyebrows as the orderbook is filled with coins on the sell side while large market orders wipe out existing buy orders, driving the price downward. In the past, large buy and sell orders have dominated digital currency markets and are a well-known manipulation tactic. We won't get into that too deeply here, but rest assured it does exist and saavy (and not-so-saavy) traders often use them to their advantage. Not only do large walls tip the scale of supply and demand in the trader's favor, but they act as psychological manipulation as well: Buyers who see a BTC1000+ sell wall at the top of the orderbook will not believe the price will go up; furthermore they will feel powerless to do anything about it as that trader obviously has a larger bankroll. On the other hand, this manipulation puts a portion of the trader's coins at risk while revealing their tactics to the observant competition. It is a two-way street.

Market manipulation in traditional markets occurs by the big players. Here, Jim Cramer, former Goldman Sach's employee, admits to this (http://www.youtube.com/watch?v=gMShFx5rThI). For a short primer on manipulation in the digital currency markets, one needs to look no further than The Book of Wolong (http://pastebin.com/cqM71kes), written by an experienced trader who was responsible for the original Dogecoin pump and subsequent dump. Anyone who has traded altcoins has seen this playbook in action time and time again. Riding the coattails of these deep-pocketed traders and exiting trades before they do is rule number one. Knowing this, suggesting that manipulation is part of normal market activity is incorrect in many cases, especially with small market cap coins that have low liquidity and no real-world use. Trading altcoins, although highly risky, is useful for those who are curious about some of the greedier, nefarious players in these markets and what tactics they employ.

Bitcoin is more resistant to manipulation than altcoins due to its higher market cap, but experienced traders know that it does occur from time to time. With this in mind, we can focus again on the topic at hand. Who is the mysterious player that has pushed the market down recently? Unfortunately we will probably never know for certain. Whether it's one trader with deep pockets, a miner cashing out, a group of investors accumulating cheap coins on a private IRC channel, or simply an early adopter cashing out to buy a Porsche to impress his girlfriend, his actions on the market have been effective enough to raise the eyebrows of more than a few and cause further investigation.

What is certain is the story that their activity tells on the ticker tape. Here's what I have noticed so far on Bitstamp.

  • The player sells at major technical and psychological support levels (400, 380, 375, 360)
  • The initial sign that he is working is a large market sell, in the neighborhood of BTC500-800. Sometimes they are split up into smaller orders, but they tend to occur within seconds of each other. This snaps up all of the buy orders immediately below the market price.
  • Some time later come smaller market sells, on average 10 times less than the original market sells. These increase sell pressure and are intended to fool traders that a downtrend is imminent.
  • Smaller traders eventually join in, effectively pushing the price down further.
  • No evidence of buying or microbuying once the price evens out lower. He may be doing this on another exchange or OTC.

I've also noticed that when the price gets to a certain level, additional sales happen almost simultaneously. I saw this when the price level broke 370--instantly hundreds more coins were sold in two separate orders to push down further. Here's my half-baked theory: Either this player has one helluva trigger finger or he is using a bot. As someone with experience running algorithmic traders, the repeated strategy, "random" size of orders, and speed at which they are executed suggest that it is very possible. Just program it to wait for certain conditions in the orderbook, sell random amount x between z and y based on market price, wait a while, then sell x/10 as long as the price continues to drop. Give it a huge bankroll and let it go. The bot controller could analyze the market and set desired resistance levels for it to break while simultaneously shorting the market on other exchanges.

I am not one to believe conspiracy theories. This could be me overthinking in what is essentially a powerful bear market. I am one, however, to obsess about things that interest me, watch closely and gather evidence. I consider myself an honest and moral person. In an unregulated market I believe manipulation tactics should be called out and profited from. There is no doubt in my mind traders will figure out how to profit from whatever or whoever is causing this downward pressure on the market until this player becomes unprofitable. I have seen evidence of this already, indicating that those who can be fooled by this activity, have been. One thing is for sure, that another larger player is always off stage left, waiting patiently for his entrance.
4  Economy / Speculation / Technical Analysis for Dummies on: August 11, 2014, 10:17:12 PM
The misunderstanding and hating on Technical Analysis, lovingly referred to as TA, is incredible. People just don't get it. It's based on three things:

1. Market action discounts everything.
2. Prices move in trends.
3. History repeats itself.


1. Market action discounts everything. Unless you get this, then you won't understand much about TA except that it's simply lines on a chart. It means everything that can be reflected in the market, IS reflected in the market. Thousands of market participants all over the world, each buying/selling for different reasons, reading the news, responding to FUD, trading on insider information, etc etc etc, affecting supply and demand thus moving the price around. In this way (the fundamentals of the asset being reflected in the price) Technical Analysis includes Fundamental Analysis by default. Ever see the market start to move inexplicably before big news comes out? This is because of this rule. If you can catch this move using TA, then it gives you a leg up over those who rely solely on fundamentals. Of course the technical analyst should be cognizant of both, especially in such dynamic markets as digital currency.

2. Prices move in trends. If you're dubious of rule #1 and don't understand this rule, there's no point in reading any further. The purpose of chart-reading and applying technical indicators is to PREDICT TRENDS. That means identifying when they start, how long they may last, and when they might end. A trend that is set in motion is likely to stay in motion until it reverses. The trend is your friend until the bend at the end. As a profitable trader, you should always be on the correct side of the trend. Proper chart analysis can give excellent clues to when old trends will end and new ones are likely to begin.

3. History repeats itself. Part of what we're doing with TA is studying human psychology. Who is the person behind the keyboard? What is he thinking? Is he bearish or bullish? Trading the markets is certainly an emotional event and that is reflected in the price/volume action. Is the volume on a most recent move high or low? Are there more sellers than buyers after a particular event? Did we fail to break a price ceiling multiple times on decreasing volume, indicating more bears than bulls? These are the questions analysts ask themselves. They don't look for pretty pictures, they look for patterns that reflect human psychology that have worked in the past and are likely to work in the future.

There it is. Hopefully this sheds some light for those who are doubtful. The thing is, TA doesn't promise anything except a better understanding of how markets work. And it's all subjective. It's up to the analyst to create a strategy that is right at least 51% of the time and includes proper risk and money management.
5  Economy / Computer hardware / WTS: Corsair HX1000 PSU on: February 14, 2014, 12:52:02 AM
Hi guys, I've got a Corsair HX1000 for sale. It was used to power my watercooled mining rig for a few months.

The HX1000 is unique in the Corsair line as it's actually a dual 750w unit, being identical to the Thermaltake Toughpower series 1500w (see here). I have personally run this 24/7 at 1300w for over a month with no problems. A few times I took it to 1450w before I undervolted my cards, so I can personally attest to this PSU's hidden greatness Cool

Unit comes with original box and cables, and I'll even throw in a 2-foot 14AWG power cord. I'll have pictures of the actual unit up tomorrow if anyone wants to see it.

Asking $100 equivalent in BTC plus shipping. Escrow accepted of course, but I have solid feedback if you want a quick transaction.


6  Economy / Computer hardware / [WTS] LEPA G1600 PSU on: October 22, 2013, 10:44:35 PM
I have the granddaddy of power supplies here, the Lepa G1600.

Brand new, never used, all original packaging and accessories included. I was going to use it for a mining project, but alas it will find a better home elsewhere. A 20 amp circuit is recommended if you're going to drive this baby hard, but for a lesser project it will give you plenty of overhead.

Asking $230USD with free Priority shipping within the US. International customers PM me for quote. Preferred payment method is BTC.

My feedback is positive (I just sold a bunch of asic chips to marto74 without escrow), however buyer can use it if desired. PM me with questions.

Cheers!


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