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Author Topic: Settle down  (Read 2807 times)
xtapol
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June 12, 2011, 12:48:24 AM
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Jesus, people. You should stay out of financial markets if you're not going to take the time to familiarize yourself with their mechanics.

This is what markets do. Markets do not go up (or down) in a straight line. This is a correction, and a necessary one. But it could go a lot lower, and you still shouldn't panic. Look at the "all data" chart on bitcoincharts.com in log scale (ALWAYS use log scale). This latest drop is barely a blip on the long-term trend, which is still VERY strongly positive.

I've been buying Bitcoins all the way up past $30 with the expectation that a correction as low as $8 was likely. Who cares? It could hit $2 without breaking its long-term uptrend, or it could go from here to $100. If you believe in the fundamentals, and you're not trying to do short-term trading, keep buying. Hell, even a test of the $1 level might be a healthy thing for the market. Corrections flush out the weak buyers, make some money for the shorts, and set the stage for the rally to go on.

But while we're on the subject, Bitcoin is a terrible market for short-term trading. Low-volume markets are nasty, and you're likely to lose your shirt. Slow down, remember that you're in the market before even the institutional investors, and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).

Buy and hold, averaging in through the peaks and valleys. That is how you make your money when you're in this early, not quick trades. Bitcoin is a long-term growth play, and a hell of a promising one at that. Any talk of a bubble is nonsense when 99% of the population either hasn't heard of it or thinks it's a joke.
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June 12, 2011, 12:55:01 AM
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Buy and hold, averaging in through the peaks and valleys. That is how you make your money when you're in this early, not quick trades. Bitcoin is a long-term growth play, and a hell of a promising one at that. Any talk of a bubble is nonsense when 99% of the population either hasn't heard of it or thinks it's a joke.

Dollar-cost averaging would probably be a good way to play this market, i.e., invest the same amount of fiat currency on a regular basis.  For example, buy $100 worth of Bitcoins each week at whatever the market value is at the time.  This way, you limit your exposure when the market is overbought and pick up extra Bitcoins when it is oversold.

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xtapol
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June 12, 2011, 12:56:52 AM
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Buy and hold, averaging in through the peaks and valleys. That is how you make your money when you're in this early, not quick trades. Bitcoin is a long-term growth play, and a hell of a promising one at that. Any talk of a bubble is nonsense when 99% of the population either hasn't heard of it or thinks it's a joke.

Dollar-cost averaging would probably be a good way to play this market, i.e., invest the same amount of fiat currency on a regular basis.  For example, buy $100 worth of Bitcoins each week at whatever the market value is at the time.  This way, you limit your exposure when the market is overbought and pick up extra Bitcoins when it is oversold.

Absolutely. That is exactly what I have been doing, and will continue to do.
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June 12, 2011, 12:58:32 AM
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Nice post, once the exchanges become more sophisticated I expect to see larger buyers.

The difference between $15 and $30 is not a such a big deal if it hits $150+.

xtapol
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June 12, 2011, 01:03:12 AM
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The difference between $15 and $30 is not a such a big deal if it hits $150+.

Yeah, and the base trendline (which is down around $2 or so now) will be at $150 in somewhere around 2 years at the current growth rate (quick estimate, but it's in the ballpark). We ain't seen nothin' yet.
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June 12, 2011, 01:06:37 AM
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The difference between $15 and $30 is not a such a big deal if it hits $150+.

Yeah, and the base trendline (which is down around $2 or so now) will be at $150 in somewhere around 2 years at the current growth rate (quick estimate, but it's in the ballpark). We ain't seen nothin' yet.

because of what exactly?
speculating on the influx of speculators?
xtapol
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June 12, 2011, 01:09:48 AM
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because of what exactly?
speculating on the influx of speculators?

I don't care what it's because of - it's what the market is predicting, according to my reading of the chart. It knows more than I do.

But if I had to guess, I'd say it's simply that Bitcoin's economy will continue to grow and attract more capital.
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June 12, 2011, 01:19:08 AM
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Buy and hold, averaging in through the peaks and valleys. That is how you make your money when you're in this early, not quick trades. Bitcoin is a long-term growth play, and a hell of a promising one at that. Any talk of a bubble is nonsense when 99% of the population either hasn't heard of it or thinks it's a joke.

Dollar-cost averaging would probably be a good way to play this market, i.e., invest the same amount of fiat currency on a regular basis.  For example, buy $100 worth of Bitcoins each week at whatever the market value is at the time.  This way, you limit your exposure when the market is overbought and pick up extra Bitcoins when it is oversold.

This almost sounds like a self-bailout from all the people who just bought in at the latest run up.  JK.

 Grin

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June 12, 2011, 01:20:49 AM
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Excellent post OP.

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Gandlaf
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June 12, 2011, 01:22:52 AM
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But while we're on the subject, Bitcoin is a terrible market for short-term trading. Low-volume markets are nasty, and you're likely to lose your shirt. Slow down, remember that you're in the market before even the institutional investors, and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).


I´m sorry, but that statement is just plain wrong and missleading! Yes I do believe that the technology behind Bitcoin is sound. This however does not necessarily mean, that the current implementation will succeed.
Firefox was based on Netscape technology and is quite successful. How did that investment in Netscape work out for you?

Not trying to say that Bitcoin in it´s current form can´t succeed, but the statement you are making is not supported by past experience.

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June 12, 2011, 01:25:09 AM
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I don't care what it's because of - it's what the market is predicting, according to my reading of the chart. It knows more than I do.


wow. it is worse than I thought. you don't even try to rationalize.
xtapol
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June 12, 2011, 01:32:02 AM
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This almost sounds like a self-bailout from all the people who just bought in at the latest run up.  JK.

Heheh. I haven't risked much. I could lose it all and be out a nice lens or two for my DSLR.

Which, I suppose, brings us to another fundamental point about markets: risk and reward are inextricably linked. You could make a killing here, but you could also lose it all. So make your killing with a reasonable amount of initial capital and be happy with what you get.

I´m sorry, but that statement is just plain wrong and missleading! Yes I do believe that the technology behind Bitcoin is sound. This however does not necessarily mean, that the current implementation will succeed.
Firefox was based on Netscape technology and is quite successful. How did that investment in Netscape work out for you?

Not trying to say that Bitcoin in it´s current form can´t succeed, but the statement you are making is not supported by past experience.

You misunderstood my point, and I agree with you 100%. See the first half of this comment - this is clearly a high risk investment.

wow. it is worse than I thought. you don't even try to rationalize.

I have enough experience in financial markets to know that technical analysis is well grounded in human group psychology. The pattern of a chart with strong technicals is nothing more than the pattern of a crowd with growing interest in something. What this chart shows is that investment interest in Bitcoin is steadily growing and shows no sign of slowing down on the larger scale.

When you remove all the bullshit, that's what you're looking for in any investment, and reading the charts is one way to find it.
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June 12, 2011, 01:35:53 AM
 #13

But while we're on the subject, Bitcoin is a terrible market for short-term trading. Low-volume markets are nasty, and you're likely to lose your shirt.

I disagree.  There is plenty of volatility, and trading can turn volatility into profit.  Low volume is only a problem if the volume is low relative to your trading capital and frequency of trading.  People have suggested dollar-cost averaging and buying the dips... that's already half a trading strategy.  Use the corresponding techniques on the sell side and you're a trader.   

We should be encouraging traders, as they will provide liquidity and smooth out some of the volatility.  Exactly what the bitcoin economy needs.

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June 12, 2011, 01:40:32 AM
 #14

Jesus, people. You should stay out of financial markets if you're not going to take the time to familiarize yourself with their mechanics.

This is what markets do. Markets do not go up (or down) in a straight line. This is a correction, and a necessary one. But it could go a lot lower, and you still shouldn't panic. Look at the "all data" chart on bitcoincharts.com in log scale (ALWAYS use log scale). This latest drop is barely a blip on the long-term trend, which is still VERY strongly positive.

I've been buying Bitcoins all the way up past $30 with the expectation that a correction as low as $8 was likely. Who cares? It could hit $2 without breaking its long-term uptrend, or it could go from here to $100. If you believe in the fundamentals, and you're not trying to do short-term trading, keep buying. Hell, even a test of the $1 level might be a healthy thing for the market. Corrections flush out the weak buyers, make some money for the shorts, and set the stage for the rally to go on.

But while we're on the subject, Bitcoin is a terrible market for short-term trading. Low-volume markets are nasty, and you're likely to lose your shirt. Slow down, remember that you're in the market before even the institutional investors, and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).

Buy and hold, averaging in through the peaks and valleys. That is how you make your money when you're in this early, not quick trades. Bitcoin is a long-term growth play, and a hell of a promising one at that. Any talk of a bubble is nonsense when 99% of the population either hasn't heard of it or thinks it's a joke.

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xtapol
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June 12, 2011, 01:42:12 AM
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But while we're on the subject, Bitcoin is a terrible market for short-term trading. Low-volume markets are nasty, and you're likely to lose your shirt.

I disagree.  There is plenty of volatility, and trading can turn volatility into profit.  Low volume is only a problem if the volume is low relative to your trading capital and frequency of trading.  People have suggested dollar-cost averaging and buying the dips... that's already half a trading strategy.  Use the corresponding techniques on the sell side and you're a trader.   

We should be encouraging traders, as they will provide liquidity and smooth out some of the volatility.  Exactly what the bitcoin economy needs.

If you're a seasoned trader, you love wild swings (although they're a lot harder to deal with without derivatives). If you're an average trader, or one of these people panicking now who know *zero* about trading, this is not the environment for you. Low volume is not just a problem because it limits your moves, it's a problem because higher liquidity means saner markets.

As to the rest of your comment, I agree - absolutely we need more traders. I'm just not willing to accept the level of risk that comes with *being* one of those traders right now, and I think most people here shouldn't either.
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June 12, 2011, 01:43:21 AM
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I´m sorry, but that statement is just plain wrong and missleading! Yes I do believe that the technology behind Bitcoin is sound. This however does not necessarily mean, that the current implementation will succeed.
Firefox was based on Netscape technology and is quite successful. How did that investment in Netscape work out for you?

Not trying to say that Bitcoin in it´s current form can´t succeed, but the statement you are making is not supported by past experience.

You misunderstood my point, and I agree with you 100%. See the first half of this comment - this is clearly a high risk investment.

Sorry again, whilst, as is clear from your reply, you do seem to understand the risks and probably have the experience in trading, your statement:
´and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).´
does not provide any consideration of the point I made above.
Whilst the risks I mentionend might be self-evident to you, I do believe it may mislead others on this forum who are less experienced than yourself.

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xtapol
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June 12, 2011, 01:49:14 AM
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Sorry again, whilst, as is clear from your reply, you do seem to understand the risks and probably have the experience in trading, your statement:
´and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).´
does not provide any consideration of the point I made above.
Whilst the risks I mentionend might be self-evident to you, I do believe it may mislead others on this forum who are less experienced than yourself.

You're right, I guess I wasn't clear. When I said "if the concept is sound", I did not mean to imply either that it is, or that such a thing could necessarily be known ahead of time. There are always unknowns, and Bitcoin certainly has its share of known risks. You know if the concept is sound by whether it works in the long run. For now, my educated guess is that Bitcoin is sound, and the rest of my advice is based on that.
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June 12, 2011, 01:50:53 AM
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The approach I took when I entered the market was to define the portion of my portfolio and monthly earnings that I wanted to risk on bitcoin (knowing that it's still in its infancy and many things could still go wrong).  My strategy was to dollar cost average into bitcoins until I built my target position and then begin trading around that position.  I have not yet built my target position and thus I have not yet started trading on the sell side.  Bitcoins at $15 are far more appealing to me than $30 (which incidentally is about where they were 8 days ago...where will they be 8 days from now?  $50?  or $5?).  It's like there's promotional 2 for 1 sale going on.   Grin

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xtapol
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June 12, 2011, 01:53:10 AM
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+1 Million
You are highly qualified to make money long-term.

 Grin

Here's hopin'.
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June 12, 2011, 02:07:11 AM
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Sorry again, whilst, as is clear from your reply, you do seem to understand the risks and probably have the experience in trading, your statement:
´and rest assured that if the concept is sound you're going make a killing in the long run (which probably won't even be that long).´
does not provide any consideration of the point I made above.
Whilst the risks I mentionend might be self-evident to you, I do believe it may mislead others on this forum who are less experienced than yourself.

You're right, I guess I wasn't clear. When I said "if the concept is sound", I did not mean to imply either that it is, or that such a thing could necessarily be known ahead of time. There are always unknowns, and Bitcoin certainly has its share of known risks. You know if the concept is sound by whether it works in the long run. For now, my educated guess is that Bitcoin is sound, and the rest of my advice is based on that.

I completely agree that the technology is probably sound. But that was not my point of crtitizism, I totally accept that premises, if not I probably would not spend time on this forum and I definetely would not have invested. My contention is with your line of argument: ´ if the concept is sound -> you are going to make a killing in the long run [with an investment in bitcoins].´
I believe the correct line of argument would be: if the concept is sound -> this concept will be extremely successful -> you are going make a killing in the long run [with an investment in bitcoins if it proves to be the most successful implementation of this concept ].
The whole software is open source(easy to copy and tweak), there´s a lot of heat on the current implementation, on the other hand it has a fairly large and dedicated userbase.
But Firefox/IE did not invent the browser, Google did not invent the concept of a search engine, both used existing ideas and improved on them. But that´s not what you are saying in the quote I critizised. Hence I stated that I believe it to be misleading.

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