Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[ImI]

Anyone know why btc-e is lagging so much behind?

Fiat friction.

this.

[JimboToronto]

January 1 is behind us now (UTC) and what a lovely green candle it left behind.



Let's hope there are lots more to come in 2017

[BTCtrader71]

Happy 2017 to everyone, I think the next step is the 1050$ if it breaks i don't have any idea what would be the next stop of this rally, maybe some old bitcoiners have an idea ?

I think that we need to look at the current ATH as the next stop and a potential resistance point...

There is considerable potential that the current ATH would not be a resistance point because we are already so close to it, but I think that we still need to see how this price range plays out between $1060 and $1180

Seems to be plausible, i'm very cautious because it's my first time as a bitcoiner as i experience a rally a these prices, so thanks for your thoughts

If you are nervous about retaining value with your BTC holdings, you can sell a little bit on the way up.  Usually you do not want to sell too much because you could end up with a bunch of fiat and a lacking in BTC. 

Everyone is different regarding how they will do it, but I tend to sell 1% to 2% of my BTC holdings every $100 price rise of BTC in about every $10 to $15 increments (in other words staggered in both directions - up and down), and then I buy back when BTC prices go back down... therefore, on average I end up selling less than 1% for every $100 (and my BTC holdings grow overall with the same amount of investment, more or less). 

I started this selling strategy at a bit over $250 (but my selling between $250 and about $400 was an even smaller percentage of my BTC holdings because my BTC portfolio was then in the red) and today, I still have nearly 92% of my BTC holdings in BTC and the other 8% in fiat. 

Some kind of a strategy of taking profits (even small amounts) can help you to be less nervous during BTC volatile periods (which are almost inevitable) but I think that even with extensive practice a lot of us get nervous no matter what when the price becomes really volatile (especially when it goes down), so we have to figure out ways to hedge and to safeguard some of our nervousness that are tailored to our own situations.

This is an excellent strategy, imho, because you actually profit from volatility. IOW, a volatile price rise from A to B will leave you richer than a steady rise from A to B. You (the investor) win, at the expense of the speculators.

It actually seems to play out like that in practice, too, as long as you stick to your guns and continue to stagger your bets in both directions.... It probably works at bringing down some of the overall volatility too, if everyone were to engage in such a practice. 

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

[JayJuanGee]

Happy 2017 to everyone, I think the next step is the 1050$ if it breaks i don't have any idea what would be the next stop of this rally, maybe some old bitcoiners have an idea ?

I think that we need to look at the current ATH as the next stop and a potential resistance point...

There is considerable potential that the current ATH would not be a resistance point because we are already so close to it, but I think that we still need to see how this price range plays out between $1060 and $1180

Seems to be plausible, i'm very cautious because it's my first time as a bitcoiner as i experience a rally a these prices, so thanks for your thoughts

If you are nervous about retaining value with your BTC holdings, you can sell a little bit on the way up.  Usually you do not want to sell too much because you could end up with a bunch of fiat and a lacking in BTC. 

Everyone is different regarding how they will do it, but I tend to sell 1% to 2% of my BTC holdings every $100 price rise of BTC in about every $10 to $15 increments (in other words staggered in both directions - up and down), and then I buy back when BTC prices go back down... therefore, on average I end up selling less than 1% for every $100 (and my BTC holdings grow overall with the same amount of investment, more or less). 

I started this selling strategy at a bit over $250 (but my selling between $250 and about $400 was an even smaller percentage of my BTC holdings because my BTC portfolio was then in the red) and today, I still have nearly 92% of my BTC holdings in BTC and the other 8% in fiat. 

Some kind of a strategy of taking profits (even small amounts) can help you to be less nervous during BTC volatile periods (which are almost inevitable) but I think that even with extensive practice a lot of us get nervous no matter what when the price becomes really volatile (especially when it goes down), so we have to figure out ways to hedge and to safeguard some of our nervousness that are tailored to our own situations.

This is an excellent strategy, imho, because you actually profit from volatility. IOW, a volatile price rise from A to B will leave you richer than a steady rise from A to B. You (the investor) win, at the expense of the speculators.

It actually seems to play out like that in practice, too, as long as you stick to your guns and continue to stagger your bets in both directions.... It probably works at bringing down some of the overall volatility too, if everyone were to engage in such a practice. 

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'm not clear about the math terminology, but I agree that a bot could be programmed with such methodology and overall be profitable, and I think that the profitability kind of assumes an overall upwards BTC price trajectory.  If the price trajectory goes down overall, likely the losses would be less than if no such system were followed, but it would not necessarily be profitable if the longterm price trajectory ends up being downwards.

Without a bot, there is both a potential for human error and also human impulsivity and emotions to sometimes cause actions that are not quite fitting with complete logical and technical inputs - that can also include accounting for various behaviors of other traders and the news, etc. that may cause deviation from the model.

   Maybe in the end, some of the human interventions can be minimized or averaged out so that they do not cause losses or gains that are outside of normal parameters?  Everyone likes to believe that they can kind of beat market averages, but frequently that ability to beat is proven to be quite difficult to achieve.   No matter what if a bot is not employed, there will tend to be a bit of human influence that can rise to a kind of gambling component that may or may not play out profitably.

[r0ach]

The r0ach report vol 5 released.  I cover the whole FOA "freegold" theory vs bitcoin vs silver:

http://steemit.com/money/@r0achtheunsavory/if-there-s-any-plausible-conspiracy-involving-silver-and-bitcoin-this-is-it

There's a lot of stuff in there I'm sure many people here are not aware of in terms of monetary reset and ramifications.  

It will be interesting to see what other people think about my gold/silver/bitcoin allocation tables.

[talkingleaves]

The r0ach report vol 5 released.  I cover the whole FOA "freegold" theory vs bitcoin vs silver:

http://steemit.com/money/@r0achtheunsavory/if-there-s-any-plausible-conspiracy-involving-silver-and-bitcoin-this-is-it

There's a lot of stuff in there I'm sure many people here are not aware of in terms of monetary reset and ramifications.  

It will be interesting to see what other people think about my gold/silver/bitcoin allocation tables.

thanks roach, been looking forward to that.

I bet if you got a regular blog going you'd build up quite a following.

[harrymmmm]

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

[Elwar]

$1,000



Bitcoin just joined the

[BTCtrader71]

Happy 2017 to everyone, I think the next step is the 1050$ if it breaks i don't have any idea what would be the next stop of this rally, maybe some old bitcoiners have an idea ?

I think that we need to look at the current ATH as the next stop and a potential resistance point...

There is considerable potential that the current ATH would not be a resistance point because we are already so close to it, but I think that we still need to see how this price range plays out between $1060 and $1180

Seems to be plausible, i'm very cautious because it's my first time as a bitcoiner as i experience a rally a these prices, so thanks for your thoughts

If you are nervous about retaining value with your BTC holdings, you can sell a little bit on the way up.  Usually you do not want to sell too much because you could end up with a bunch of fiat and a lacking in BTC.  

Everyone is different regarding how they will do it, but I tend to sell 1% to 2% of my BTC holdings every $100 price rise of BTC in about every $10 to $15 increments (in other words staggered in both directions - up and down), and then I buy back when BTC prices go back down... therefore, on average I end up selling less than 1% for every $100 (and my BTC holdings grow overall with the same amount of investment, more or less).  

I started this selling strategy at a bit over $250 (but my selling between $250 and about $400 was an even smaller percentage of my BTC holdings because my BTC portfolio was then in the red) and today, I still have nearly 92% of my BTC holdings in BTC and the other 8% in fiat.  

Some kind of a strategy of taking profits (even small amounts) can help you to be less nervous during BTC volatile periods (which are almost inevitable) but I think that even with extensive practice a lot of us get nervous no matter what when the price becomes really volatile (especially when it goes down), so we have to figure out ways to hedge and to safeguard some of our nervousness that are tailored to our own situations.

This is an excellent strategy, imho, because you actually profit from volatility. IOW, a volatile price rise from A to B will leave you richer than a steady rise from A to B. You (the investor) win, at the expense of the speculators.

It actually seems to play out like that in practice, too, as long as you stick to your guns and continue to stagger your bets in both directions.... It probably works at bringing down some of the overall volatility too, if everyone were to engage in such a practice.  

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

... I agree that a bot could be programmed with such methodology and overall be profitable ...

A bot would definitely be nice for this kind of thing. When you see volatility, everyone else would be having a heart attack, and you could just sit back, think about your bot making money from the volatility plus the fact that you're making the world a better place by decreasing volatility, and smile

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

I've never done the proof formally, but the statement to be proved would be something along these lines:
- assume X% allocation bitcoin, and 100-X % allocation fiat at the beginning
- assume price starts at $A and ends at $B, with arbitrary path from A to B
- assume zero spread and zero fees (makes the math simpler, but you'd have to bear in mind this is an oversimplification of the model)
Strategy 1: no buying and no selling at all
Strategy 2: if your percent allocation of wealth in bitcoin rises above or below X% by some fixed amount D (let's say, +/- 5%) due to bitcoin price fluctuations, then buy or sell as needed to keep the % allocation within X +/- D %.

For example: if you set X at 50% at the beginning and D at 5%, then your bot will buy or sell as needed to keep your percent allocation within the range of 45% to 55%

The proof would basically say that Strategy 2 works better than Strategy 1. I think a few more assumptions are needed though. I'm not sure, but I think Strategy 2 is better if we assume that neither bitcoin nor the fiat becomes worthless. Suppose, for example, that the fiat hyperinflates a la Zimbabwe in 2009 or whenever. In that case, Strategy 2 would definitely be a BAD idea, because by the end you would have sold all your bitcoin and you'd have a zillion Zimbabwean dollars worth nothing. But if we assume the fiat currency stays stable, and bitcoin goes to the moon but does so in a very volatile fashion, then I'm pretty sure Strategy 2 can be proven to be superior.

EDIT:
Actually I might also have to assume that you start and end at the same price. Obviously if the price of bitcoin shoots up to $1M, you're better off if you didn't sell any of it at all during the rise, which means Strategy 1 would be better.

[Paashaas]

16B Market Cap!

Even bearstamp is now over $1000.!

I cant believe it $1000+ per coin   and going up!

The hype in the mainstream media continues.

[JayJuanGee]

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

I think that I understand that your criticism may encapsulate that humans are way too inconsistent in order to make such a system work mathematically as profitable - however, couldn't you program a bot to take out some of the human error and instead of having it set at really close intervals (like they probably do in china with no fees), they set them at intervals like $10 - or maybe more accurately to use percentage moves, like a .5 or 1% move in one direction triggers a sell, and then every equal increment.  Then buy backs would be 1% or more below the sales price.  Of course, there are variations about what increments to use and what quantities.


Edit:  I wrote the above post before reading BTCtrader71's response.  His response does not seem inconsistent with mine, but seems a bit more eloquent and mathematically oriented than mine.  hahahaha  

[BTCtrader71]

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

I think that I understand that your criticism may encapsulate that humans are way too inconsistent in order to make such a system work mathematically as profitable - however, couldn't you program a bot to take out some of the human error and instead of having it set at really close intervals (like they probably do in china with no fees), they set them at intervals like $10 - or maybe more accurately to use percentage moves, like a .5 or 1% move in one direction triggers a sell, and then every equal increment.  Then buy backs would be 1% or more below the sales price.  Of course, there are variations about what increments to use and what quantities.

Percentages would definitely be the way to go, and the optimal percentages would depend on how wide you expect the price fluctuations to be. For example: if you expect LOTS and LOTS of +/- 10% fluctuations, then you're better off buying at the -10% and selling at the +10%. Suppose you model lots of +/- 3% fluctuations with very infrequent +/- 50% fluctuations ... in that case your idealized bot would probably have a pretty complex behavior. Deriving what exactly the ideal bot should do would be a very interesting exercise.

[savetherainforest]

Anyone know why btc-e is lagging so much behind?

West markets be like:





And China be like:








Fun stuff!!!     ... Also China announce some big infrastructure thingy, developing new train, highways, electricity grids... (hmm... maybe high speed internet optics as well??)

Also India seems to have some currency problems and bank cash withdrawal restrictions. So we add another 1.5 billion people that might get desperate soon...


Choo!!!... Choo!!!...  

[PoolMinor]

[tabnloz]

The r0ach report vol 5 released.  I cover the whole FOA "freegold" theory vs bitcoin vs silver:

http://steemit.com/money/@r0achtheunsavory/if-there-s-any-plausible-conspiracy-involving-silver-and-bitcoin-this-is-it

There's a lot of stuff in there I'm sure many people here are not aware of in terms of monetary reset and ramifications.  

It will be interesting to see what other people think about my gold/silver/bitcoin allocation tables.

Haven't read much of the FOFOA stuff but some links in with what Rickards talked about in The Death of Money; if we can believe that the big players are co-operating behind the scenes to deal with the eventual monetary reset then that explains the big players buying up gold while it gets trashed in the press. Working theory being that once they all have a similar gold to gdp % ratio then an orderly reset can begin. If the reset happens outside of their control before then, so be it, but its coming.

[JayJuanGee]

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

I think that I understand that your criticism may encapsulate that humans are way too inconsistent in order to make such a system work mathematically as profitable - however, couldn't you program a bot to take out some of the human error and instead of having it set at really close intervals (like they probably do in china with no fees), they set them at intervals like $10 - or maybe more accurately to use percentage moves, like a .5 or 1% move in one direction triggers a sell, and then every equal increment.  Then buy backs would be 1% or more below the sales price.  Of course, there are variations about what increments to use and what quantities.

Percentages would definitely be the way to go, and the optimal percentages would depend on how wide you expect the price fluctuations to be. For example: if you expect LOTS and LOTS of +/- 10% fluctuations, then you're better off buying at the -10% and selling at the +10%. Suppose you model lots of +/- 3% fluctuations with very infrequent +/- 50% fluctuations ... in that case your idealized bot would probably have a pretty complex behavior. Deriving what exactly the ideal bot should do would be a very interesting exercise.

Since in the real world, I would not have any kind of real clue about how to program a bot (without having to engage in a lot of learning), therefore, I tend to set pretty small increments in terms of dollars (these days $10 or $15 increments.  I was doing other variations in the past - almost every variation down to a couple of dollars when there were lower fee options available to me, and price moves were a larger percentage of the overall change in value), and I do that because it is a bit easier to keep track..

Also, probably in recent weeks I have been trading way too much (even though I increased some of my intervals to like $15), so it is occupying more of my time than fruitful to be having to reset buys after sells have executed, so possibly in the future, I will trade on much larger swings in order that it is not as time consuming (which a bot would likely solve a lot of those kinds of issues - if the bot doesn't get programed in such a way that would fuck everything up because of unforeseen scenarios, for example or some other programing error).

[Yves_Oluchione]

Happy 2017 to everyone, I think the next step is the 1050$ if it breaks i don't have any idea what would be the next stop of this rally, maybe some old bitcoiners have an idea ?

I think that we need to look at the current ATH as the next stop and a potential resistance point...

There is considerable potential that the current ATH would not be a resistance point because we are already so close to it, but I think that we still need to see how this price range plays out between $1060 and $1180

Seems to be plausible, i'm very cautious because it's my first time as a bitcoiner as i experience a rally a these prices, so thanks for your thoughts

If you are nervous about retaining value with your BTC holdings, you can sell a little bit on the way up.  Usually you do not want to sell too much because you could end up with a bunch of fiat and a lacking in BTC.  

Everyone is different regarding how they will do it, but I tend to sell 1% to 2% of my BTC holdings every $100 price rise of BTC in about every $10 to $15 increments (in other words staggered in both directions - up and down), and then I buy back when BTC prices go back down... therefore, on average I end up selling less than 1% for every $100 (and my BTC holdings grow overall with the same amount of investment, more or less).  

I started this selling strategy at a bit over $250 (but my selling between $250 and about $400 was an even smaller percentage of my BTC holdings because my BTC portfolio was then in the red) and today, I still have nearly 92% of my BTC holdings in BTC and the other 8% in fiat.  

Some kind of a strategy of taking profits (even small amounts) can help you to be less nervous during BTC volatile periods (which are almost inevitable) but I think that even with extensive practice a lot of us get nervous no matter what when the price becomes really volatile (especially when it goes down), so we have to figure out ways to hedge and to safeguard some of our nervousness that are tailored to our own situations.

Thanks for the advises, I'm not so nervous because i have started by investing little amounts of fiat every months and i didn't invest a lot since november, also, what i've invested i consider if i lose this amount it won't change my life (even if i wouldn't be happy), but i wanted to trade a little bit but i was nervous so i was just hodl
But it's an interesting strategy to start trading at minimal risk, thanks i'll try that

I completely agree with what appears to be your initial strategy to invest small amounts into BTC on a regular basis that you could afford to lose, if worst case scenario were to arise.  That should be a continued strategy with any investment (and especially true with known volatile investments such as bitcoin).

Also, I understand that if you are in a kind of initial BTC accumulation phase of your investment, you cannot really justify selling any part of it.. because you feel that you have so little and you are continuing to accumulate and to buy on dips, etc.  

I accumulated BTC for more than a year and a half before I created a selling (or BTC trading) strategy... but partly my hand was forced to keep accumulating BTC during that time because during my initial investment BTC prices continued to go down for the first year (2014) and then only became somewhat flat then next 6-8 months in 2015, which allowed me to accumulate some coins at the lower prices and then to create a BTC trading strategy that I considered to be profitable because my strategy only allowed me to sell coins from the ones that I had accumulated below the then selling price (as prices went up - so my average buy price was less than $250 for those coins that I authorized selling some of the profits)....


So in essence I divided my total BTC investment into mostly three components, and initially, I held 2 of the portions that continued to be in the red and only traded from the portion of the coins that was in the green... as price continued to rise, then my other two portions of my BTC portfolio merged into the green or at least closer in the green which allowed me to authorize myself to trade more coins and a higher portion of my BTC portfolio  (my cost basis for the coins was a bit of a moving target as the price changed and as I continued to buy and sell, but initially my price averages for the three groups were approximately as follows: 1) below $250, 2) below $350 and 3) about $500.

I created some other limits too in order to only trade from "profits".  For example, if you have accumulated 10BTC, then every dollar that BTC prices goes up, your portfolio goes up in value by $10, which is $10 profits.  So, if BTC prices goes up $10, then your profits of your BTC holdings are $100, and initially I authorized myself only to trade from my BTC profits (and my authorization varied over time, but trading 30% to 50% of my profits seemed to be somewhat reasonable for me, but I know sometimes people will want to trade either more or less of their profits based on their own personality, view of bitcoin and/or otherwise overall financial circumstances).

Thanks for all these informations, for your strategy a little interrogation to help myself when you sell, at what level do you fix your buy back ? Level at selling - fees - 2 or 3 % ? I think I'll do regularly this in a little percentage until a reliable consensus for the scalability of the bitcoin will be determined, I think you could play with your method as long as this problematic remains unsolved, but I think if this problematic comes to an end the best strategy would be hold & accumulate with buying or  proposing services/works based on your specifications/qualifications for remuneration in btc, as mentionned by BTCTrader in the case where Bitcoin could explose and replace the role of the fiat without being limited by the hashing power of the network and their fees for the microtransactions.

NB : Sorry for my poor English syntax, i didn't learn it by the books :/

[Paashaas]

[BTCtrader71]

If you assume price = constant + superimposed sinusoidal curve, with the amplitude of the curve big enough to trigger buying and selling, then by your method, you repeatedly buy low, sell high, over and over again. Which means you make money, assuming the spread and transaction costs are less than what you earn from buying low and selling high.

Any curve can be represented as a sum of sinusoidal curves, i.e. a Fourier series. Therefore, it becomes mathematically provable that your method, if properly implemented, will cause you to benefit from volatility.

I'd like to see that proof
A couple of problems I see with it:
1) you are talking about piecewise sinusoids (right? reset at each sudden price change?). That complicates any kind of frequency domain analysis. Lots of noise.
2) After a price change, how do you determine what phase (and amplitude) to start the next piece at?

If you really did mean fourier analysis of the whole price data, then you would see low frequency cycles with a bit of luck (but too many people already found those, so they're tiny). The sudden price moves add way too much noise to be able to detect anything sinusoidal at day trader frequencies.

I think that I understand that your criticism may encapsulate that humans are way too inconsistent in order to make such a system work mathematically as profitable - however, couldn't you program a bot to take out some of the human error and instead of having it set at really close intervals (like they probably do in china with no fees), they set them at intervals like $10 - or maybe more accurately to use percentage moves, like a .5 or 1% move in one direction triggers a sell, and then every equal increment.  Then buy backs would be 1% or more below the sales price.  Of course, there are variations about what increments to use and what quantities.

Percentages would definitely be the way to go, and the optimal percentages would depend on how wide you expect the price fluctuations to be. For example: if you expect LOTS and LOTS of +/- 10% fluctuations, then you're better off buying at the -10% and selling at the +10%. Suppose you model lots of +/- 3% fluctuations with very infrequent +/- 50% fluctuations ... in that case your idealized bot would probably have a pretty complex behavior. Deriving what exactly the ideal bot should do would be a very interesting exercise.

Since in the real world, I would not have any kind of real clue about how to program a bot (without having to engage in a lot of learning), therefore, I tend to set pretty small increments in terms of dollars (these days $10 or $15 increments.  I was doing other variations in the past - almost every variation down to a couple of dollars when there were lower fee options available to me, and price moves were a larger percentage of the overall change in value), and I do that because it is a bit easier to keep track..

Also, probably in recent weeks I have been trading way too much (even though I increased some of my intervals to like $15), so it is occupying more of my time than fruitful to be having to reset buys after sells have executed, so possibly in the future, I will trade on much larger swings in order that it is not as time consuming (which a bot would likely solve a lot of those kinds of issues - if the bot doesn't get programed in such a way that would fuck everything up because of unforeseen scenarios, for example or some other programing error).

Also, you have to take into account:
- risk of exchange getting hacked
- tax implications of selling
- exchange fees and spread

I bet someday someone is going to build a bot using ethereum (or some such tool) that will do this automatically using peer to peer exchanges. Of course that can't happen until:
- p2p exchanges gain more traction
- we can move fiat around on the blockchain (like Tether-USD, but with a more established backer and a larger market cap)

[nanobtc]