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

[seleme]

He doesn't know what he is saying or doing anymore... the catalog example of emotional trading, he lost a plot completely.

[JorgeStolfi]

This plot may be of interest:

The red line shows how much one's investment would have been multiplied, on a yearly basis, if one had bought bitcoins at various dates in the past on Bitstamp and sold them on April 01, 2014.  

Thus, for example, if one bought bitcoins at almost any time between December 2011 and November 2013, and sold them on April 01 at 480 USD/BTC (the approximate price on that date), one's  investment would have grown by about a factor of 10 each year, ie., at 900% return over investment per year on the average.

(Unless one bought at the April 2013 peak, in which case the average return rate would have been "only" 200% per year)

On the other hand, if one bought bitcoins in December 2013 or later, and sold on April 01 at 480,  one's investment would have shrunk by a factor of 10 or more per year, that is, at least 90%  loss per year on the average.

(Unless one bought in the last half of December or within a short interval in February, in which case one would have almost recovered one's investment.)

The other two plots show what would have happened if the price on April 01 was 300 USD/BTC (lower line) or 600 USD/BTC (upper line).

Note that, in all three scenarios, the yearly appreciation rate would be almost the same for early investors (about 900% per year), and the lucky/unlucky break date would be nearly the same (second half of November).   If the Apr/01 price had been 600, someone who bought at the right time during the February crash would have made a profit, but otherwise the late (post-November) investors would still have lost ~80% per year.

EDIT: Fixed a 6-day error on the sale date, affecting mainly the final days of March/2014.

[Davyd05]

This plot may be of interest:

The red line shows how much one's investment would have been multiplied, on a yearly basis, if one had bought bitcoins at various dates in the past on Bitstamp and sold them on April 01, 2014.  

Thus, for example, if one bought bitcoins at almost any time between December 2011 and November 2013, and sold them on April 01 at 480 USD/BTC (the approximate price on that date), one's  investment would have grown by about a factor of 10 each year, ie., at 900% return over investment per year on the average.

(Unless one bought at the April 2013 peak, in which case the average return rate would have been "only" 200% per year)

On the other hand, if one bought bitcoins in December 2013 or later, and sold on April 01 at 480,  one's investment would have shrunk by a factor of 10 or more per year, that is, at least 90%  loss per year on the average.

(Unless one bought in the last half of December or within a short interval in February, in which case one would have almost recovered one's investment.)

The other two plots show what would have happened if the price on April 01 was 300 USD/BTC (lower line) or 600 USD/BTC (upper line).

Note that, in all three scenarios, the yearly appreciation rate would be almost the same for early investors (about 900% per year), and the lucky/unlucky break date would be nearly the same (second half of November).   If the Apr/01 price had been 600, someone who bought at the right time during the February crash would have made a profit, but otherwise the late (post-November) investors would still have lost ~80% per year.

surely you mean would have realized a loss if they sold during q1 and early q2 2014? I'll perhaps sell this coin I bought in nov if the price is right.

[octaft]

Martingale trading is a bulletproof strat

Only if you have an infinite line, infinite time, snd a random market.  I.e. never.  But it does form an important part of a balanced algo.

The martingale fallacy is based on the fact that the human brain is not easily fathoming the speed with which an exponential function increases. You have to use your left brain for that, which takes some thought work.

Edit: And you also have to understand the limit of your betting power, and the limit for bets in the casino.

Edit2: And to top it up: Your only gain in the end, if you win before the limits, is the size of your first bet. So if you start low, to be able to go on for a large number of rounds, your win is also low. If you start a martingale series with a one dollar bet, and lose many times, you could end up putting thousands on the table, and if you win in the end, your gain is one dollar, the size of the first bet.

A Martingale strategy works, so long as the win amount is equal to the bet and the odds are 50/50.  With a 1 dollar bet, you are very likely to win your 1 back dollar bet back before you get anywhere near $1000.  If the odds are 50/50, then you would have to lose 7 times in a row, to reach into the $100 arena... highly unlikely if the odds truly are 50/50.. the trick in that regard is making sure that you do NOT miscalculate the odds.

A Martingale strategy does NOT work. If you do the math, you will find you will lose money long-term unless you have infinite funds and no betting limits. Yes, it's unlikely that you will lose 10 times in a row or whatever, but when you do you are wiped out for an enormous amount of money, and it's that scenario which makes you lose money on the strategy long-term.

[JorgeStolfi]

sure you mean would have realized a loss if they sold during q1 and early q2 2014? I'll perhaps sell this coin I bought in nov if the price is right.

The sale date is fixed (April 01, 2014) and the price too (480 USD/BTC for the red line).  The horizontal axis is when the coins were bought. 

By selling at that price and date, one would have made a profit only if one bought before mid-November.

However, the plot considers only mean (L+H)/2 daily prices.  There were a few "golden windows of opportunity" when the price momentarily went lower than 480 USD/BTC. (For example, 400 on Feb/25, and ~435 on Mar/30--31).  People who bought at those prices and sold on Apr/01 at 480 USD would have achieved a fairly large ROI per year.

[TERA]

USD exchanges have not followed Huobi up all the way and have no volume. I wonder if the rally on Huobi is due to people leaving to get out before banking is frozen and they think it's already too late/risky to submit a withdrawal when the bank account could be shut down at any time.

[tazcatlicoatlus]

USD exchanges have not followed Huobi up all the way and have no volume. I wonder if the rally on Huobi is due to people leaving to get out before banking is frozen and they think it's already too late/risky to submit a withdrawal when the bank account could be shut down at any time.

Doesnt huobi have 0% exchange fees so they could just be trading the same volume?

[windjc]

USD exchanges have not followed Huobi up all the way and have no volume. I wonder if the rally on Huobi is due to people leaving to get out before banking is frozen and they think it's already too late/risky to submit a withdrawal when the bank account could be shut down at any time.

It could also be short covering.

[windjc]

TERA - any reason you think if we go back down again it is most likely to 435?

[JayJuanGee]

Martingale trading is a bulletproof strat

Only if you have an infinite line, infinite time, snd a random market.  I.e. never.  But it does form an important part of a balanced algo.

The martingale fallacy is based on the fact that the human brain is not easily fathoming the speed with which an exponential function increases. You have to use your left brain for that, which takes some thought work.

Edit: And you also have to understand the limit of your betting power, and the limit for bets in the casino.

Edit2: And to top it up: Your only gain in the end, if you win before the limits, is the size of your first bet. So if you start low, to be able to go on for a large number of rounds, your win is also low. If you start a martingale series with a one dollar bet, and lose many times, you could end up putting thousands on the table, and if you win in the end, your gain is one dollar, the size of the first bet.

A Martingale strategy works, so long as the win amount is equal to the bet and the odds are 50/50.  With a 1 dollar bet, you are very likely to win your 1 back dollar bet back before you get anywhere near $1000.  If the odds are 50/50, then you would have to lose 7 times in a row, to reach into the $100 arena... highly unlikely if the odds truly are 50/50.. the trick in that regard is making sure that you do NOT miscalculate the odds.

A Martingale strategy does NOT work. If you do the math, you will find you will lose money long-term unless you have infinite funds and no betting limits. Yes, it's unlikely that you will lose 10 times in a row or whatever, but when you do you are wiped out for an enormous amount of money, and it's that scenario which makes you lose money on the strategy long-term.

You have to keep doubling and betting until you win.  It is mathematically proven at least to be a break even strategy as long as the odds are exactly 50/50 like flipping a coin or black and red on a roulette wheel... so long as there are NO betting limitations.  Your point is that a guy would run out of money sooner or later, but overall it is at least a break even strategy... and pretty unlikely that a guy or gal would lose more than 10 times in a row.

 You incorporated a 10 time betting limit into your description.. which is NOT part of the theory.. and pretty unlikely.. less than 1 in a 1,000 chance of losing 10 times in a row (actually it is a 1 in 1,024.00262 chance of losing that many times in a row)...

Anyhow, if we use the $1 scenario, the odds are that you would have won more than a thousand by the time you lose 10 in a row.... which if you lose 10 in a row, you are invested $1,023 at that point in time.  If you lose one more time (11 times), then you are invested $2039, (1/2048.00524 chance). Anyhow.. sooner or later, you are going to win back your dollar, so long as you keep doubling your bet each time.. it's inevitable.. so long as the odds are 50/50. 

Of course, if you do reach that unlucky losing streak of 10 in a row, then you gotta find the capital from somewhere to keep betting and doubling the bet again.. otherwise you will lock in your losses. 

The problem, that I already mentioned, is that sometimes peeps will misunderstand or misread the odds or they will accept a betting limit or will deviate from the exact application of doubling the bet each time that you lose, until you win..

After you win, then you start over at $1 again. 

Of course, if you were going to start out with $10 or $100, then you would need 10x or 100x more capital, in the event you entered a long losing streak... but it is almost guaranteed that you will NOT lose 10 times in a row, unless the odds really are NOT 50/50.

[JayJuanGee]

sure you mean would have realized a loss if they sold during q1 and early q2 2014? I'll perhaps sell this coin I bought in nov if the price is right.

The sale date is fixed (April 01, 2014) and the price too (480 USD/BTC for the red line).  The horizontal axis is when the coins were bought.  

By selling at that price and date, one would have made a profit only if one bought before mid-November.

However, the plot considers only mean (L+H)/2 daily prices.  There were a few "golden windows of opportunity" when the price momentarily went lower than 480 USD/BTC. (For example, 400 on Feb/25, and ~435 on Mar/30--31).  People who bought at those prices and sold on Apr/01 at 480 USD would have achieved a fairly large ROI per year.

I would NOT be so foolish as to have bet in December 2013 during an exorbitant price increase and to expect to cash out in the next few months or even in the next year or two at a profit... .. just does NOT make any sense to pick such an opportunistic time to suggest that people are losers in BTC b/c they chose to start investing after or near the end of a bubble.... Yes there are people who invest without foresight and lose money... but that is NOT a very logical investment strategy to begin at the end of a exorbitant price rise and to expect profits in the short term.

[octaft]

Martingale trading is a bulletproof strat

Only if you have an infinite line, infinite time, snd a random market.  I.e. never.  But it does form an important part of a balanced algo.

The martingale fallacy is based on the fact that the human brain is not easily fathoming the speed with which an exponential function increases. You have to use your left brain for that, which takes some thought work.

Edit: And you also have to understand the limit of your betting power, and the limit for bets in the casino.

Edit2: And to top it up: Your only gain in the end, if you win before the limits, is the size of your first bet. So if you start low, to be able to go on for a large number of rounds, your win is also low. If you start a martingale series with a one dollar bet, and lose many times, you could end up putting thousands on the table, and if you win in the end, your gain is one dollar, the size of the first bet.

A Martingale strategy works, so long as the win amount is equal to the bet and the odds are 50/50.  With a 1 dollar bet, you are very likely to win your 1 back dollar bet back before you get anywhere near $1000.  If the odds are 50/50, then you would have to lose 7 times in a row, to reach into the $100 arena... highly unlikely if the odds truly are 50/50.. the trick in that regard is making sure that you do NOT miscalculate the odds.

A Martingale strategy does NOT work. If you do the math, you will find you will lose money long-term unless you have infinite funds and no betting limits. Yes, it's unlikely that you will lose 10 times in a row or whatever, but when you do you are wiped out for an enormous amount of money, and it's that scenario which makes you lose money on the strategy long-term.

You have to keep doubling and betting until you win.  It is mathematically proven at least to be a break even strategy as long as the odds are exactly 50/50 like flipping a coin or black and red on a roulette wheel... so long as there are NO betting limitations.  Your point is that a guy would run out of money sooner or later, but overall it is at least a break even strategy... and pretty unlikely that a guy or gal would lose more than 10 times in a row.

 You incorporated a 10 time betting limit into your description.. which is NOT part of the theory.. and pretty unlikely.. less than 1 in a 1,000 chance of losing 10 times in a row (actually it is a 1 in 1,024.00262 chance of losing that many times in a row)...

Anyhow, if we use the $1 scenario, the odds are that you would have won more than a thousand by the time you lose 10 in a row.... which if you lose 10 in a row, you are invested $1,023 at that point in time.  If you lose one more time (11 times), then you are invested $2039, (1/2048.00524 chance). Anyhow.. sooner or later, you are going to win back your dollar, so long as you keep doubling your bet each time.. it's inevitable.. so long as the odds are 50/50.  

Of course, if you do reach that unlucky losing streak of 10 in a row, then you gotta find the capital from somewhere to keep betting and doubling the bet again.. otherwise you will lock in your losses.  

The problem, that I already mentioned, is that sometimes peeps will misunderstand or misread the odds or they will accept a betting limit or will deviate from the exact application of doubling the bet each time that you lose, until you win..

After you win, then you start over at $1 again.  

Of course, if you were going to start out with $10 or $100, then you would need 10x or 100x more capital, in the event you entered a long losing streak... but it is almost guaranteed that you will NOT lose 10 times in a row, unless the odds really are NOT 50/50.

Well I am assuming you are talking about in a casino, since nobody in their right mind is going to let you keep doubling your bet on something until you win when the bet is break even. Martingales used in casinos lose just as much as any other strategy, but a lot quicker because you are often risking a lot more money per bet by the end of it. I said 10x because, starting at $1 (which most casinos won't even let you do), after about 8-10 losses you will hit the betting limit.

Assuming you are playing true 50-50's, with infinite bankroll and no betting limits, yes you will break even. But you will also break even betting $5 each time in that scenario, so why go bonkers with doubling your bet?

As for roulette, you DO realize that that is not a 50-50, right? The 0 (and sometimes 00) screw your odds and give the casino their edge on that bet. It has to be a TRUE 50-50 to break even, and if it's a true 50-50 (and even money bets as well), you will break even long term no matter what.

[greenlion]

The Martingale "system" has no sound rational basis to even be called a system in the first place, because it does not actually do anything statistically that in any way improves outcome of any arbitrary series of fixed bets.

All the Martingale system actually does is play psychological games with your perception of wins and losses, and appeals to a misguided sense that the individual bets are somehow not statistically-independent events.

[CoinDox]

You have to keep doubling and betting until you win.  It is mathematically proven at least to be a break even strategy as long as the odds are exactly 50/50 like flipping a coin or black and red on a roulette wheel... so long as there are NO betting limitations.  Your point is that a guy would run out of money sooner or later, but overall it is at least a break even strategy... and pretty unlikely that a guy or gal would lose more than 10 times in a row.

 You incorporated a 10 time betting limit into your description.. which is NOT part of the theory.. and pretty unlikely.. less than 1 in a 1,000 chance of losing 10 times in a row (actually it is a 1 in 1,024.00262 chance of losing that many times in a row)...

Anyhow, if we use the $1 scenario, the odds are that you would have won more than a thousand by the time you lose 10 in a row.... which if you lose 10 in a row, you are invested $1,023 at that point in time.  If you lose one more time (11 times), then you are invested $2039, (1/2048.00524 chance). Anyhow.. sooner or later, you are going to win back your dollar, so long as you keep doubling your bet each time.. it's inevitable.. so long as the odds are 50/50.  

Of course, if you do reach that unlucky losing streak of 10 in a row, then you gotta find the capital from somewhere to keep betting and doubling the bet again.. otherwise you will lock in your losses.  

The problem, that I already mentioned, is that sometimes peeps will misunderstand or misread the odds or they will accept a betting limit or will deviate from the exact application of doubling the bet each time that you lose, until you win..

After you win, then you start over at $1 again.  

Of course, if you were going to start out with $10 or $100, then you would need 10x or 100x more capital, in the event you entered a long losing streak... but it is almost guaranteed that you will NOT lose 10 times in a row, unless the odds really are NOT 50/50.

Here is a spreadsheet if anyone is interested http://imgur.com/JuLDf9H. I made it back when I tried the strategy on Prime dice. After about 50,000 trials on Automated mode it had earned less than it took electricity to run it so long.  I think the most times I ever lost was 16 times in a row.

I can post the full file if anyone is interested in playing around with it.

[octaft]

The Martingale "system" has no sound rational basis to even be called a system in the first place, because it does not actually do anything statistically that in any way improves outcome of any arbitrary series of fixed bets.

All the Martingale system actually does is play psychological games with your perception of wins and losses, and appeals to a misguided sense that the individual bets are somehow not statistically-independent events.

Yeah, I'm pretty sure casinos love the Martingale, since it gets you betting more and more on losing bets.

[JorgeStolfi]

.. just does NOT make any sense to pick such an opportunistic time to suggest that people are losers in BTC b/c they chose to start investing after or near the end of a bubble....

OK, but I am not suggesting anything, that is just data.

The sale date (Apr/01)  was not "picked"; it is basically "today", except that the datafile I had at hand was collected a few days ago.  I did this same plot a couple of months ago, and I may do it again in a month or so, in both cases using the then-current date and price.

[chessnut]

ascending wedge. doesnt have much time left to decide.

[greenlion]

You have to keep doubling and betting until you win.  It is mathematically proven at least to be a break even strategy as long as the odds are exactly 50/50 like flipping a coin or black and red on a roulette wheel... so long as there are NO betting limitations.  Your point is that a guy would run out of money sooner or later, but overall it is at least a break even strategy... and pretty unlikely that a guy or gal would lose more than 10 times in a row.

ALL bet distributions/"strategies" are mathematically "proven" to be break even under these conditions, because of the very nature of how multiplication and addition work in the first place.

[JorgeStolfi]

...

PS. The point of the plot is to show the AVERAGE gain/loss PER YEAR over the last N days, rather than the accumulated gain/loss factor.

[virtualfaqs]

You have to keep doubling and betting until you win.  It is mathematically proven at least to be a break even strategy as long as the odds are exactly 50/50 like flipping a coin or black and red on a roulette wheel... so long as there are NO betting limitations.  Your point is that a guy would run out of money sooner or later, but overall it is at least a break even strategy... and pretty unlikely that a guy or gal would lose more than 10 times in a row.

ALL bet distributions/"strategies" are mathematically "proven" to be break even under these conditions, because of the very nature of how multiplication and addition work in the first place.

Like you said betting limitations and the fact there's no 50/50 bet at Casinos. I think the closest is Craps with 100x odds and 2 deck Black Jack. There used to be a few Pai Gow tables that had no commission with huge match play coupons. That was a total blast until they ran out of business.