Technical Analysis of Bitcoin

[abednego]

I've been following Bitcoin and people's analysis since 2011.  Starting this year I left my job in IT to become a full time professional trader.  Now I trade Bitcoin just like any other financial instrument and have naturally become excited about the trading range we have established recently. 

You're invited to follow my analysis of the current market cycle (hint: we are consolidating) on my blog:

http://www.adventcarraig.com/2013/05/08/bitcoin-analysis-52013/

I welcome any comments.  The trading system I use is called Ichimoku.

[1713519782]

1713519782

[1713519782]

1713519782

[solidshotnosh]

Did you study markets before entering, or did you learn by first trading then developing a knowledge base for future trading?

Bitcoin is my first venture into the trading/investment world, and I would like to extend into trading on the stock market after at least a year or two of this.

I've found bitcoin to be a great entry point because it holds my interest since I'm an IT at heart.

But I too would like to quit my IT day job and migrate into day trading

[cedivad]

But I too would like to quit my IT day job and migrate into day trading

Starting this year I left my job in IT to become a full time professional trader.

 

[Anth0n]

I like it. It's a lot more detailed than what most people on this forum are offering. I know just a bit of TA from my own studies, but most people here don't offer much more than what I already know.

[Crypt_Current]

But I too would like to quit my IT day job and migrate into day trading

Starting this year I left my job in IT to become a full time professional trader.

 

my thoughts exactly.  What exactly in IT do these guys do?

[wobber]

But I too would like to quit my IT day job and migrate into day trading

Starting this year I left my job in IT to become a full time professional trader.

 

my thoughts exactly.  What exactly in IT do these guys do?

Sorry, I don't get it. You mean they could earn more in IT than in day trading?

[Frozenlock]

But I too would like to quit my IT day job and migrate into day trading

Starting this year I left my job in IT to become a full time professional trader.

 

my thoughts exactly.  What exactly in IT do these guys do?

Sorry, I don't get it. You mean they could earn more in IT than in day trading?

Really depends on their available capital.

[abednego]

Did you study markets before entering, or did you learn by first trading then developing a knowledge base for future trading?

Bitcoin is my first venture into the trading/investment world, and I would like to extend into trading on the stock market after at least a year or two of this.

I've found bitcoin to be a great entry point because it holds my interest since I'm an IT at heart.

But I too would like to quit my IT day job and migrate into day trading

I have not checked back to this post in a while.

Here are the 3 things that let me do it:

• Accumulate 3 years of trading experience.  Lose money, lot's of money, and don't quit.  You have to do it, love it, and see it as a job and more than a hobby.  When I exhausted what I could gain from free Internet education I started going to trading Meetup groups in my local city.  From there I found a mentor and got a job working in a trading company where we trade our own capital.
• Be financially secure.  That meant me saving for 8 years a little bit every month from my job in cash, stocks, etc.  My car is paid off and so is my house.  In 8 years I bought a motorcycle for cash off Craigslist and that was about it for big purchases.  Working in IT should give you the salary to do this in the same amount of time.  It's one of the highest paying and fastest growing industries in the past decade.  If not; you're either not keeping up with technology to advance your skills/career or living beyond your means.
• Get fed up with the corporate world.  Realize you have no pension, no retirement, no legacy to pass onto your kids unless you build something yourself.  A 401k or some stock options are not going to be a satisfying definition of your life's work.

Also, I've updated my sentiment as a professional trader on Bitcoin.  Many may disagree unfortunately... but I see a lot of added systematic/legal risk coming on this month: http://www.adventcarraig.com/2013/05/30/bitcoin-concerns/

[RationalSpeculator]

Interesting read. Thanks so much for sharing.

When would you consider entering bitcoins again?

[abednego]

There are a few things I will look for on either side of legitimacy:

• Bitcoin is made more legitimate by a large corporate player becoming vested. This could be in the form of a new exchange such as Tradehill, which now operates on an "institutional level" (you need about $10,000 USD to open an account) or even an established brokerage such as Paypal.  Really what it comes down to is someone willing to pay the legal fees to fight if the Justice Department comes knocking.  It's clear by his comments that Gavin Andresen would put up no fight.  Maybe the Winklevoss twins would with their stake.  I need to see some positive legal precedent to move forward.
• Bitcoin goes through a major legal apocalypse... and survives underground.  I definitely see Bitcoin as a currency and P2P system continuing to exist regardless of any attempts to shut it down.  The nature of it's protocol and the hardcore community will keep going even if it has to resort to being TOR network only.  At that point, once the common methods of the underground existence (new exchanges) of Bitcoin is established I'll evaluate my options.  Case in point: Napster to Emule to Torrents... the idea is unkillable it just morphs.

The key problem for me right now is uncertainty and high risk of frozen assets/total loss keeping capital (BTC or USD) on website exchanges.  It's too much for me as a professional trader to have a significant portion of my capital on the current mediums with all the government threats facing the market.

[notme]

There are a few things I will look for on either side of legitimacy:

• Bitcoin is made more legitimate by a large corporate player becoming vested. This could be in the form of a new exchange such as Tradehill, which now operates on an "institutional level" (you need about $10,000 USD to open an account) or even an established brokerage such as Paypal.  Really what it comes down to is someone willing to pay the legal fees to fight if the Justice Department comes knocking.  It's clear by his comments that Gavin Andresen would put up no fight.  Maybe the Winklevoss twins would with their stake.  I need to see some positive legal precedent to move forward.
• Bitcoin goes through a major legal apocalypse... and survives underground.  I definitely see Bitcoin as a currency and P2P system continuing to exist regardless of any attempts to shut it down.  The nature of it's protocol and the hardcore community will keep going even if it has to resort to being TOR network only.  At that point, once the common methods of the underground existence (new exchanges) of Bitcoin is established I'll evaluate my options.  Case in point: Napster to Emule to Torrents... the idea is unkillable it just morphs.

The key problem for me right now is uncertainty and high risk of frozen assets/total loss keeping capital (BTC or USD) on website exchanges.  It's too much for me as a professional trader to have a significant portion of my capital on the current mediums with all the government threats facing the market.

So become an investor.  Store your own bitcoins for the long term.  You obviously believe in the concept.

[ArticMine]

There are a few things I will look for on either side of legitimacy:

• Bitcoin is made more legitimate by a large corporate player becoming vested. This could be in the form of a new exchange such as Tradehill, which now operates on an "institutional level" (you need about $10,000 USD to open an account) or even an established brokerage such as Paypal.  Really what it comes down to is someone willing to pay the legal fees to fight if the Justice Department comes knocking.  It's clear by his comments that Gavin Andresen would put up no fight.  Maybe the Winklevoss twins would with their stake.  I need to see some positive legal precedent to move forward.
• Bitcoin goes through a major legal apocalypse... and survives underground.  I definitely see Bitcoin as a currency and P2P system continuing to exist regardless of any attempts to shut it down.  The nature of it's protocol and the hardcore community will keep going even if it has to resort to being TOR network only.  At that point, once the common methods of the underground existence (new exchanges) of Bitcoin is established I'll evaluate my options.  Case in point: Napster to Emule to Torrents... the idea is unkillable it just morphs.

The key problem for me right now is uncertainty and high risk of frozen assets/total loss keeping capital (BTC or USD) on website exchanges.  It's too much for me as a professional trader to have a significant portion of my capital on the current mediums with all the government threats facing the market.

This is a serious risk for a trader but not for a long term investor who buys BTC in small amounts over time. My current exposure to this kind of risk is less than 1% of my BTC holdings. The rest of my BTC are safe backed up in a multitude of ways including a 5.25in floppy disk.

[Crypt_Current]

There are a few things I will look for on either side of legitimacy:

• Bitcoin is made more legitimate by a large corporate player becoming vested. This could be in the form of a new exchange such as Tradehill, which now operates on an "institutional level" (you need about $10,000 USD to open an account) or even an established brokerage such as Paypal.  Really what it comes down to is someone willing to pay the legal fees to fight if the Justice Department comes knocking.  It's clear by his comments that Gavin Andresen would put up no fight.  Maybe the Winklevoss twins would with their stake.  I need to see some positive legal precedent to move forward.
• Bitcoin goes through a major legal apocalypse... and survives underground.  I definitely see Bitcoin as a currency and P2P system continuing to exist regardless of any attempts to shut it down.  The nature of it's protocol and the hardcore community will keep going even if it has to resort to being TOR network only.  At that point, once the common methods of the underground existence (new exchanges) of Bitcoin is established I'll evaluate my options.  Case in point: Napster to Emule to Torrents... the idea is unkillable it just morphs.

The key problem for me right now is uncertainty and high risk of frozen assets/total loss keeping capital (BTC or USD) on website exchanges.  It's too much for me as a professional trader to have a significant portion of my capital on the current mediums with all the government threats facing the market.

This is a serious risk for a trader but not for a long term investor who buys BTC in small amounts over time. My current exposure to this kind of risk is less than 1% of my BTC holdings. The rest of my BTC are safe backed up in a multitude of ways including a 5.25in floppy disk.

 
I took great joy in reading the last bolded part.  When I moved about a year ago, I was going through some old stuff in the basement and found the 5.25 I used in my BASIC programming class in the seventh grade.  It probably doesn't work now, but it was neat seeing the names of the "games" I made back then.  Maybe not the most dependable medium, but definitely nostalgic.  

[Seal]

I agree that a lot of money can be made trading technical analysis. I made a huge amount by developing bots that traded it... Why share your analysis when it will become less effective the more people know about it though?

Have you applied backtesting? If so what were your results?

[ManBearPig]

I agree that a lot of money can be made trading technical analysis. I made a huge amount by developing bots that traded it... Why share your analysis when it will become less effective the more people know about it though?

Have you applied backtesting? If so what were your results?

+1 would really be interesting to see this too.

Interesting post OP.

I'd never dream of giving up my 'day' job though, it's too much fun and is too small a drain on my time. Some people spend a lot of money on it as a hobby