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Author Topic: Trading so slow and flat = boredom  (Read 3146 times)
Gareth Nelson
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June 29, 2011, 09:38:39 AM
 #21

This is what a psychologist friend of mine predicted: if prices go stable, speculators will miss their dopamine releases and be even more upset than when price is plunging, which is at least exciting.  Random, unpredictable, positive reinforcement is the best way to train behavior, and that has been the story of bitcoin for the past year or so.

Ask your psychologist friend what conditioning is occurring that produces dopaminergic activity for market instability as opposed to profit.
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Rob Lister
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June 29, 2011, 12:19:49 PM
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Seriously, if it's just going to hang out at 17.0 all day, I can find better things to speculate with.  Roll Eyes

I really hope that's what a lot of the people speculating with Bitcoins think. I'm sorry this is spoiling the fun for you - but people speculating like crazy with Bitcoins is spoiling the fun for the people actually using Bitcoins and that's the people who actually give Bitcoin true value. Driving them away is one of the things you can do to assure that Bitcoin will eventually die.

So less people speculating with Bitcoins won't hurt the Bitcoin economy. Quite the contrary.

It'll become fun for you again when the dollar dies and everyone tries to escape to Bitcoin. Let's hope this happens when Bitcoin is already more or less well established. The wise thin

I agree with you 99%.  The wild swings in trading prevent merchants from adopting BTC as a useful currency; there's no easy way to price a good or service.  The 1% disagreement I have regards the impact of speculators.  Stability will happen only when there are more speculators; the market needs to be saturated.  As more speculators enter, the more narrow the margins become.  Stability follows. 

Embrace greed.  It is your friend.

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June 29, 2011, 12:24:49 PM
 #23

I agree with you 99%.  The wild swings in trading prevent merchants from adopting BTC as a useful currency; there's no easy way to price a good or service.  The 1% disagreement I have regards the impact of speculators.  Stability will happen only when there are more speculators; the market needs to be saturated.  As more speculators enter, the more narrow the margins become.  Stability follows.

+1 The more speculators the more stable bitcoin will be. Also, the Bitcoin community is learning and becoming better at trading.

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Embrace greed.  It is your friend.

Greed is not your friend, neither your enemy. Greed just is.
cloud9
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June 29, 2011, 12:57:13 PM
 #24

The beauty of free market systems is that every player sees it differently.  The more volatility, the more speculators.  The more speculators (long & short side), the more stability.  The more stability, the more investment and trading.  Some outside event rocks the boat, the more volatility and the cycle continues...

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
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June 30, 2011, 11:23:42 PM
 #25

The beauty of free market systems is that every player sees it differently.  The more volatility, the more speculators.  The more speculators (long & short side), the more stability.  The more stability, the more investment and trading.  Some outside event rocks the boat, the more volatility and the cycle continues...
The key word here is 'more'. More is better.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
qualia8
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June 30, 2011, 11:30:44 PM
 #26

This is what a psychologist friend of mine predicted: if prices go stable, speculators will miss their dopamine releases and be even more upset than when price is plunging, which is at least exciting.  Random, unpredictable, positive reinforcement is the best way to train behavior, and that has been the story of bitcoin for the past year or so.

Ask your psychologist friend what conditioning is occurring that produces dopaminergic activity for market instability as opposed to profit.

She says to ask casino operators.  You're guaranteed a negative expected utility, but you play anyway, because the swings in your fortune are exciting.  Treasury bills are nearly guaranteed profit but boring as hell.

The brain's salience and reward circuits are dynamic, not static, and demand ever-changing stimuli.
bitcoiners
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July 01, 2011, 12:42:16 AM
 #27

@OP.

Still boring?
bitsalame
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July 01, 2011, 12:59:53 AM
 #28

This is what a psychologist friend of mine predicted: if prices go stable, speculators will miss their dopamine releases and be even more upset than when price is plunging, which is at least exciting.  Random, unpredictable, positive reinforcement is the best way to train behavior, and that has been the story of bitcoin for the past year or so.

The market has more to do with classical conditioning rather than with operant conditioning.
It is possible that every time we see a crash graph we laugh because the "goxed" meme pops up in our brain, or we might feel anguish because it reminds us about losing money.

The dopamine rush on the other hand, yes, she is right and I rely on it when I invest.
This is very similar to what compulsive gamblers do.
But it is improper to call it "random" reinforcements (that would have NO effect at all), but variable-ratio schedules.
This not only happens to humans, it happens with animals as well. In gamblers, the euphoria and the excitement is their "reward" (dopamin & endorphines). If winning at the casino were trivial, the gamblers would get really bored because there would be no excitement.
Btw, endorphines literally means "internal morphine", no wonder why it is so desirable and in some cases even addictive.

I take behavioral cues for investing, since I know how (crowd) psychology works I take that as an advantage when the prices are way under its value or from its perceived value.
That's why neoclassical economics can't explain the irrational behavior of a gambler, because by definition economics is about "rational choices".

It is here where behavioral economics have its relevance when analyzing an inefficient market.
geek-trader
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July 01, 2011, 01:22:23 AM
 #29

@OP.

Still boring?

Nope, that was fun.   Grin

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