Newbie Trading Basics 101

[FlipPro]

I am making this post in hopes of helping some newbie miners + traders alike. I think 90% of the traders in this community (which probably amount to less than 10% of the population) probably know all of the recommendations in this post by heart, and maybe they will bitch and moan about some of the responses. But who cares screw them! This is primarily for the techies who don't know squat about trading.  We are all here to learn, and this seems to be the area with the most trading newbs on the forum. I will start with 1 recommendation and anyone can input anything they like after. The more confidence people have with their trading abilities, the more stable Bitcoin prices will become...

Newbie Tip 1: Do not put out ridiculous sell orders.

Don't buy at 13 and then put those 13 right back on the market for $20... It dosen't work like that, and if it did we would all be rich by now! The more Bitcoins that are in the exchange markets, the LOWER THE PRICE WILL BE. So basically you are hurting yourself by doing what I just mentioned above, and I see alot of ridiculous sell orders out there proving my theory... Get rid of your SELL ORDERS unless you actually INTEND on selling!

There's my tip ! Please don't be greedy guys...

Quick Note: I am one of the trading newbs here. I have never traded in my life before Bitcoins so it is an exciting and new thing for me, and I am not ashamed/afraid to say so. Learning isn't free, and people should really try to understand that before they get into something like this... And in the recent hostile environment in this community it's hard to ask ANY questions without getting ridiculed for three pages. This is your safe haven.

[Zem]

I'll finish reading right after I put up a 15k BTC ask wall at $12.

[proudhon]

I'll finish reading right after I put up a 15k BTC ask wall at $12.

That's awfully bullish of you.  My 15k BTC ask wall is going at $11.80.

[stsbrad]

I'll finish reading right after I put up a 15k BTC ask wall at $12.

That's awfully bullish of you.  My 15k BTC ask wall is going at $11.80.

If the price hits 11.80 will all those coins you have a buy order for drive the price significantly? Whats the purpose of a "wall"?

[Zem]

Usually a wall supports the roof of your house and also creates enclosures to make rooms.

[stsbrad]

Usually a wall supports the roof of your house and also creates enclosures to make rooms.

sigh

[Oldminer]

Usually a wall supports the roof of your house and also creates enclosures to make rooms.

Another brick in the wall?

[julz]

I'll finish reading right after I put up a 15k BTC ask wall at $12.

That's awfully bullish of you.  My 15k BTC ask wall is going at $11.80.

If the price hits 11.80 will all those coins you have a buy order for drive the price significantly? Whats the purpose of a "wall"?

Wait.. so is an 'ask wall' a sell order to stop bids.. or is it a buy order to block the asks?
My first interpretation was it's a sell order

[FlipPro]

Usually a wall supports the roof of your house and also creates enclosures to make rooms.

sigh

And this ladies and gentlemen is exactly why the price is where it's at... People unwilling to help others for their own personal selfish gains.

http://www.learntechnicaltrading.com/TradingGlossary.aspx

Terms:

Support line:This is the price where maybe in the past the stock has found support (demand from investors).

Resistance line:This is the price where maybe in the past the stock has found resistance (over supply, investors are selling the stock more than they are buying).

Trend line:   What direction does the current stock have, is it going up, down or sideways.

Volume:Don't forget that the stock(in our case bitcoin) must have sufficient liquidity. If it doesn't leave it alone and chose another. Remember that share prices rise or drop until they find either support (investor demand) or resistance (investor supply).  

2% top loss   We have mentioned that if you do not want to deplit your investment account always use a stop loss before you get in a trade.

Bull market:This term is widely used in the financial world. It is used when the market has been on a up trend for sometime and runs very fast like a bull.

Bear marketThis term is widely used in the financial world. It is used when the market has been on a down trend for sometime, the market is showing signs that is slowing down.

Market Dept This is the same information that brokers see on their screen. It shows that number of buyers and sellers and when the price is matched the business is transacted.

http://www.learntechnicaltrading.com/IntermediaryTrading/LearnhowtousetheMarketDepth.aspx

Market depth is where you will be able to see these "walls" of support build up. Bulls build the price up by building these walls ,and bears drive the price by tearing the walls down.

[FlipPro]

I'll finish reading right after I put up a 15k BTC ask wall at $12.

That's awfully bullish of you.  My 15k BTC ask wall is going at $11.80.

If the price hits 11.80 will all those coins you have a buy order for drive the price significantly? Whats the purpose of a "wall"?

Wait.. so is an 'ask wall' a sell order to stop bids.. or is it a buy order to block the asks?
My first interpretation was it's a sell order

If you want to manipulate the market you throw down a huge amount of Bitcoins on the Ask side so you literally flood the market with coins thus making an "ask wall". This will (in theory) drive the prices down so that you can then buy-in artificially cheaper and reward yourself on the way back up when people follow. The bigger the market gets, the less effective this technique will be as it would take alot of money to manipulate the market effectively, however that doesn't mean there isn't some hedgefunder in America who dosen't have the dough to do it. Now what happens if 1000 people with money are doing this technique? That makes us the suckers, and gives you a pretty basic understanding of whats going on with these crazy prices... How do we correct this? STOP SELLING YOUR BITCOINS...

[stsbrad]

tyvm!!!

[tripper22]

Thanks FlipPro for all the tips. Its very appreciated.

[Xenland]

This is some great advice, We need to educate the community(and my self) as Bitcoin economy is needs some stability and I think education will help this future stability.

[Houdini]

If you want to manipulate the market you throw down a huge amount of Bitcoins on the Ask side so you literally flood the market with coins thus making an "ask wall". This will (in theory) drive the prices down so that you can then buy-in artificially cheaper and reward yourself on the way back up when people follow.

Aha...
Why don't you also mention the reverse possibility of people throwing down a huge amount of bitcoins on the bid side to drive the prices up so they can sell at a high price ?
Actually why do all your post seem to be trying to rise the price of bitcoins ? And masking that as a "newbie helper" ! A bull in sheep's clothing !

P.S.
All you people thanking Flip for the advice bear (no pun intended) in mind he has his personal interests in manipulating other people's opinion, just like 99% other people here. Belief makes prices, not reason, and who controls belief controls prices.

[FlipPro]

If you want to manipulate the market you throw down a huge amount of Bitcoins on the Ask side so you literally flood the market with coins thus making an "ask wall". This will (in theory) drive the prices down so that you can then buy-in artificially cheaper and reward yourself on the way back up when people follow.

Aha...
Why don't you also mention the reverse possibility of people throwing down a huge amount of bitcoins on the bid side to drive the prices up so they can sell at a high price ?
Actually why do all your post seem to be trying to rise the price of bitcoins ? And masking that as a "newbie helper" ! A bull in sheep's clothing !

P.S.
All you people thanking Flip for the advice bear (no pun intended) in mind he has his personal interests in manipulating other people's opinion, just like 99% other people here. Belief makes prices, not reason, and who controls belief controls prices.

It's the never ending battle of buyers vs sellers. Our entire net-worth continues to grow but unfortunately people refuse to see the truth, see the list of legitimate businesses that take Bitcoin https://en.bitcoin.it/wiki/Trade , and it continues to grow and grow every day. People are waking up to what this is, and slowly a better service will emerge that will compensate for the few flaws that come with a decentralized cryptographic currency.
And of course I have personal interest in this, we all do. That's the point of it being a Peer to Peer currency, everyone has shared stake. That's what I think makes Bitcoin a fair and solid investment, and things will only get safer and better. Besides our developer overlords are working hard with the government to legitimize Bitcoin, check this video out it's Gavin in the CIA. http://www.youtube.com/watch?v=Fv4q4i2Ktd0

[vulgata]

If you want to manipulate the market you throw down a huge amount of Bitcoins on the Ask side so you literally flood the market with coins thus making an "ask wall". This will (in theory) drive the prices down so that you can then buy-in artificially cheaper and reward yourself on the way back up when people follow.

Aha...
Why don't you also mention the reverse possibility of people throwing down a huge amount of bitcoins on the bid side to drive the prices up so they can sell at a high price ?
Actually why do all your post seem to be trying to rise the price of bitcoins ? And masking that as a "newbie helper" ! A bull in sheep's clothing !

P.S.
All you people thanking Flip for the advice bear (no pun intended) in mind he has his personal interests in manipulating other people's opinion, just like 99% other people here. Belief makes prices, not reason, and who controls belief controls prices.

Well anyone, after reading these points, can expand upon it with their own research.  Nobody should take one source as gospel no matter how good it is, and it's not like he said anything wrong.  Plus, what if his personal interests line up with mine?

It's the never ending battle of buyers vs sellers. Our entire net-worth continues to grow but unfortunately people refuse to see the truth, see the list of legitimate businesses that take Bitcoin https://en.bitcoin.it/wiki/Trade , and it continues to grow and grow every day. People are waking up to what this is, and slowly a better service will emerge that will compensate for the few flaws that come with a decentralized cryptographic currency.
And of course I have personal interest in this, we all do. That's the point of it being a Peer to Peer currency, everyone has shared stake. That's what I think makes Bitcoin a fair and solid investment, and things will only get safer and better. Besides our developer overlords are working hard with the government to legitimize Bitcoin, check this video out it's Gavin in the CIA. http://www.youtube.com/watch?v=Fv4q4i2Ktd0

Brilliant observation.  We're all invested in it, we all run the backbone/overhead, and we're all responsible for its use/misuse.  I am optimistic too

Even the CIA couldn't get the 50%+ majority needed for a doublespend attack, and we've barely started...

[grod]

Even the CIA couldn't get the 50%+ majority needed for a doublespend attack, and we've barely started...

Are you kidding me?  Our network is roughly 4 million dollars worth of 5830s.  NSA & friends are NOT using graphics cards, they have had dedicated hardware for every major crypto even before the algorithms become popular.  Buildings full of hardware.

If the US government was interested in disrupting bitcoins as opposed to attending to other matters of national security you'd be looking at tens of millions in difficulty after a weekend, way more if they got serious.

The US government throws millions of $ at various pork projects non-stop.  If BTC were seen as a threat to national security or even domestic policy -- well, let's take a modest budget of 10 to 20 million dollars.  About the same price as an average supercomputer.  Look at the ASIC thread to see what kind of hash rates can reasonably be expected from a 2 million R&D investment, spend the remaining 8-18 mil on manufacturing 5 gigahash devices for 500 bucks a pop and there you go.  Conservatively 80-180 terahash on a budget even a municipality could swing.  In reality volume chip pricing mean you'd be looking at 500 terahash and a difficulty approaching 100 million for that 20 meg.

To put this in further perspective, the "Bridge to nowhere" project cost 400 million.

Still think the current 14 terahash looks invincible?

[Xenland]

Looks like price is going back up I wonder why the bubble is growing again after such a quick drop

[Xenland]

Looks like price is going back up I wonder why the bubble is growing again after such a quick drop

Looks like i answered my own question when i found this..... https://bitcointalk.org/index.php?topic=35827.0

[cicada]

Looks like price is going back up I wonder why the bubble is growing again after such a quick drop

Correlation generally doesn't equal causation, but in this case I think both the drop and the spike were wholly intentional.  Someone testing the waters to see if the market would react in a predictable way, and I think it certainly has.

A wise investor with enough money to move the market like this will be looking for a saturation point.  I expect to see quite a few more wild swings while this person/group plays around, until the market grows large enough to make high-volume, low-margin transactions more predictable and reliable.