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December 30, 2013, 02:56:01 PM |
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If there is a big drop looking at the OB ahead of time won't tell you where the likely floor will end up. And if you don't get your orders in early enough, you'll only get filled last minute if you're about %15+ above the floor (assuming a big %50+ drop, although there is a clear trend of reducing volatility).
My rule of thumb is that roughly half of the orders will get out of the way of the drop as it's happening. I don't have the data on this, it just seems to be true. I'm always looking at the order book and asking how much volume will sell, resulting in what price, in a given time, in a panic given that buy orders will be cancelled and replaced lower. If you're at that lower point earlier then others, then your order gets filled first (presuming your exchange isn't heavily rigged).
But in Bitcoin world where a $130 move over Christmas can happen when no one in the West or in Asia can get money on an exchange, this hounding the market can be like digging down for coal when gold is jumping out of the ground (I coined it here first! No stealsies!). I've been looking for the opposite phrase to "picking up nickels in front of a steam roller" for a month now.
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