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Author Topic: Here we go again, another major price drop for bitcoins  (Read 21518 times)
PatrickHarnett
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September 03, 2011, 02:30:20 AM
 #161

Where did you sell coins for $10.50? Mt. Gox has been trading 8.71 - 8.21 in the past 24 hours.

(Since it's P2P it's difficult to arbitrage though since you get a several day delay)


Helps to hold coin and $ in several places/currencies at once.

BTW the trades were in TH-LRUSD  It's hardly giving away any information to say the smaller/less liquid boards have some fun opportunities.  I've done some "interesting" trades on wbxAUD and B7EUR recently (although I have some issues with B7 switching currencies unexpectedly).  A few weeks ago it was TH-AUD, but I don't have many AUD left there at the moment.  I don't bother trading on Gox much - no fun.

Edit: an afterthought, now Gox is doing JPY I might play there a bit more, but none of the exchanges uses my home currency so I don't particularly care which is which - I started originally with PLN (zloty's?)
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prof7bit
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September 03, 2011, 11:34:05 AM
 #162

(Traders still don't outperform chance. If you want to claim they do, please point to relevant data)

Traders don't have to outperform chance because markets simply don't move by chance. Why is this so difficult to understand?

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Blockchain.info -> Multibit converter (and much more) https://github.com/prof7bit/wallet-key-tool
defxor
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September 03, 2011, 11:45:50 AM
 #163

Traders don't have to outperform chance because markets simply don't move by chance. Why is this so difficult to understand?

Likely because you haven't understood the discussion you replied to Smiley

Jack of Diamonds
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September 03, 2011, 04:04:36 PM
 #164

Where did you sell coins for $10.50? Mt. Gox has been trading 8.71 - 8.21 in the past 24 hours.

http://bitmarket.eu is a good place to sell at a premium. I know because I usually buy at a premium there. There are large differences in price just depending on whether you want to look at trades in USD or EUR.

(Since it's P2P it's difficult to arbitrage though since you get a several day delay)


Don't say you sold at a $2 premium through PayPal. Please.

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bonker
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September 03, 2011, 08:53:59 PM
 #165

There is no chance in trading, you've just got to learn the rules.

I'm sorry, but if you want to participate in a serious discussion I suggest you do it from a non-troll account. While I applaud the troll posts you have in your posting history (some of them are really really funny) it's just impossible to take anything you write seriously even if that would suddenly be your intention Smiley



Just laying down the facts, man. Chance is an illusion conjured by the ego of a poor trader.






BTC: 1FU1EX4xCEt26rezoNaEZ1rhbqA4VVP8pq
LTC: Li8UYJprncRwmNzvRs53UG714Lcps2Yy8R
defxor
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September 03, 2011, 09:05:20 PM
 #166

Just laying down the facts

To do that you need to learn the facts first Wink Sorry, trolling doesn't cut it.
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September 03, 2011, 09:46:46 PM
 #167

Just laying down the facts

To do that you need to learn the facts first Wink Sorry, trolling doesn't cut it.


I loose far more money in the markets than I could by chance alone.



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the joint
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September 03, 2011, 10:04:13 PM
 #168

But, there is no chance in trading.  There may be factors unknown to you, but that does not make it chance.  Everyone is placing conscious bid/sell orders and the bots are running according to algorithms dependent upon set parameters.

What's the weather going to be like in six days?

(Traders still don't outperform chance. If you want to claim they do, please point to relevant data)



The weather example is irrelevant.  You don't need to know what the exact market value will be to make a profit.  You just have to know which direction it's going.

I'm in Chicago.  We just got out of a very warm front and a cold front is moving in today.  It has been over 90 degrees the last few days.  I predict the weather will be cooler than 90 degrees in 6 days. 

And, I predict it will be even colder in 2 months from now.

About 90% of my trades have been profitable ones.  I've made approx. 30-40 trades on tradehill.  Try flipping a coin 30-40 times and see how often you get 90% heads.


defxor
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September 03, 2011, 10:12:39 PM
 #169

About 90% of my trades have been profitable ones.  I've made approx. 30-40 trades on tradehill.  Try flipping a coin 30-40 times and see how often you get 90% heads.

Since you're the one claiming it would be out of the ordinary, why don't you do the math Smiley You of course know how to do basic statistical calculations.

(PS: Traders talking about their success rates after the fact, using words like "about" and "approx" don't ever show up in scientific research. Can you guess why that would be?)

the joint
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September 04, 2011, 09:46:39 PM
 #170

About 90% of my trades have been profitable ones.  I've made approx. 30-40 trades on tradehill.  Try flipping a coin 30-40 times and see how often you get 90% heads.

Since you're the one claiming it would be out of the ordinary, why don't you do the math Smiley You of course know how to do basic statistical calculations.

(PS: Traders talking about their success rates after the fact, using words like "about" and "approx" don't ever show up in scientific research. Can you guess why that would be?)


Ugh fine.
Trials = 40
40*.9 = 36
What is the chance that I flip AT LEAST 36 heads (at MOST 4 tails) -- That is, if the choices are profiting vs. not profiting on a trade, what is the likelihood that I will profit AT LEAST 36 times?

Total possible outcomes = 2^40 = 1024^4 = 1099511627776
nCr  (40,4) = 91,310 possible 4 tail outcomes
nCr (40,3) = 9880 possible 3 tail outcomes
nCr (40,2) = 780 possible 2 tail outcomes
nCr (40,1) = 40  possible 1 tail outcomes
nCr(40,0) = 1 possible 0-tail outcomes
= 102011  possible outcomes or 4 tails or less
(91,310/1099511627776) + (9880/1099511627776) + (780/1099511627776) + (40/1099511627776) + (1/1099511627776) ~ 9.279^-8

.00000009279 = .000009279% chance I will flip at least 36 heads (i.e. trade positively at least 36/40 times)


.000009279 * x = 100
x = 100/.000009279 = 10777023.38614075

Yep, I guess I got really lucky!  There was only ABOUT a 1 in 10,777,023 chance that I was as least as successful as I was!

That is because, as you know...I profited purely by chance.

Edit:  Note this calculation is an oversimplification of the problem and impossible to truly demonstrate.  There are fees, there is a possibility the market will not move at all, or will not move enough to compensate for the fees.  Simply put, it is impossible to create a formula for calculating the 'chances' of profiting x number of times after y trades because there are too many (key word) UNKNOWN variables.  These unknown variables are what make you think the market is due to chance, but in reality they are simply that -- unknown.
 
Edit 2:  You do realize that the chances of trading at 90% profit become less likely the more times I trade...right?  I hope you weren't implying that my chances of doing this across 40 trials were good, were you? 



defxor
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September 04, 2011, 10:21:58 PM
 #171

.00000009279 = .000009279% chance I will flip at least 36 heads (i.e. trade positively at least 36/40 times)
 
Edit 2:  You do realize that the chances of trading at 90% profit become less likely the more times I trade...right?  I hope you weren't implying that my chances of doing this across 40 trials were good, were you? 

Nah I wanted to see if you considered after-the-fact to be the same as before-the-fact, which you did. Even if we go by "approx" and "about" being at the top of your own estimation - your numbers show that if there are 11 million traders in the world one will indeed be so lucky by chance alone.

That's what the whole "traders don't outperform chance" means. We talk about the successful ones, not the ones that don't beat the market.

So, I propose the following: For 40 days you'll post if you believe the price of BTC will be higher or lower than the day before, MtGox GMT timezone. Now if we're indeed on a steady downward slope due to inflation there should be a slight skew, but I'm quite sure you won't hit 36/40.

(The point being that after-the-fact is a lot easier, all you have to do is to be selective as to which trades you count)

I've never so far had anyone doing TA take me up on such a wager anyway.
the joint
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September 04, 2011, 11:36:35 PM
 #172

.00000009279 = .000009279% chance I will flip at least 36 heads (i.e. trade positively at least 36/40 times)
 
Edit 2:  You do realize that the chances of trading at 90% profit become less likely the more times I trade...right?  I hope you weren't implying that my chances of doing this across 40 trials were good, were you?  

Nah I wanted to see if you considered after-the-fact to be the same as before-the-fact, which you did. Even if we go by "approx" and "about" being at the top of your own estimation - your numbers show that if there are 11 million traders in the world one will indeed be so lucky by chance alone.

That's what the whole "traders don't outperform chance" means. We talk about the successful ones, not the ones that don't beat the market.

So, I propose the following: For 40 days you'll post if you believe the price of BTC will be higher or lower than the day before, MtGox GMT timezone. Now if we're indeed on a steady downward slope due to inflation there should be a slight skew, but I'm quite sure you won't hit 36/40.

(The point being that after-the-fact is a lot easier, all you have to do is to be selective as to which trades you count)

I've never so far had anyone doing TA take me up on such a wager anyway.

The problem is that you are assuming that market movement is independent of the individual trades.

Suppose I guess "the market will move up 40 consecutive days"

I then make 40 consecutive trades, 1 on each day, buying enough coins such that the market goes up for 40 consecutive days.

At this point, my prediction was correct.  The market moved up 40 consecutive days in a row.  But, I did not profit 40 consecutive days in a row.

"Outperform" implies the action of the traders.  This can either mean "outperform" in terms of profiting, or "outperform" in terms of guessing market movement.  But the 2 are not always mutually exclusive.

When a large seller dumps coins, his action impacts the market.  Suppose the price has been relatively steady for a few days at $9, bouncing between $8.80 and $9.20.  Hard to guess which way it's gonna go in an hour, right?

Now, suppose one such seller dumps 5000 BTC dropping the price from $9 to $8.  Care to make a new guess of where the price is going to go?

It seems you are suggesting that market movement is independent of the prior trades.  So, for example, if I were to guess what the market price would be 1 month from now, I would obviously not have the data available to me between now and those 30 days.  During the passing of those 30 days, I would accumulate more data with which I could adjust my guess.  It would be hard to guess the value in 30 days because I do not know what the choices of other traders will be between now and then.  However, the trades that occur between now and then are NOT random.

The trades that occur between now and then will be made by traders who ARE considering previous trades, and the trades they make continuously refine the guesses made by others.  I cannot guess what the next trade that is made is going to be.  But, when you confound the 'guess' with my desire (and the desire of everyone else) for profit, things get more interesting.  You are, in effect, placing a new constraint on the 'guess.'  The guess no longer is a pure guess...the parameters become more refined because you know everyone wants to make a profit.

Suppose I knew where every individual's buy-in price was.  This is a factor that contributes to the current market price (after all, the current market price is only the current market price due to the trades made to date).  Add to this the total sum of $ available to each individual to purchase additional BTC.  This piece of information means there is a known limit to value of BTC.  The minimum value is 0, the maximum value is the total amount of $ in the economy divided by the total number of BTC.  This places another limitation on the possibility of the value.  If there is only (for exmaple) $1,000,000 that can possibly be put into the BTC market, and only 1000 BTC available, you know that the value of BTC can never exceed $1000.  So, no 'guess' can be made that the value would be over $1000.  It is an absolute certainty that the value will be below $1,000.  It is impossible that the value will be over $1,000. 

The point is, with every additional piece of information available AT THE GIVEN MOMENT (before the fact) you can make a more educated guess.  Can I guess whether or not the next trade will be a buy or sell?  Not without knowing who the next seller will be or what their intention is.  If I know trader x will buy 100 BTC at y time, then I know the market will go up then.  Suppose I also know that the most BTC that any single person has is 10,000.  While I don't know the exact value of the next trade, I do know that it will be impossible for that trade to exceed 10,000 BTC and I can be absolutely certain it will be less than 10,000 BTC.  It is certain that the next trade will be a trade of amount x BTC.  The more factors I can take into account, the more I will be aware of the constraints leading to this certainty.

So, back to what you're getting at.  If I make guesses on up/down movement for the next 40 days, will I hit 90% again?  Probably not.
BUT, saying this is a lack of outperforming 'chance' is an inappropriate statement.

You are, in effect, correlating chance with "unknown" factors that have nothing to do with chance at all.  They are, in fact, variables that are available and can be known, but simply aren't to you.
There are, however, factors which are known and available at the present moment.  These include current price, market depth, your own intentions, the current number of BTC in the economy, etc.

In particular, the market depth is the best indicator for predicting future movement.  This is because from this you can infer the general 'intention' of the market.  It's like an emotion - you can get a gist for how the market 'feels' at a given moment.  This is why, as you say, if I were to predict that the market would go down tomorrow, I may have a better chance of being right since, as you acknowledged, it seems as if we are on a slight downward slope.

In conclusion, the problem I see with your argument is that you are assuming a cross-sectional piece of data is strictly that...cross-sectional, and that a singular cross-sectional event cannot be used to predict a future event.  But, in reality, the cross-sectional event is not truly cross-sectional - it speaks of after-the-fact conditions.  That is, the event itself indicates constraint of potential future movement.  This makes the 'chance' analogy an invalid one.

Edit:  Here's food for thought.
Only 1 of 3 things can happen.  Event A (market goes up) Event B (market goes down) or Event C (market stays the same).
If event A happens, events B and C are impossible.
If event B happens, events A and C are impossible.
If event C happens, events A and B are impossible.
There is no possibility.  There is only impossibility since only A B or C will happen.
In other words, there is only certainty (no chance) that one of these will happen, so there is only certainty (no chance) that 2 will not.  
Chance is impossible because chance implies that A B or C could happen when in actuality only 1 WILL happen.

Could I have gone to the market today at noon instead of sleeping in?  Nope.  Never could have happened.  Why?  It didn't happen.  Could I go to the market in 1 hour from now?  Not if I don't go 1 hour from now.  One of these options (going or not going) is impossible and there is absolutely zero chance that it will happen.  The other isn't possible...it is certain to be.

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September 05, 2011, 01:38:41 PM
 #173

.00000009279 = .000009279% chance I will flip at least 36 heads (i.e. trade positively at least 36/40 times)
 
Edit 2:  You do realize that the chances of trading at 90% profit become less likely the more times I trade...right?  I hope you weren't implying that my chances of doing this across 40 trials were good, were you? 

Nah I wanted to see if you considered after-the-fact to be the same as before-the-fact, which you did. Even if we go by "approx" and "about" being at the top of your own estimation - your numbers show that if there are 11 million traders in the world one will indeed be so lucky by chance alone.


There aren't 11 million people trading bitcoins.  And if there were, do you think it's really that likely that we happen to be talking to him/her?
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September 05, 2011, 03:38:35 PM
 #174

Nah I wanted to see if you considered after-the-fact to be the same as before-the-fact, which you did. Even if we go by "approx" and "about" being at the top of your own estimation - your numbers show that if there are 11 million traders in the world one will indeed be so lucky by chance alone.
There aren't 11 million people trading bitcoins.  And if there were, do you think it's really that likely that we happen to be talking to him/her?

Of course there aren't. Neither are we talking to someone whose "approx" and "about" really means 36/40 Wink But you should expect that the most vocal about how good traders they are indeed are the ones on the far (profitable) end of the distribution - the ones who lose money don't usually go around claiming that they can beat the market.

This makes the 'chance' analogy an invalid one.

Are you prepared to put your claims to the test or not? After-the-fact all traders beat the market. Before-the-fact no one wants to step up to the challenge.
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September 05, 2011, 04:47:08 PM
 #175

Im still selling my coins on ebay for 13 to 16 a coin by selling .5 of a bitcoin for 6.50 on up, that has been working really well for the past 3 weeks.  I stopped selling anything over 2 bitcoins to help avoid scams.  So far only had to deal with one chargeback over the past 6 months.  Thats the only way I see making money with bitcoins or beating the market.  Its definitely chance with bitcoins no doubt about it.  Now down in the 7s, scary, could drop to 2 bux tomorrow, who the hell knows.

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September 05, 2011, 08:36:57 PM
 #176


Trading in isolation is a zero sum game.  For every loser there is a winner.

With bitcoins currently having a negative revenue stream (power to run the network is an ongoing cost -- IIRC it's around 10 megawatts at 10c/kwhr(?)) anyone breaking even has already beaten the odds.
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September 05, 2011, 10:26:34 PM
 #177

Shit anyone who has made money has beat the odds.  Who would have thought this would have made it as long as it has, and still going.  The exchanges are whos making the big bucks and the very early investors, or lucky guys that hit that 30 dollar each bitcoin spike and sold everything, but beyond that its tough to make real money with bitcoins.

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September 05, 2011, 10:56:12 PM
 #178


Trading in isolation is a zero sum game.  For every loser there is a winner.

With bitcoins currently having a negative revenue stream (power to run the network is an ongoing cost -- IIRC it's around 10 megawatts at 10c/kwhr(?)) anyone breaking even has already beaten the odds.

No.  This is wrong.  First, you are assuming there are calculable odds and this not the case.  You can't calculate or assume there are odds if you aren't aware of all factors involved.  If you are aware of all factors involved, then there arguably aren't any odds anyway.

2nd, it only takes 1 loser.  It's quite possible that 90% of all Bitcoiners have profited and that 10% have simply lost and lost big.  And, it's possible for all to profit except for 1.


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September 06, 2011, 08:13:39 PM
 #179

Its way more probable that 75 percent have lost money or broke even and 25 percent have made some cash, some won big time getting lucky, others got really unlucky and lost big, but its probably more like 60/40

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September 18, 2011, 02:29:03 PM
 #180

It's quite possible that 90% of all Bitcoiners have profited and that 10% have simply lost and lost big.  And, it's possible for all to profit except for 1.

Yeah and possible for it to be the other way around... 10% won and won big and the other 90% have lost money.

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