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Author Topic: Here we go again, another major price drop for bitcoins  (Read 21509 times)
S3052
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August 28, 2011, 09:09:22 AM
 #41

It is no chance if someone has consistently a track record of over 70% success.

This is based on statistics.

And no: I don't think that for just being 70% right I deserve a Nobel price.

>15years analysis experience

Always do your own due diligence & consult your financial advisor. Never invest unless you can afford to lose your entire investment.

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defxor
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August 28, 2011, 09:20:53 AM
 #42

It is no chance if someone has consistently a track record of over 70% success.

This is based on statistics.

And no: I don't think that for just being 70% right I deserve a Nobel price.


Thank you for proving conclusively that you have absolutely no idea what chance is Smiley With enough analysists, someone will - by pure chance - outperform the market for X time. It's still completely expected, and is no different from flipping coins. It does not in any way point to the analyst using a method which has predictive power.

(I'm also quite positive your track record isn't 70%, but that's beside the actual point)

This comic describes the situation pretty well:

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August 28, 2011, 09:48:35 AM
 #43

"So, which way is the market going to move today, Jim?"

Once again defxor demonstrates that he thinks being a good trader is about knowing whether to buy or sell.

Pretty much an irrelevant question if you want to be profitable.

How about:

"So, if it starts to move up, what is your exposure and entry point and stop loss/take profit levels, or, if it starts to move down, what are your exposure amounts, entry point and stop loss/take profit levels, Jim?"

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August 28, 2011, 09:51:21 AM
 #44

being a good trader is about knowing whether to buy or sell.

is functionally equivalent to

Quote
"So, if it starts to move up, what is your exposure and entry point and stop loss/take profit levels, or, if it starts to move down, what are your exposure amounts, entry point and stop loss/take profit levels, Jim?"

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August 28, 2011, 09:55:20 AM
 #45

Are the methods for analyzing the charts made for something with this kind of inflation?




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August 28, 2011, 10:00:01 AM
 #46

Are the methods for analyzing the charts made for something with this kind of inflation?



Yes, the charts work for very well for this. If you are interested, I can share some examples, but don't have time today.

>15years analysis experience

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August 28, 2011, 11:17:42 AM
 #47

For a good analysis on how chance compares against market experts, I suggest reading The Drunkard's Walk, by physicist Leonard Mlodinow. Dexfor's point is valid, I'm afraid. The key statistical issue isn't whether someone has made money in over 70% of his or her trades (whether by choosing when to buy/sell, or how to apply stop-loss is irrelevant).

The question is, given that there are x number of traders, all trying their best, what are the chances that, in any given time frame, ONE of them at least will hit 70% of positive trades... And the answer the chances are really quite high. The ones who didn't reach 70% we simply don't know about. But the fact remains that with nothing more sophisticated than a coin toss SOMEONE would have hit 70%.

In his book, Mlodinow explores the case of one Wall Street trader who was hailed as a financial hero because he outperformed the Dow 17 years in a row. On the face of it, it seemed like almost insurmountable odds, but when properly analyzed it turned out to be something closer to one in two.
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August 28, 2011, 12:26:41 PM
 #48


Repeat: No analyst ever has outperformed chance. Ever.


Now you made my day. I can't stop laughing. Grin



It's exactly people with such beliefs allow some analysts to outperform chance.

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August 28, 2011, 12:58:33 PM
 #49

For a good analysis on how chance compares against market experts, I suggest reading The Drunkard's Walk, by physicist Leonard Mlodinow. Dexfor's point is valid, I'm afraid. The key statistical issue isn't whether someone has made money in over 70% of his or her trades (whether by choosing when to buy/sell, or how to apply stop-loss is irrelevant).

The question is, given that there are x number of traders, all trying their best, what are the chances that, in any given time frame, ONE of them at least will hit 70% of positive trades... And the answer the chances are really quite high. The ones who didn't reach 70% we simply don't know about. But the fact remains that with nothing more sophisticated than a coin toss SOMEONE would have hit 70%.

In his book, Mlodinow explores the case of one Wall Street trader who was hailed as a financial hero because he outperformed the Dow 17 years in a row. On the face of it, it seemed like almost insurmountable odds, but when properly analyzed it turned out to be something closer to one in two.

Someone skilled in the art of money management can be profitable even if only 30% of trades go their way.

Because they know when/how to cut the losing trades, and let the winning trades run.

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August 28, 2011, 02:35:27 PM
 #50

Are the methods for analyzing the charts made for something with this kind of inflation?



Yes, the charts work for very well for this. If you are interested, I can share some examples, but don't have time today.

Didn't you say we were in rally mode after we broke 11?
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August 28, 2011, 03:17:45 PM
 #51

It's exactly people with such beliefs allow some analysts to outperform chance.

None. If you want to claim differently, feel free to prove your point. Start with understanding chance, though.

Someone skilled in the art of money management can be profitable even if only 30% of trades go their way.

Because they know when/how to cut the losing trades, and let the winning trades run.

Which is exactly functionally equivalent to "buy and sell". If you need "functionally equivalent" to be explained just let me know and I'll try to use other words.
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August 28, 2011, 04:12:01 PM
 #52

Its been pretty stable for over a month now, sitting around 10 to 11 bux even during the weekend down time.  Now its pretty quickly dropped to 8 bux a coin.  So how low we going this time.  I bought a bunch when it hit 9 today, now wish I would have waited of course.  Problem is, if bitcoin keeps freaking going from 11 to 7, to 12, to 8 back and forth its just making it harder and harder for there to be a strong bitcoin economy.  Sellers are not going to want to sell products and services for something that changes its value so dramatically and so quickly.  We need to fix that somehow, it has to stabilize even if its at 5 bux a coin, it just has to be stable withing a dollar for there to ever be any future economy for bitcoin, or at least thats how I feel.

Don't worry, prices are going to be more stable. just give it some time :-)

We are seeing large price drops because a few early adopters are selling large amounts at once (the last major sale was 24k bitcoins)
OTOH, buyers tend to buy much smaller amounts, typically a few hundred bitcoins.
This means that those 24k btc, that were owned by a single person, are now in the hands of dozens of people.

Bitcoins might represent a large percentage of the wealth of some early adopters; for these people, it makes sense to diversify their assets, this is why they sell.
However, each of those large sales tends to spread bitcoins among more people.
As time passes, there will be less and less people capable of causing these large prices drops.


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August 28, 2011, 05:03:55 PM
 #53


Now, 2 1/2 months of the long, slow slide.

Since the bubble popped in June, we've had 2 1/2 months of long, slow slide. The pattern is clear enough. There is no "crash". There is no "rally". There is just some noise on top of a long term drop of about 20% per month.

There's a lot of volatility because the market is thin relative to the number of Bitcoins outstanding. Any big trade can disrupt the market. But it comes back to the long, slow slide trend line each time.

Each time there's a drop, some recovery follows. Each peak, though. has been consistently lower than the previous one.  This is normal post-bubble behavior.

Many people here seem to be in denial about this. 
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August 28, 2011, 05:06:46 PM
 #54


Now, 2 1/2 months of the long, slow slide.

Since the bubble popped in June, we've had 2 1/2 months of long, slow slide. The pattern is clear enough. There is no "crash". There is no "rally". There is just some noise on top of a long term drop of about 20% per month.

There's a lot of volatility because the market is thin relative to the number of Bitcoins outstanding. Any big trade can disrupt the market. But it comes back to the long, slow slide trend line each time.

Each time there's a drop, some recovery follows. Each peak, though. has been consistently lower than the previous one.  This is normal post-bubble behavior.

Many people here seem to be in denial about this. 

lol bitcoin is a bubble! it poped 2 1/2 months ago!

get out while you still can SELL SELL SELL!

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August 28, 2011, 05:08:36 PM
 #55



This is normal post-bubble behavior.

Are you claiming there's predictive information in that graph?



I can only assume you were on the barricades in the year 2000 telling everyone that the gold bubble had burst.

(My point has nothing to do with gold per se, only with predictions-based-on-graphs)
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August 28, 2011, 05:14:29 PM
 #56

It's exactly people with such beliefs allow some analysts to outperform chance.

None. If you want to claim differently, feel free to prove your point. Start with understanding chance, though.

Someone skilled in the art of money management can be profitable even if only 30% of trades go their way.

Because they know when/how to cut the losing trades, and let the winning trades run.

Which is exactly functionally equivalent to "buy and sell". If you need "functionally equivalent" to be explained just let me know and I'll try to use other words.


I guess you're right, just like 1 billion shades of gray is functionally equivalent to black and white.

Let's say in your world of black and white we decide to flip a coin and sell. How many should I sell? All available? Half of them? 14.5892% of them?

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August 28, 2011, 05:18:43 PM
 #57

Are you claiming there's predictive information in that graph?



I can only assume you were on the barricades in the year 2000 telling everyone that the gold bubble had burst.

(My point has nothing to do with gold per se, only with predictions-based-on-graphs)

Actually we are at 75 in this graph, not 00

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August 28, 2011, 05:36:21 PM
 #58

Let's say in your world of black and white we decide to flip a coin and sell. How many should I sell? All available? Half of them? 14.5892% of them?

Irrelevant for the argument. I still believe it's the "functionally equivalent" part you're having problems with. Since I have no idea what your education level is I don't know how best to explain it.

You know that absolutely everything you can do with a computer is in reality done by just flipping bits, right? In the same way everything you can possible dream up with trading strategies boils down to "buy and sell".

I believe another poster referenced a book on the topic, where they show how traders don't outperform chance. I suggest you go read it if you want more details.
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August 28, 2011, 06:17:05 PM
 #59

In the same way everything you can possible dream up with trading strategies boils down to "buy and sell".

I think you're wrong there, because at any given moment in time, a trader really has 3 options: buy, sell, wait.

The impatient trader sells for a small profit and congratulates himself on a 'successful' trade, when he could instead wait, wait, wait, and sell for a large profit.

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August 28, 2011, 06:19:09 PM
 #60

I think you're wrong there, because at any given moment in time, a trader really has 3 options: buy, sell, wait.

Are you even trying to be serious?

Yes, of course there's not-buy/not-sell also. In my computing example, that would be an idle CPU. It doesn't change the argument whatsoever.

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