rpietila Wall Observer - the Quality TA Thread ;)

[pa]

the exponent error point is the good point in your post

I did not get how there can be exponent error if all you do is observe some set of data and draw a least-squares trendline, explain?

I think aminorex is pointing out that there is an underlying "real" trend that you are merely estimating using the available price data. So the error is just the difference between your estimated exponent (based on the available data) and the "real" exponent (which is presumably driven by multiple fundamental dynamically varying factors that we can never fully enumerate nor perfectly measure).

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[Pruden]

I found the chart I was talking about:



Kudos to jl2012 for the work ( https://bitcointalk.org/index.php?topic=470453.0;all ) and oda.krell for pointing it out to me.

As you can see in 2010-2011 the then most accurate trendline (red line) seems quite robust but then, over a year, shifts to another exponent, the current one, which has been valid for a further year and a half starting in mid-2012.

[rpietila]

As you can see in 2010-2011 the then most accurate trendline (red line) seems quite robust but then, over a year, shifts to another exponent, the current one, which has been valid for a further year and a half starting in mid-2012.

Ln base (instead of log) makes it difficult to read. But the more dangerous design decision is to start the graph from Mt.Gox inception, which is really a totally arbitrary choice of a startdate. There has been Bitcoin trading before Mt.Gox, the fact that finding the data is hard does not give us the right to ignore it! I have estimated it to be a flat $0.005/1BTC based on multiple isolated trades, and the ballpark is certainly correct because there has not been any trades below $0.001 or above $0.010 before the opening of Gox, which instantly lifted the price to a new level of about $0.05-$0.08. (Again, many have criticized this, but never given any recommendation about what might be better, NOR helped me to find more data on the trading in 2009-10.)

What kind of trading signals has that one given? Like I told in its thread, mine has excelled in buyback zones - the previous 2 signals at $2.28 in October-2011 and $71 last summer were spot on, and this time the signal came at $460 some days ago.

[JHammer]

New to all this. 

Very interested in learning about Technical Analysis..

Would you guys be so kind to recommend any good books and web sites where a complete newbie could learn about  Technical Analysis?

Please don't laugh but I just purchased the second edition Dummy's Guide to Technical Analysis..  It looked like a good book to get a newbie overview..

I read somewhere where Technical Analysis is right something like 66% of the time..  Only 16% better then a coin flip but that 16% still means a lot..

[podyx]

New to all this.  

Very interested in learning about Technical Analysis..

Would you guys be so kind to recommend any good books and web sites where a complete newbie could learn about  Technical Analysis?

Please don't laugh but I just purchased the second edition Dummy's Guide to Technical Analysis..  It looked like a good book to get a newbie overview..

I read somewhere where Technical Analysis is right something like 66% of the time..  Only 16% better then a coin flip but that 16% still means a lot..

*32% better then a coin flip

16/50(refer to 50/50 as in coin flip)=0.32=32%
This is an important factor to account when talking about percentage imo

[AlexGR]

Is anyone using neural networks with the BTC price dataset?

[jbah01]

Is anyone using neural networks with the BTC price dataset?

Check out http://www.btcpredictions.com, seems to be a decent effort.
Don't know to much about the neural networks yet, but will definitely look into it of I can find some time. The guy also has a thread here somewhere.

[chessnut]

New to all this. 

Very interested in learning about Technical Analysis..

Would you guys be so kind to recommend any good books and web sites where a complete newbie could learn about  Technical Analysis?

Please don't laugh but I just purchased the second edition Dummy's Guide to Technical Analysis..  It looked like a good book to get a newbie overview..

I read somewhere where Technical Analysis is right something like 66% of the time..  Only 16% better then a coin flip but that 16% still means a lot..

That is not a fact and the wrong way to go about it. Technical analysts hope to make money even if they are only right 40% of the time.

It would be healthy for you to learn about TA, but that is only the tip of the ice berg of trading. your trading will not reward you until you are in tune with fundamentals and understand a few things about sentiment, fear, greed and risk management. Not to mention, you will need a thick skin to trade the markets. some say that trading the markets is the greatest test of character. so dont put too much faith in your book.

[AlexGR]

Is anyone using neural networks with the BTC price dataset?

Check out http://www.btcpredictions.com, seems to be a decent effort.
Don't know to much about the neural networks yet, but will definitely look into it of I can find some time. The guy also has a thread here somewhere.

Thanks... apparently neural networks are able to perceive patterns in "chaos" which we tend to think are random or insignificant, thus paying no attention to them.

Based on the pattern detection neural networks* can then plot future trends. Kind of (automated) technical analysis on steroids, as it's detecting multiple patterns simultaneously, not only tops/bottom/lines etc... But there are various kinds of neural networks and not all have the same accuracy.

* It's just a computer algorithm that emulates how biological neurons operate.

[aminorex]

Considered apart from training, feed forward networks are just iterated weighted sums of logistic regressions.  Recurrent networks are more...complicated.

[ArticMine]

As you can see in 2010-2011 the then most accurate trendline (red line) seems quite robust but then, over a year, shifts to another exponent, the current one, which has been valid for a further year and a half starting in mid-2012.

Ln base (instead of log) makes it difficult to read. But the more dangerous design decision is to start the graph from Mt.Gox inception, which is really a totally arbitrary choice of a startdate. There has been Bitcoin trading before Mt.Gox, the fact that finding the data is hard does not give us the right to ignore it! I have estimated it to be a flat $0.005/1BTC based on multiple isolated trades, and the ballpark is certainly correct because there has not been any trades below $0.001 or above $0.010 before the opening of Gox, which instantly lifted the price to a new level of about $0.05-$0.08. (Again, many have criticized this, but never given any recommendation about what might be better, NOR helped me to find more data on the trading in 2009-10.)

What kind of trading signals has that one given? Like I told in its thread, mine has excelled in buyback zones - the previous 2 signals at $2.28 in October-2011 and $71 last summer were spot on, and this time the signal came at $460 some days ago.

There is data for early 2010 from New Liberty Standard and Bitcoin Market starting in January 2010. http://newlibertystandard.wikifoundry.com/page/Exchange+Rate. There is also a reference from theymos indicating he felt New Liberty Standard was over charging, and that New Liberty Standard was the most visible exchanger at the time.  https://bitcointalk.org/index.php?topic=104287.msg1143955#msg1143955. I have pointed out this data before. This data is based on 1 gram XAU via Pecunix. One can easily convert this to USD using the gold price at the time. There is little doubt in my mind that this model breaks down in 2009. I believe that an exponential model based on the market capitalization rather than price and the inclusion of the New Liberty Standard and Bitcoin Market data will address these shortcomings. The net effect of these shortcomings is to give premature sell signals. A very good example is that sell signal given at the April 2011 low in the 0.6 USD range. If one takes a close look at the graph this sell signal is comparable in strength to the sell signal given for the April 2013 high. http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzl.

My conclusion is that one must treat a bitcoin sell signal given by this model with extreme caution.

Edit: My arguments against rpietila's model should not be construed as making a case for the bears at this time in the market. This is a bull arguing that another bull is not bullish enough.  

[spooderman]

Edit: My arguments against rpietila's model should not be construed as making a case for the bears at this time in the market. This is a bull arguing that another bull is not bullish enough.  

Bull-ier than thou

[aminorex]

if r.p. is an überbull what do we call a.m.? 

If anybody says you must be smoking crack, tell them it's trans-Δ9 taurine.

[rpietila]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400?  

Perhaps we are going lower. But what if their wish is not granted..

[doctor877]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400?  

Perhaps we are going lower. But what if their wish is not granted..

When will the shorts be forced to close?

[cAPSLOCK]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400?  

Perhaps we are going lower. But what if their wish is not granted..

When will the shorts be forced to close?

Not until the squeeze.

[chessnut]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400?  

Perhaps we are going lower. But what if their wish is not granted..

When will the shorts be forced to close?

Not until the squeeze.

every day that goes by where an exchange does not close deposits or receive warning after the deadline reduces the bears cause to be bears. I'd say no more than 3-4 days is enough to push them out. today is the first day.

[cAPSLOCK]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400? 

Perhaps we are going lower. But what if their wish is not granted..

When will the shorts be forced to close?

Not until the squeeze.

every day that goes by where an exchange does not close deposits or receive warning after the deadline reduces the bears cause to be bears. I'd say no more than 3-4 days is enough to push them out. today is the first day.

And then if the exchanges close or partially close, the shorts realize gains and close their positions.  Or as time goes by without closure the shorts get sqeezed and exit that way... either way we are in for a short term bump over the next week or two perhaps?

[chessnut]

10,839.95 BTC of BFX shorts forgot to buy the dip to $400?  

Perhaps we are going lower. But what if their wish is not granted..

When will the shorts be forced to close?

Not until the squeeze.

every day that goes by where an exchange does not close deposits or receive warning after the deadline reduces the bears cause to be bears. I'd say no more than 3-4 days is enough to push them out. today is the first day.

WRONG.

tl;dr: Clock really isn't ticking for the bears, specially if the price does not move against them.

a) The interest rate on BTC is very low and can be settled in USD (in which case USD is taken from your account and used to buy BTC which goes to pay the interest). Secret BFX statistics page https://www.bitfinex.com/pages/stats indicates the interest rate for BTC is only 0.0507% (or 18.5% per year) on average.
b) The margin requirement for 2.5:1 leverage is only 13%.

This means that shorts can hodl those short positions quite a while depending on how much of their leverage they actually used. If you have a 2.5:1 limit and do a 1:1 position you can run up pretty big losses before you are forced to finally deal with that horrible telephone call from this pesky guy called Mr Margin.

Sensible people will naturally have set stops that trigger at certain price levels but it's Bitcoin so those are probably a minority.

There's still 7551 BTC to be borrowed at BFX so it's not like shorts are going to run out of coins to sell either.

I'm not saying bears will be right, I'm just saying that your belief that "3-4 days is enough to push them out" is just ludicrous. They can, and some do, wait months if need be.

You missed my point, I said the bears will have no reason to hold short if the exchanges are not closing down. It's no good holding short bitcoin for no good reason. positions will be closed to manage risk. you may hold on to your short at your own peril.....

critical factor being the deadline

[SlipperySlope]

The bitcoin price weekly candlestick chart is now showing a nice hammer, which often occurs at a bottom. Not a certainty of course, but comforting for those expecting a trend reversal from the bubble collapse. The bubble collapse low last July 2013 at $61 was characterized by a hammer.