rpietila Wall Observer - the Quality TA Thread ;)

[hdbuck]

Repeat after me:

BITCOIN IS NOT A STOCK.

Stocks don't jump up 10× in 60 days.  Bitcoin has.  And it typically does it at the end of one of these wedges.

I'm ready. Make it so.

that is just too simple.

[TERA]

I would draw the lines a bit more like this.

It seems to me BTC is at a critical inflection point.  A break below 400 would be bearish and a break above 550 would be bullish. 

The next few weeks should tell us which way this market wants to go.

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

[SlipperySlope]

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

Could you elaborate with some justification? I concede in advance that bitcoin price series have been difficult to forecast, yet clear patterns appear in the history.

[TERA]

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

Could you elaborate with some justification? I concede in advance that bitcoin price series have been difficult to forecast, yet clear patterns appear in the history.

Indicators on weekly chart: RSI divergence. EW termination. EMA downcross. Imminent falling under weekly ichimoku cloud.

[2017orso]

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

Could you elaborate with some justification? I concede in advance that bitcoin price series have been difficult to forecast, yet clear patterns appear in the history.

Indicators on weekly chart: RSI divergence. EW termination. EMA downcross. Imminent falling under weekly ichimoku cloud.

How many exceptions to the rules above have you found in your research?

How many of the exceptions were representative of technology adoption?

How many of those technologies were comparable in function / motivation?

How many of those similarly functioning / motivated technologies were shown to be succeeding to this magnitude and depth of proliferation?

The above are meant to address the underlying mass psychology patterns represented by TA.

bitcoin is not solely a commodity - http://upload.wikimedia.org/wikipedia/commons/e/e3/Gold_price_in_USD.png

bitcoin is not a company - https://ca.finance.yahoo.com/q/bc?s=MSFT&t=my&l=on&z=l&q=l&c=

2017orso is not a fun-gi - http://en.wikipedia.org/wiki/Category:Fungi ...or is he? 

[rpietila]

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

Could you elaborate with some justification? I concede in advance that bitcoin price series have been difficult to forecast, yet clear patterns appear in the history.

Indicators on weekly chart: RSI divergence. EW termination. EMA downcross. Imminent falling under weekly ichimoku cloud.

I am also on the opinion that the exponential trendline will surprise the unbelievers yet again. It is the rubber band that shows how long the price can over- or undershoot the trend. Itself it is not a true and full representation of the trend, but works anyhow.

Good that you have been successful with traditional TA methods. What a pity that you cannot communicate it to the others so that they can replicate your success, whereas I can easily communicate what I do, and why.

[Todorius]

Can you guys please stop drawing charts connecting 2014 to 2013. We are broken out of that trend into a completely different trend.

Could you elaborate with some justification? I concede in advance that bitcoin price series have been difficult to forecast, yet clear patterns appear in the history.

Indicators on weekly chart: RSI divergence. EW termination. EMA downcross. Imminent falling under weekly ichimoku cloud.

I am also on the opinion that the exponential trendline will surprise the unbelievers yet again. It is the rubber band that shows how long the price can over- or undershoot the trend. Itself it is not a true and full representation of the trend, but works anyhow.

Good that you have been successful with traditional TA methods. What a pity that you cannot communicate it to the others so that they can replicate your success, whereas I can easily communicate what I do, and why.

It's not a lack of communication skills that prevent other people of taking TERA seriously, it is the plain fact that he/she permanently keeps repeating the same uber-bear scenario over and over again. As if bitcoin really continues to decline until October at around 200$, following the old 2012 trendline. Yeah, right. It's just plain and simple trolling, wanting to scare people into selling, and thus can't be taken seriously.

The infrastructure of bitcoin is growing in ways it never did before. The effects are not yet visible, but they will be soon.

[rpietila]

Good that you have been successful with traditional TA methods. What a pity that you cannot communicate it to the others so that they can replicate your success, whereas I can easily communicate what I do, and why.

Just wanted to make an example and codify the green/red candles method that I suggest in the "quick TA" update that I publish:

1. Trader position is always NEUTRAL or SHORT (this is due to the fact that borrowing BTC is much cheaper than borrowing $, and we assume that he hedges the position with cold storage coins anyway resulting in net long). For play without margin, replace with LONG and NEUTRAL.

2. Trading is according to short trend. Short trend is either NEUTRAL or SHORT and once it changes, the position must be changed accordingly and without delay.

3. The trend change data is derived from Bitstamp 6H chart/data. A trend change happens if all of the following hold true:

a) The volume of the latest 6H period is higher than 3 previous periods.
b) The volume is higher than BTC2000.
c) The 6H change is to the opposite direction than previous trend.
d) The 6H change is at least 0.5%.


I simulated this for the last 5 months and it returned 17% in USD terms or 163% in BTC terms. Assuming no fees, no slippage (in reality 48 trades easily cause both).

[TERA]

I think it would be beautiful if the chart were to end up looking like this: Perfect

[rpietila]

It may happen, but only if the exponential, viral, increase of knowledge considering Bitcoin's (and cryptotechnology's) merits would immediately stall and nobody would talk about it for 2 years, nor would there be any maturation of the thinking in the heads of those who already know about the coin. Also all the bitcoin companies and projects in pipeline need to shut down.

=> Summary shutdown of the Internet and forced lobotomy for all males under 60.

Perfect

But hardly realistic.

[TERA]

Where do you get the number 2 years? I have this chart hitting a bottom in 3 months and breaking ATH in 1.5 years. Also, it doesn't require that bitcoin adoption stop. It only requires that the supply is greater than the demand. Right now the demand has decreased by an unknown factor due to the chinese shadow currency traders in the past, and the supply  has increased by millions of coins between mtgox, china, the government, silk road, etc. All this adoption would be the reason why we capitulate at 270 and not any lower.

[rpietila]

OK, fine. There is one month in the year when I am in tune with the Bitcoin universe, and it is the month when the price rises by a factor of 5-10. For 2014, it is yet to come..

Meanwhile I was analysing the previous trading system more and the period between 2014-2-1 and 2014-3-13 (40 days) still returned 29% more bitcoins (with 2*9 trades) with a set of very simple rules that I just pulled from the hat. By optimizing all the parameters I am sure it will return better.

[rpietila]

Newest automatic volume-based trading system was backtested with the data from 2013-12-1...2014-5-8. The parameters that gave the so far optimal result were:

- 2H data, buy/sell signal comes from a high-volume change into that direction
- Quite large minimum trigger volume for the last 2H (less than 15% of 2H periods qualify, this is also good for high-volume trading)
- Quite large minimum % change for the last 2H (less than 15% qualify)

I won't disclose the exact parameters sorry (because this is starting to look too good ) but this one has so far returned BTC427 for the investment of BTC100 in 2013-12-1, less than 6 months ago. Number of single trades (not pairs) was 19.

ADD: Current record is 442 bitcoins from 100 bitcoins with 17 trades. That's 9.1% per trade. 

[holomen]

Newest automatic volume-based trading system was backtested with the data from 2013-12-1...2014-5-8. The parameters that gave the so far optimal result were:

- 2H data, buy/sell signal comes from a high-volume change into that direction
- Quite large minimum trigger volume for the last 2H (less than 15% of 2H periods qualify, this is also good for high-volume trading)
- Quite large minimum % change for the last 2H (less than 15% qualify)

I won't disclose the exact parameters sorry (because this is starting to look too good ) but this one has so far returned BTC427 for the investment of BTC100 in 2013-12-1, less than 6 months ago. Number of single trades (not pairs) was 19.

ADD: Current record is 442 bitcoins from 100 bitcoins with 17 trades. That's 9.1% per trade. 

Congratulations Risto! You Rock, how long are you trading since to know so much?

Sounds like a nice rocket science to me;)

P.s. Where should I start learning how to make that ATS, could you tell few books or links ? I'm serious. 

[rpietila]

Congratulations Risto! You Rock, how long are you trading since to know so much?

Sounds like a nice rocket science to me;)

P.s. Where should I start learning how to make that ATS, could you tell few books or links ? I'm serious. 

I started online stock trading in 1998-99, before the Nasdaq bubble.

I think bitcoin is so special that the books are of limited benefit only. Hands-on analysis and experience is what rocks.

[hbee]

Newest automatic volume-based trading system was backtested with the data from 2013-12-1...2014-5-8. The parameters that gave the so far optimal result were:

- 2H data, buy/sell signal comes from a high-volume change into that direction
- Quite large minimum trigger volume for the last 2H (less than 15% of 2H periods qualify, this is also good for high-volume trading)
- Quite large minimum % change for the last 2H (less than 15% qualify)

I won't disclose the exact parameters sorry (because this is starting to look too good ) but this one has so far returned BTC427 for the investment of BTC100 in 2013-12-1, less than 6 months ago. Number of single trades (not pairs) was 19.

ADD: Current record is 442 bitcoins from 100 bitcoins with 17 trades. That's 9.1% per trade. 

Intriguing numbers, what software are you using for this analysis?

[rpietila]

Newest automatic volume-based trading system was backtested with the data from 2013-12-1...2014-5-8. The parameters that gave the so far optimal result were:

- 2H data, buy/sell signal comes from a high-volume change into that direction
- Quite large minimum trigger volume for the last 2H (less than 15% of 2H periods qualify, this is also good for high-volume trading)
- Quite large minimum % change for the last 2H (less than 15% qualify)

I won't disclose the exact parameters sorry (because this is starting to look too good ) but this one has so far returned BTC427 for the investment of BTC100 in 2013-12-1, less than 6 months ago. Number of single trades (not pairs) was 19.

ADD: Current record is 442 bitcoins from 100 bitcoins with 17 trades. That's 9.1% per trade.  

Intriguing numbers, what software are you using for this analysis?

MS Excel.

The record trading algo would have performed as follows since 2013-12-1:

Code:

TIME OF TRADE	RATE	S/BUY	B GAIN		USD	BTC
1.12.2013 4:00	1024,00	-1			102 400	0,00
7.12.2013 2:00	748,99	1	37 %		0	136,72
11.12.2013 10:0	852,50	-1			116 552	0,00
19.12.2013 8:00	605,00	1	41 %		0	192,65
20.12.2013 22:0	610,00	-1			117 515	0,00
22.12.2013 8:00	652,86	1	-7 %		0	180,00
7.1.2014 20:00	823,00	-1			152 030	0,00
14.2.2014 2:00	595,00	1	38 %		0	255,51
20.2.2014 6:00	601,10	-1			153 589	0,00
22.2.2014 16:00	603,98	1	0 %		0	254,29
24.2.2014 2:00	574,97	-1			146 211	0,00
26.2.2014 6:00	594,98	1	-3 %		0	245,74
4.3.2014 16:00	675,61	-1			166 026	0,00
1.4.2014 6:00	481,01	1	40 %		0	345,16
2.4.2014 12:00	469,95	-1			162 208	0,00
14.4.2014 4:00	427,50	1	10 %		0	379,43
16.4.2014 8:00	515,00	-1			195 409	0,00
8.5.2014 16:00	442,50	1	16 %		0	441,60

So guys, with only 17 trades, performed after the triggers (perhaps BTC500 could have been used without affecting the market too much - even thousands with some planning, delay, and slippage), you would have 4.5x'd your bitcoins or made almost double your dollars, in a falling market.

I also checked the same rules in a rising market. They did not work, I could barely make it return positive bitcoins over 1 year. The problem is that in the rising market the selloffs come viciously and up it goes with stable medium volume. So this interprets the periodic selloffs as the important events and loses out on runups.

[MahaRamana]

Newest automatic volume-based trading system was backtested with the data from 2013-12-1...2014-5-8. The parameters that gave the so far optimal result were:

- 2H data, buy/sell signal comes from a high-volume change into that direction
- Quite large minimum trigger volume for the last 2H (less than 15% of 2H periods qualify, this is also good for high-volume trading)
- Quite large minimum % change for the last 2H (less than 15% qualify)

I won't disclose the exact parameters sorry (because this is starting to look too good ) but this one has so far returned BTC427 for the investment of BTC100 in 2013-12-1, less than 6 months ago. Number of single trades (not pairs) was 19.

ADD: Current record is 442 bitcoins from 100 bitcoins with 17 trades. That's 9.1% per trade.  

Intriguing numbers, what software are you using for this analysis?

MS Excel.

The record trading algo would have performed as follows since 2013-12-1:

Code:

TIME OF TRADE	RATE	SELL/BUY	B GAIN		USD	BTC
1.12.2013 4:00	1024,00	-1			102 400	0,00
7.12.2013 2:00	748,99	1	37 %		0	136,72
11.12.2013 10:0	852,50	-1			116 552	0,00
19.12.2013 8:00	605,00	1	41 %		0	192,65
20.12.2013 22:0	610,00	-1			117 515	0,00
22.12.2013 8:00	652,86	1	-7 %		0	180,00
7.1.2014 20:00	823,00	-1			152 030	0,00
14.2.2014 2:00	595,00	1	38 %		0	255,51
20.2.2014 6:00	601,10	-1			153 589	0,00
22.2.2014 16:00	603,98	1	0 %		0	254,29
24.2.2014 2:00	574,97	-1			146 211	0,00
26.2.2014 6:00	594,98	1	-3 %		0	245,74
4.3.2014 16:00	675,61	-1			166 026	0,00
1.4.2014 6:00	481,01	1	40 %		0	345,16
2.4.2014 12:00	469,95	-1			162 208	0,00
14.4.2014 4:00	427,50	1	10 %		0	379,43
16.4.2014 8:00	515,00	-1			195 409	0,00
8.5.2014 16:00	442,50	1	16 %		0	441,60

Looks nice, are you selling it ?

[rpietila]

The thread shows a poster example how one system would have performed during the downtrend of the past few months. The "track record" is impressive but we have to remember that I started from the data and honed the parameters with trial and error method to give the best results. In real world, spotting the downtrend correctly, guessing the parameters upfront, and executing without slippage would have diminished returns greatly.

I cannot sell my own signals because Bitstamp's average volume is BTC764 per hour. The system gives signals based on the last 2 hours market data and assumes that you can execute at the closing price. The signals are always in direction of the trend, so you will have to buy/sell quickly to avoid slippage, and your own actions cause more slippage. If I would use this, I want to allocate as many coins to it as possible, and that is less than I wanted.

The configurable excelsheet is for sale for BTC5, including tutorial in skype chat.

[rpietila]

The configurable excelsheet is for sale for BTC5, including tutorial in skype chat.

This is actually a good deal, I will open it up in case somebody is interested.

The sheet works as follows:
- You can copypaste any data from Bitcoincharts.
- The system gives buy and sell signals according to the following rule:
IF "the last row volume is at least A" & "the highest volume in the last B rows is to the same direction as the last volume" & "the last change is at least C" & "the new signal is to the opposite direction as the current signal", THEN give a new signal.
- The parameters A, B, C can be fully customized. As you change them, you see in real time what signals the system would have given and when, how many total signals (too many leads to increase in fees), and what is the end result in $ or bitcoins in this time period. You can try several values per minute, and then zoom in to the interesting parts of the data, such as the flashcrashes.

So yes, I am giving all this work for (almost) free.