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Author Topic: 3 is the magic number, and the magic number is 3  (Read 7102 times)
gewure
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November 10, 2011, 03:07:20 PM
 #61

Looks like bitcoin has reached a plateau of high stability.

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old_engineer
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November 10, 2011, 09:49:13 PM
 #62

Now, the market goes to 3.6, and then back down to 3. You are now at a 500 loss, even though you had your hedging…
Good point, I suppose I need to keep enough of a reserve to last to the breakeven point at 3.8 in order to be "foolproof", and even then I'd have to liquidate everything to be assured a break even.

I'd prefer to liquidate the short at 2.5, profit, wait until price rebounds to 3.5, then profit doubly.

Either way, the important bit is that the market can't run away from me.  If it magically jumps to $5, I'm not left out completely, assuaging my FOMO.
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November 10, 2011, 09:56:21 PM
 #63

Good point, I suppose I need to keep enough of a reserve to last to the breakeven point at 3.8 in order to be "foolproof", and even then I'd have to liquidate everything to be assured a break even.

I'd prefer to liquidate the short at 2.5, profit, wait until price rebounds to 3.5, then profit doubly.

Either way, the important bit is that the market can't run away from me.  If it magically jumps to $5, I'm not left out completely, assuaging my FOMO.
Yes, you have to liquidate everything to be assured a break even. But then you also have no investment anymore.
If you are holding equal amounts of shorts and longs, you might as well not have done any investment, and save yourself the spread fees.

Your current setup assumes that if the price hits 3.6, it will keep rising to much greater heights. But if you have that assumption, you can also just not have any positions, and set a stop buy order at 3.6. This would save you from paying spread.

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November 11, 2011, 10:55:30 PM
 #64

Just want to say... even expecting a stable price in the short-term, 3 has been a very good guess so far, holding out for over two weeks now without any volume starving or the likes.

Good job on that. Smiley
old_engineer
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November 12, 2011, 12:39:45 AM
 #65

Just want to say... even expecting a stable price in the short-term, 3 has been a very good guess so far, holding out for over two weeks now without any volume starving or the likes.

Good job on that. Smiley
Thanks - it's nice to be right most of the time. Yes, I can be a self-centered ass with a big ego, thanks for feeding it! Smiley

The stability at 2.8 unnerved me, and Revalin pointed out the folly in my holdings, so I liquidated my short position yesterday.  Just in time, it seems, and I just now I sold a couple thousand coins at 3.x to dampen the rally.  I don't feel too bad shitting on the rally party: I announced I was buying under $3 and selling over $3, and now I'm doing it.  There's also the 12k coins sitting at Tradehill for $3.10, so even if the bulls get past $3.10, they may not get too far before arbitrage kicks in.

Which reminds me, one even more unnerving thing happened at Bitcoinica: when I liquidated my short, there was no corresponding activity on Mt. Gox.  When I purchased the short, there were a number of bitcoins sold on Mt. Gox just seconds later, as expected.  But when I closed the position, there was no activity at all - zero , zilch, nada - on Mt. Gox for at least a minute, so I'm not sure if the activity was actually Bitcoinica's.  This means that there's a good chance Bitcoinica is a bucket shop, which defeats my goal of taking a short position in an attempt to stabilize the market.

From wikipedia on bucket shop:
Quote
As defined by the U.S. Supreme Court a Bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in."

The charitable possibility is that his trading bot was broken last night.  But I doubt it: more likely he's playing his speculators off against one another with a slush pool so he doesn't have to pay Mt. Gox purchase fees on every transaction.  Oh well, all I can do is highlight what I see, and let other decide what to do.
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November 12, 2011, 12:53:24 AM
 #66

Just want to say... even expecting a stable price in the short-term, 3 has been a very good guess so far, holding out for over two weeks now without any volume starving or the likes.

Good job on that. Smiley
Thanks - it's nice to be right most of the time. Yes, I can be a self-centered ass with a big ego, thanks for feeding it! Smiley

The stability at 2.8 unnerved me, and Revalin pointed out the folly in my holdings, so I liquidated my short position yesterday.  Just in time, it seems, and I just now I sold a couple thousand coins at 3.x to dampen the rally.  I don't feel too bad shitting on the rally party: I announced I was buying under $3 and selling over $3, and now I'm doing it.  There's also the 12k coins sitting at Tradehill for $3.10, so even if the bulls get past $3.10, they may not get too far before arbitrage kicks in.

Which reminds me, one even more unnerving thing happened at Bitcoinica: when I liquidated my short, there was no corresponding activity on Mt. Gox.  When I purchased the short, there were a number of bitcoins sold on Mt. Gox just seconds later, as expected.  But when I closed the position, there was no activity at all - zero , zilch, nada - on Mt. Gox for at least a minute, so I'm not sure if the activity was actually Bitcoinica's.  This means that there's a good chance Bitcoinica is a bucket shop, which defeats my goal of taking a short position in an attempt to stabilize the market.

From wikipedia on bucket shop:
Quote
As defined by the U.S. Supreme Court a Bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in."

The charitable possibility is that his trading bot was broken last night.  But I doubt it: more likely he's playing his speculators off against one another with a slush pool so he doesn't have to pay Mt. Gox purchase fees on every transaction.  Oh well, all I can do is highlight what I see, and let other decide what to do.

He has stated elsewhere on the forum thus is what he does.  He only goes to mtgox when the positions get too far out of balance.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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old_engineer
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November 12, 2011, 12:57:05 AM
 #67

The stability at 2.8 unnerved me, and Revalin pointed out the folly in my holdings, so I liquidated my short position yesterday. [...]
Excuse me, that was BTCurious that pointed out my folly, credit where credit is due.
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November 12, 2011, 12:59:09 AM
 #68

The last 22k of the rally volume got to my Bitcoins, so I did my part.

He has stated elsewhere on the forum thus is what he does.  He only goes to mtgox when the positions get too far out of balance.
Why would you trade on MtGox if you can handle it yourself? A sell and rebuy puts 2% in MtGox's pockets.

trogdorjw73
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November 12, 2011, 01:01:17 AM
 #69

Or 1.2% max (assuming price didn't change).

deepceleron
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November 12, 2011, 01:13:03 AM
 #70

Or 1.2% max (assuming price didn't change).
Depending on your monthly volume, they take .3% to .6% from the currency earned from both sides of the trade. So assuming first discount tier on average, your buy and your sell = .5% BTC buyer + .5% $ seller + .5% $ buyer + .5% BTC seller in fees, transferred directly from user accounts into mtgox accounts.

old_engineer
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November 12, 2011, 01:24:39 AM
 #71


Which reminds me, one even more unnerving thing happened at Bitcoinica: when I liquidated my short, there was no corresponding activity on Mt. Gox.  When I purchased the short, there were a number of bitcoins sold on Mt. Gox just seconds later, as expected.  But when I closed the position, there was no activity at all - zero , zilch, nada - on Mt. Gox for at least a minute, so I'm not sure if the activity was actually Bitcoinica's.  This means that there's a good chance Bitcoinica is a bucket shop, which defeats my goal of taking a short position in an attempt to stabilize the market.

If I understand correctly how Bitcoinica works they will clear counter trades first. It may be that there were enough counter trades to balance your position when you closed it out. I doubt that you can count on a tick for tick correspondence between Gox and Bitcoinica activity unless it is for very large trades. But, maybe not even then if their algorithm is maintaining reserves at different times.
The short was for 1000 btc, which is why I expected a tick on Mt. Gox.
zby
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November 12, 2011, 06:49:11 AM
 #72

Good point, I suppose I need to keep enough of a reserve to last to the breakeven point at 3.8 in order to be "foolproof", and even then I'd have to liquidate everything to be assured a break even.

I'd prefer to liquidate the short at 2.5, profit, wait until price rebounds to 3.5, then profit doubly.

Either way, the important bit is that the market can't run away from me.  If it magically jumps to $5, I'm not left out completely, assuaging my FOMO.
Yes, you have to liquidate everything to be assured a break even. But then you also have no investment anymore.
If you are holding equal amounts of shorts and longs, you might as well not have done any investment, and save yourself the spread fees.

Your current setup assumes that if the price hits 3.6, it will keep rising to much greater heights. But if you have that assumption, you can also just not have any positions, and set a stop buy order at 3.6. This would save you from paying spread.

Plus he does not show the graph below 2, plus he assumes that when it goes down he'll liquidate the short at the exact moment it bounces back.  I've already seen before that strategy announced on this forum - the absurdity of it just boggles my mind - how on earth someone could think that selling borrowed bitcoins will be somehow more profitable then selling your own.
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November 12, 2011, 02:09:08 PM
 #73

The stability at 2.8 unnerved me, and Revalin pointed out the folly in my holdings, so I liquidated my short position yesterday. [...]
Excuse me, that was BTCurious that pointed out my folly, credit where credit is due.
Smiley Thanks


I'm also considering buying below 3, selling above. Seems to be nice and stable investment… but it's hard to suppress the part of me that wants to be bull Cheesy

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November 12, 2011, 05:35:51 PM
 #74

BTCurious: It's actually a logical strategy to do a combination of both; just don't sell all of your coins in the 3-4 range.

Mixed strategies sometimes allow for bolder moves. That's just how risk management works. Cool (Though holding BTC is still risky either way.)
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November 14, 2011, 08:49:22 PM
 #75

Oh look who got burned... and look at the second post Smiley

(BFL)^2 < 0
Dan The Man
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November 14, 2011, 08:58:01 PM
 #76

I guarantee you that in two weeks the price will be below $3

-Nov 7th

Call me a clairvoyant.

PatrickHarnett
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November 14, 2011, 09:05:34 PM
 #77

I guarantee you that in two weeks the price will be below $3

-Nov 7th

Call me a clairvoyant.

That would be some time on the 21st then?  Still a week to go.
payb.tc
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November 14, 2011, 09:11:14 PM
 #78

I guarantee you that in two weeks the price will be below $3

-Nov 7th

Call me a clairvoyant.

i just realised Dan the Man is short for Dan the Manipulator... that's how come he always knows what's going to happen.
bulanula
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November 14, 2011, 09:15:15 PM
 #79

I guarantee you that in two weeks the price will be below $3

-Nov 7th

Call me a clairvoyant.

i just realised Dan the Man is short for Dan the Manipulator... that's how come he always knows what's going to happen.


Hehe. We found him ! Bring the pitchforks.
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November 14, 2011, 09:38:01 PM
 #80

I guarantee you that in two weeks the price will be below $3

-Nov 7th

Call me a clairvoyant.

i just realised Dan the Man is short for Dan the Manipulator... that's how come he always knows what's going to happen.


Hehe. We found him ! Bring the pitchforks.

If he is the mythical 'manipulator', all I've got for him is a big 'thank you' for making BTC more available to more people after those who are interested have had more time to get set up to obtain them.

Da'man has made some awfully good calls, I will give him that.  It will be difficult to ignore his prognostications going forward.  Or will for me at least.


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