Goomboo's Journal

[Goomboo]

Furthermore, let's go into his investment logic.
-He believed that in 30 years, the price would be $10.
-Taking the current market price of $6.27, compounding it across 30 years yields an annual percentage return of 1.72%.
-The current 30 year U.S. bond rate of return is 3.15% YTM.
-YTM is an approximation of what you would actually earn across the time period, but it's roughly twice what he expects with significantly less risk.
-For a 30 year time period, does it make sense to invest in something which offers half of the "risk-free" rate of return?

Your first point is false.  I do not believe it will be anywhere near $10.  I said at least $10, just to make the point that it will be worth more more than it is now, or worth nothing.  This market will act like a currency in the future, but we're not there yet.

The average yearly return on the stock market for the past 150 + years is typically 11.98%.  Let's call this your "cost of capital", or your opportunity cost / lost rate of return you substitute by investing in BTC.

$6.00 * 1.1198 ^ 30 = $178.80.  If Bitcoin is above $178.80, your investment will be worthwhile in 30 years.

Look at what you just said - The market will act like a currency in the future (no directional bias) and yet you are holding for this future.  Translate that into finance talk - you are holding an investment speculating that in the future it will trade sideways and your money won't experience growth from an increase in prices.  Your logic is flawed.

I don't have time or interest in debating you on this message board.  This thread is called "Goomboo's Journal" because I'm sharing my thoughts with the community.  You contributed your time to the thread by giving your opinion.  If you say something flaky and I don't call you out on it, it would be a disservice to you.

I appreciate your attempts to educate me, but I assure you BTC is not my only investment.  As I've already stated, I have stocks and gold holdings that I have paid for with BTC profits.  I understand that all-in long is not the answer, and will gladly diversify my holdings again when the opportunity is presented.  Bitcoin is the reason I have any assets at all, so I'm a little partial.  However, my strategy is far from the rigidness you seem to continually try to apply to it.  Just because I'm long now, doesn't mean I will remain so heavily invested as conditions change.  You may have seen good growth in stock in your lifetime, but I'm willing to bet that millions of babyboomers retiring will dampen that a bit for the next decade or two.  But, like I said, I have stocks too in case I'm wrong.

Thank you for your reply,

I happy to hear that you did well in BTC and are able to invest in multiple asset classes.

My point about rigidness is this: prices will always fall / rise but WITH a trading system, you can profit in both market conditions.

This thread is about:
-Analytically thinking
-Having a plan based upon research
-Managing your risk

I wish you continued success in your investing!

[Sargasm]

Did you produce that chart showing historical success of your plan?

If so, how?

[Seal]

Great posts Goomboo. I've not read it all but will do later. Out of interest, what is your incentive in sharing all of this? Surely by sharing this information and by others acting on it (which i see from your followers they are), your strategys will become less effective?

Maybe i'm missing something... would it serve to provide more momentum from people copying you???

[vokain]

stability

[SkRRJyTC]

Did you produce that chart showing historical success of your plan?

If so, how?

This is also very relevant to my interests.

[Goomboo]

Did you produce that chart showing historical success of your plan?

If so, how?

Yes,

It is using NinjaTrader - an excellent automated and discretionary trading platform.

Basically you program a strategy (or use their easy-coding utility) and backtest the strategy on historical data.

If you're interested in testing your ideas and automated trading, I highly recommend you learn about the platform.

www.ninjatrader.com

Feel free to ask me any questions about it if you're interested.

[elux]

Zup guys? Are things settling down?

[Goomboo]

Great posts Goomboo. I've not read it all but will do later. Out of interest, what is your incentive in sharing all of this? Surely by sharing this information and by others acting on it (which i see from your followers they are), your strategys will become less effective?

Maybe i'm missing something... would it serve to provide more momentum from people copying you???

Honestly, it's pretty self-motivated.  It helps me stay disciplined to my trading strategy in the BTC market which ultimately helps me be a more profitable trader.  I don't give much weight to the idea of momentum - if anyone were seriously reading this thread, they wouldn't blindly trust me but would rather systematically test a trading concept that they can own and follow.  I'm less tempted to toy around and lose money in an undisciplined manner when I have several people watching me make decisions and risking their capital as well.

Additionally, openly discussing risk management, trading systems, and how to logically enter and exit the markets has improved my trading in other markets.  I'm human just like most of the other traders on here - I make mistakes, I struggle with following a plan, discipline, etc.


Here's my thought on lessening the effectiveness of my strategy:
-I don't believe in this
-I'd wager that there were probably 10-15 traders who took my signal right at the beginning and instantly lost money
-After this loss, probably 5 traders took the signal and lost again
-After this loss, probably 3 traders took it and lost again
-And this recent trade, maybe 1-2 of those traders took the signal and now are sitting on a trade which should have them sitting at a fresh unrealized profit

You see?  People just can't stick with the plan - it makes so much sense on paper but when capital is actually at risk, discipline falters and seat-of-the-pants decisions are made.

Here's one a great quote from the Turtle Trading system in one of my earlier posts:

[Goomboo]

Zup guys? Are things settling down?

Hope not :p

I'm short and +7% unrealized PNL.

[StewartJ]

Hoping for a decent trend again to test the 10/21 EMAs.

Not for making a profit per say, more to instill trading discipline on myself.

[Goomboo]

When it comes to trading, many people simply can't follow through with the plan.  They can spend hours carefully and meticulously studying the past, developing a system, and working through all of the contingencies, but when money is actually at risk, they freeze or allow emotion to influence their decisions.

Here is the problem with emotions: you can't backtest it.  When you are testing through historical data, you simply can't replicate the feeling of watching your unrealized PNL fluctuate.  If you begin acting on these painful and euphoric emotions in the trading day, then you are in uncharted territory and your plan / work are worthless.  I call this seat-of-the-pants or cowboy trading.  Sure you can feel great at the end of the day for making spur of the moment decisions and acting on them, but ultimately you are chasing an emotion, not profit.

Here's the sad reality of why people will eventually stop trading a system and this thread will dwindle into inactivity - trading is boring.  It is work.  Not only is it work, it is very, very hard work.  Trading is a zero-sum game in the market, but emotionally, it is a negative sum game.  Trading psychological studies have shown that traders typically internalize their negative trades much more than their positive trades.  In a business in which you can be radically profitable with a 30% success rate (or lower), this makes for a difficult life.  The whole goal of research and system based trading is to minimize your ability to make emotional decisions and focus more on what the market actually does.

[gewure]

The whole goal of research and system based trading is to minimize your ability to make emotional decisions and focus more on what the market actually does.

..sounds pretty scary

[StewartJ]

The whole goal of research and system based trading is to minimize your ability to make emotional decisions and focus more on what the market actually does.

..sounds pretty scary

Now that the market is a bit in the doldrums, a good time to assess our emotional abilities to trade.

[sukiho]

thanks for the info Goomboo. is it possible to get bitcoins historical data into ninjatrader?

[Goomboo]

thanks for the info Goomboo. is it possible to get bitcoins historical data into ninjatrader?

Yes - Google how to import data into NinjaTrader and you can find out how to do it.  I haven't done it and I don't plan on doing it for a long time because I don't believe that BTC data is representative of the past.  Any trend-following strategy will be radically skewed by a massive bubble.

[StewartJ]

Donation sent. Thanks for sharing your trading philosophy in this Forum.

It's a breath of fresh air.

[notme]

Sticking to the topic of moving average crossovers, what about the 10,21 weekly moving average crossovers I'm seeing with simple and weighted moving averages?  At what point does that factor into your trading?  You abandoned the hourly in favor of the daily.  Is it just a matter of trading frequency preference?  Is there ever a reason to consider the weekly moving average, or does following the smaller term trends keep you on the correct side of the longer term trends when they move big?  Bitcoin is a very volatile market, and it can slip a few dimes or even dollars before you can change your position.

[buck92]

Goomboo, thanks for responding to me in such detail, I greatly appreciate it. I really hope you keep visiting this thread for a long time to come...I've mentioned it before but I cannot tell you how refreshing it is to have you around here, keep it up! Fingers crossed,XX, I am hoping to send you a donation in the future to show my appreciation in a more tangible/digital way.

[Oldminer]

I have to agree the insight provided in this thread has been invaluable. Cheers Goomboo, and I hope you continue to frequent this thread 

[SkRRJyTC]

Did you produce that chart showing historical success of your plan?

If so, how?

Yes,

It is using NinjaTrader - an excellent automated and discretionary trading platform.

Basically you program a strategy (or use their easy-coding utility) and backtest the strategy on historical data.

If you're interested in testing your ideas and automated trading, I highly recommend you learn about the platform.

www.ninjatrader.com

Feel free to ask me any questions about it if you're interested.

Im trying to sign up but it says I need a broker... Can I not just try this out? I dont have a broker. 

Also less important / off topic: why do people need brokers?  Why cant they just connect to the exchange and make trades like we all do to Gox?