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Author Topic: I can't believe the margin traders haven't liquidated.  (Read 2777 times)
zby
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January 27, 2012, 07:46:13 AM
 #21

According to Kahneman people gamble against the odds (that is irrationally) in two cases.  First is when they can gain much for little (even if their chances are very small) - this is the well known lottery fact.  The second case is less obvious -  it is when they can avoid loosing (even if gambling means that most probably they will lose much more).  When on bitcoinica people have negatibe PL they tend to keep the position even if they know that prices will probably fall.  This explains how the prices were falling in the autumn so slowly, but now with bitcoinica and forced liquidations this is a different picture and I don't expect the bitcoinica deleverage to be smooth.
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cunicula
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January 27, 2012, 08:00:11 AM
 #22

According to Kahneman people gamble against the odds (that is irrationally) in two cases: when they can gain much for little (even if their chances are very small) - this is the lottery or when they can avoid loosing (even if gambling means that most probably they will lose much more).  When on bitcoinica people have negatibe PL they tend to keep the position even if they know that it will probably fall.  This explains how the prices were falling in the autumn so slowly, but now with bitcoinica this is a different picture and I don't expect the bitcoinica deleverage to be smooth.

A corollary of this point about people irrationally taking long shot bets is that people should take bets on extreme favorites more frequently.

There is a paper on horse racing, for example. The paper notes that betting on extreme favorites is systematically profitable. It just that horse races with sufficiently extreme favorites to overcome betting fees are quite rare.

So all of you irrational gamblers, leverage up those bets on things that seem almost certain to occur!



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Dutch Merganser
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January 27, 2012, 08:21:10 AM
 #23

I thought this interesting in that it it doesn't attempt to construct a rational internal model of a gambler's thought processes in making irrational choices. I have seen people who knew to a certainty that they would lose if they followed a round to its inevitable losing conclusion, yet nonetheless enjoyed the pursuit of getting there. This could be one reason why.

Gambling
The almost-winning addiction
Near misses could heighten gambling addiction

http://www.economist.com/node/16056339

"Science flies you to the Moon, religion flies you into buildings."
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January 27, 2012, 03:58:00 PM
 #24

 Grin



lol bitcoinica gamblers

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
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January 27, 2012, 04:10:34 PM
 #25

Grin



lol bitcoinica gamblers

The casino is the hoppingest place in Nakamotown, the rest is pretty much one hot stand after another  Grin

"Science flies you to the Moon, religion flies you into buildings."
 - Victor Stenger

"Religion is regarded by the common people as true, by the wise as false, and the rulers as useful."
 - Seneca the Elder (ca. 54 BCE - ca. 39 CE) Roman rhetorician
thegato
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January 27, 2012, 04:12:33 PM
 #26

Grin

http://i.imgur.com/YgqEP.png

lol bitcoinica gamblers

People dont learn the lesson.  Cheesy
markm
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January 27, 2012, 04:17:09 PM
 #27

Grin



lol bitcoinica gamblers

This image is telling people to buy high and sell low?!?!?

-MarkM-

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proudhon
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January 27, 2012, 04:21:23 PM
 #28



Confirmed.  We're not done going down yet.
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January 27, 2012, 04:23:04 PM
 #29

What do you think, proudhon? Bitcoinica is completely fucking up the depth in both directions.

How will this all end?

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
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January 27, 2012, 04:25:21 PM
 #30

What kind of idiot went long after the 17th?!  I hope the long squeeze has stopped now, this is ridiculous Angry
And started short squeeze! TIME!! silly now go long on bitkoinica. Now we all know how she earns

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proudhon
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January 27, 2012, 04:25:54 PM
 #31

What do you think, proudhon? Bitcoinica is completely fucking up the depth in both directions.

How will this all end?

My guess is more large sell-offs and more longs getting squeezed out.  Eventually enough people will short, and at that point, the price will start going up.
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January 27, 2012, 04:33:10 PM
 #32

I wonder what would happen if Bitcoinica were hit with a DDOS... Perhaps the market would re-adjust fairly quickly...

http://www.bitcloudex.com Coin/Coin Canadian Exch.
Vandroiy
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January 27, 2012, 04:36:54 PM
 #33

So, I got this right... someone just went 12k long and maxed out Bitcoinica long again? Roll Eyes Judging by the order book, nobody took the bait and someone has a problem. But let's see how it turns out, there might always be a greater fool showing up.

Let me give a prophecy though. One day, an operation like this will go wrong. Possibly harder than Tuesday last week. It might be today, or the next time, but I'm still pretty certain it must happen.
proudhon
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January 27, 2012, 04:40:19 PM
 #34

So, I got this right... someone just went 12k long and maxed out Bitcoinica long again? Roll Eyes Judging by the order book, nobody took the bait and someone has a problem. But let's see how it turns out, there might always be a greater fool showing up.

Let me give a prophecy though. One day, an operation like this will go wrong. Possibly harder than Tuesday last week. It might be today, or the next time, but I'm still pretty certain it must happen.

Last Tuesday obviously wasn't a violent enough beating to knock sense into people.  I think the worst is yet to come, unfortunately.  Bitcoinica has turned out to be the best worst thing to happen to bitcoin yet.
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January 27, 2012, 04:42:08 PM
 #35

Last Tuesday obviously wasn't a violent enough beating to knock sense into people.  I think the worst is yet to come, unfortunately.  Bitcoinica has turned out to be the best worst thing to happen to bitcoin yet.
So true.

Somehow, Bitcoin never fails to surprise in this regard. There is ALWAYS something completely ruining trust in it. Anyone want to take bets on what it’ll be post bitcoinica?

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
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January 27, 2012, 04:49:39 PM
 #36

Somehow, Bitcoin never fails to surprise in this regard. There is ALWAYS something completely ruining trust in it. Anyone want to take bets on what it’ll be post bitcoinica?

I don't want to give anyone ideas...

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Vandroiy
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January 27, 2012, 04:58:40 PM
 #37

Bitcoinica's algorithms are not our main problem. The uncertainty and volatility comes from traders who over-use them to the point where they become a market force.

A long squeeze should be nowhere near the size of the order book in proximity. That way, the money entering or exiting over margin trades is small, and the whole thing isn't much of an issue.
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January 27, 2012, 05:08:53 PM
 #38

the fuck?!

There is no way people all just went long again.  I'm calling bullshit. 

On the flip side, asterisk is gone again Smiley

(BFL)^2 < 0
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January 27, 2012, 05:12:26 PM
 #39

Keep in mind that when the asterisk dissapears, this doesn't mean that reserve problems are *gone*. It means that they are mitigated to a level that Bitcoinica can accept new orders. But it still is low on their reserves, and any bigger long position will trigger the asterisk again.
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January 27, 2012, 07:21:00 PM
 #40

hmm, just tried to "lend" some money to zhoutong using a mtgox redeemable (USD).

I just get an error.

PGP key molecular F9B70769 fingerprint 9CDD C0D3 20F8 279F 6BE0  3F39 FC49 2362 F9B7 0769
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