The Weekend Dip Myth

[Stephen Gornick]

I think this one is caused by a problem at coinbase. Hopefully, they get it sorted.

can you explain or link a thread?

New Message from Coinbase today "Sorry, the maximum number of purchases has been reached for today."

- http://www.reddit.com/r/Bitcoin/18g02v

That appears to have occurred at about the same time as a 15% selloff was underway, ... in which if there had been a green light and selling occurred Wednesday evening (West) / Thursday morning (East) then timing of the weekend dip strategy would have been perfect!
 - http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2013-2-14zeg2013-02-16ztgSzm1g10zm2g25zv

At least I'm assuming that's what cbeast was referring to.

[Stephen Gornick]

Yet one more weekend where the Green Light is NOT green.  

However, if there is a "top", and a decline trend returns this is what the start of that very well could look like:



 - http://bitcoincharts.com/charts/mtgoxUSD#rg10zig2-hourzczsg2013-03-05zeg2013-03-08ztgTzm1g10zm2g25

So, while the green light doesn't shine right now, I wouldn't be surprised if there wasn't another 10% dip awaiting before the New Money Monday rise.

[zby]

Yet one more weekend where the Green Light is NOT green.  

Why the light is red this weekend?

Here is an example of a similar setup: http://bitcoincharts.com/charts/mtgoxUSD#igHourlyzczsg2012-08-18zeg2012-08-20ztgSzm1g10zm2g25zi1gRSI
and the drop from 32 in 2011 also started on a thursday: http://bitcoincharts.com/charts/mtgoxUSD#rg60zigHourlyzczsg2011-06-01zeg2011-06-20ztgSzm1g10zm2g25zv

Update some recent ones:

14th of February also was Thursday: http://bitcoincharts.com/charts/mtgoxUSD#rg60zigHourlyzczsg2013-02-08zeg2013-02-20ztgSzm1g10zm2g25zv - this one failed, because it bounced back even higher very quickly, but still there was another dip on Monday.  And this one was between Thursday and Friday: http://bitcoincharts.com/charts/mtgoxUSD#rg60zigHourlyzczsg2013-01-24zeg2013-01-31ztgSzm1g10zm2g25zv and it was also just one dip with no second one on the weekend.

So the evidence goes both ways.  Still the price seems crazy high.

[Stephen Gornick]

Yet one more weekend where the Green Light is NOT green.  

Why the light is red this weekend?

The Weekend Dip strategy was to take advantage of a recurring pattern in which when there was a downtrend (defined very specifically) where way more often than not you could consistently earn a profit from doing trades by selling on a specific day and buying back after certain moves occurred.  There was this pattern where something like out of eight or nine weekends where the Green Light was lit, all but one resulted in gains.  Of course the timing on buying back made the difference between nice gains versus very nice gains.

The very specific definition is to wait until Wednesday night (West) / Thursday morning (East) and check the high for the previous seven days.  Then compare that to the high for the seven day period prior to that.   If the most recent 7-day high was lower than the previous period's 7-day high, then a week-to-week downtrend was occurring.  When that happens the Green Light goes on.  Following the "Weekend Dip strategy" meant selling coins at that time (Wednesday evening in the West, Thursday in the East) and waiting for a selloff.  Then hold on until the drop starts to inch its way back up, maybe recovering to about a third or a half of the drop.  If there is no recovery happening, then let it ride further into Monday if the selloff continues.   Oftentimes the best time to buy back was late Saturday evening (West)/Sunday afternoon (East), or later.

Following that strategy when the Green Light was on would pretty consistently return like 5% or more (sometimes a LOT more, sometimes approaching 30% with perfect timing).

What kind of killed off the trend is that it became a trend.  And more people traded it ... to where even a 5% drop was getting snapped up by buyers with funds ready and waiting.   The trend worked consistently way back when nearly all funding to Mt. Gox occurred with wire transfers.  So if you are in the Europe or the U.S., any wire sent on Friday arrived too late for Mt. Gox in Japan to process it until Monday.  And any wire sent on Monday wouldn't get processed until Tuesday.  And the combination between U.S. bank holidays and bank holidays in Japan often left many three-day weekends as far as no effective transfer between the U.S. and Mt. Gox for several days.     But it seemed miners, many of whom were over-invested in GPUs and with electric bills would sell 24x7, regardless of the price.   When Bitcoin currency was inflating at an annual rate of 50% or 33%, and 50 BTC per block, that meant a ton of coins were selling on Friday, Saturday and Sunday -- and no bank wires were being credited during that time.    Trader's were still leery of keeping lots of funds at the exchanges so there just wasn't many USDs sitting there ready to be put to use, at least not for just a simple 10% or 15% weekend dip.   (because if you used up your powder on a 10% gain you might miss the more attractive 35% rollercoaster ride.)  

Those days look to be behind us, but just like this past week's $49-ish to $34-ish dip, big swings still can occur.  More often than not they occur over the weekends.   But big rises can occur on the weekend as well.  So waiting for the Green Light basically was a way to lessen the chance of a big rise occurring as rallies with huge spikes up didn't usually emerge during the middle of a week-to-week downtrend.

[Stephen Gornick]

GREEN LIGHT?    

Seriously ...  we got our first GREEN LIGHT for the weekend dip strategy in many months.



 - http://bitcoincharts.com/charts/mtgoxUSD#rg1zczsg2013-02-27zeg2013-03-14ztgOzm1g10zm2g25

The high in the past seven day period was $48.469.   The high in the seven day period prior to that was $49.099.

That's not much of a drop but technically it makes it a week-to-week drop, ... which means we're in a short-term down trend.

The weekend dip strategy says to sell at this level, with the anticipation of a drop.  Then to buy bitcoins back over the weekend at a lower price.

While we've had wild swings over the weekend before, they've been narrowing in degree.

But if the drop is down 5%-ish (quite common on GREEN LIGHT weekends), that would be a price around $45.

This weekend dip theory may be something that cannot be traded reliably anymore.  Who knows.  We'll see.

[molecular]

This weekend dip theory may be something that cannot be traded reliably anymore.  Who knows.  We'll see.

Unfortunately whatever happens on this weekend will make us none the wiser regarding reliability of this strategy. Just one more datapoint in a long series that is and will keep allowing statistically rather insignificant conclusions only.

[Stephen Gornick]

This weekend dip theory may be something that cannot be traded reliably anymore.  Who knows.  We'll see.

Unfortunately whatever happens on this weekend will make us none the wiser regarding reliability of this strategy. Just one more datapoint in a long series that is and will keep allowing statistically rather insignificant conclusions only.

There was a lot of buying volume to push the exchange rate up to this level.  That buying volume is petering out.   Right now the 24H volume is an amount showing a relatively low 20K BTC  (relative to volume over the past two months).  

 - http://bitcoincharts.com/charts/mtgoxUSD#rg30zig6-hourztgTzm1g10zm2g25zvzcv

Combine that with an exchange rate drifting lower means buyers are not anxious to buy more at this slightly lower price.

But right now there are 48 hours before the next wire transfers will be credited at Mt. Gox.    This isn't anything new, but if there is a further dip, it can be pressed a bit because there's no new wires that will be credited for a couple days.  That's a property that only happens on the weekends, and this weekend could very well be one where a dip happens again.

[Ichthyo]

There was a lot of buying volume to push the exchange rate up to this level.  That buying volume is petering out.   Right now the 24H volume is an amount showing a relatively low 20K BTC Combine that with an exchange rate drifting lower means buyers are not anxious to buy more at this slightly lower price.

right now, some "wall movers" seem to try to push the rates slowly down. Will be interesting to watch if a Weekend Dip also works when it is staged

[dopamine]

Selling at the top to buy lower, parabolic rise will case a serious crash lets just hope we just have a nice correction 

[Vladimir]

So it seems this time weekend dippers turned out to be weekend hikers and will have to buy for more then they have sold for.

[Stephen Gornick]

So it seems this time weekend dippers turned out to be weekend hikers and will have to buy for more then they have sold for.

Well, the weekend isn't over but it looks to be about a break even to buy back right now, then less fees for a sub 1% loss.    At the time of the post (late Wednesday (West), mid-day Thursday (East)) the exchange rate was something like $47.80.  The last trade at this very moment was $47.52.

There was a dip, down to $46.05 and many opportunities to buy back at a small profit when it was under $47 and was looking quite apparent that this weekend was not going to see a big selloff.  The thing the weekend dip strategy couldn't have seen in advance was the IMF going batshit crazy like they did.  Now I gotta figure out how to reverse some other positions where I'm on the wrong side before Europeans rush the exits and discover bitcoin as a new home for their money.

[molecular]

So it seems this time weekend dippers turned out to be weekend hikers and will have to buy for more then they have sold for.

Well, the weekend isn't over but it looks to be about a break even to buy back right now, then less fees for a sub 1% loss.    At the time of the post (late Wednesday (West), mid-day Thursday (East)) the exchange rate was something like $47.80.  The last trade at this very moment was $47.52.

There was a dip, down to $46.05 and many opportunities to buy back at a small profit when it was under $47 and was looking quite apparent that this weekend was not going to see a big selloff.  The thing the weekend dip strategy couldn't have seen in advance was the IMF going batshit crazy like they did.  Now I gotta figure out how to reverse some other positions where I'm on the wrong side before Europeans rush the exits and discover bitcoin as a new home for their money.

Imf going crazy?

Didn't keep up-to-date. What's that about?

[deeplink]

Imf going crazy?

Didn't keep up-to-date. What's that about?

https://bitcointalk.org/index.php?topic=153773

[ehoffman]

I didn't saw that...  But at the other thread say, I'll just say wow!  Good time for Bitcoins!

[Stephen Gornick]

Time cycles come and go, and if they are correct too often, this is typically the time when it does not work any more.

I still believe that in a downtrend the weekend dip strategy can still be profitable, but we haven't seen any decent downtrends in many months.  This last one resulted essentially in a wash unless perfect timing allowed a tiny profit.

Needless to say, this weekend we are not in a downtrend (specifically we are up more than 40% week-to-week), so there's no green light.

[Stephen Gornick]

Needless to say, this weekend we are not in a downtrend [...], so there's no green light.

Having burst through the previous weekly high, Ditto.

What is interesting is that last weekend even without a green light, there was a dip -- from $74.90 to $52.35, a 30% dip from peak to bottom, but sure enough the exchange rate came right back up.

This weekend there is a unique situation.  It is a FOUR DAY weekend (i.e., banks closed) in the EU due to the Easter holiday:
 - http://www.ecb.int/home/html/holidays.en.html

Whether that is enough to trigger a dip I have no idea.   I only describe when there is a green light indicating when the Weekend Dip Strategy has historically resulting in profitable trades. This weekend there is no green light.

[Vladimir]

What is interesting is that last weekend even without a green light, there was a dip -- from $74.90 to $52.35, a 30% dip from peak to bottom, but sure enough the exchange rate came right back up.

Indeed. Quite incredible is it not? Even I thought... damn... I should start daytrading and keep some bids around 30 day moving average.

[Stephen Gornick]

Ok, GREEN LIGHT!  We have the most pronounced Weekend Dip opportunity since the weekend following the Pirate mess in August 2012.


 - http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2013-04-3zeg2013-04-18ztgCzm1g10zm2g25

The current 7 day high is dramatically below the previous 7-day high a week ago today.   We are, in the short term, in a downtrend.

The Weekend Dip Strategy, when there is a green light, has had a track record of producing profits more often than not. 

The strategy is to sell at this point in time, Wednesday evening (western timezones) / Thursday morning (eastern timezones) with the intention of buying back at a lower level at some point over the weekend. 

This pattern originated long ago when there was essentially no funds moving to the exchanges during the weekend, however selling would continue unabated. During a downtrend, this selling would, pretty consistently, be stronger than the buying.   As a result frequently there would be gains of a few percent, or really large gains like 30%.   Now with Bitcoin volatility that level of rise or drop is something that frequently occurs, but with a green light the pattern seems to very rarely incur a loss, and then other weekends had gains ranging from moderate (couple percent) to really decent levels. 

The right time to buy back is after a selloff seems to be reversing, pulling back up about half from the bottom of the selloff from when the starting mark occurred.  Right now at this moment the "starting mark" is $93 on Mt. Gox. 

Remember, this is just a post about a pattern that has repeated in the past, and is not a suggestion that the pattern will continue this particular weekend.  There have been a few times where there never was a dip and instead the exchange rate rallied throughout the weekend.

[Stephen Gornick]

friday rally, then a weekend dip! get em while they're cheap.

Bah.  I think this myth is BUSTED.  It used to work.  There still might be conditions where it works.   It is not working now.

Buying back at over a 10% higher price sucks!

[Stephen Gornick]

Bah.  I think this myth is BUSTED.  It used to work.  There still might be conditions where it works.

This week was a perfect example of how we had a pretty clear Weekend Dip green light, and following the Weekend Dip strategy would have yielded a nice gain.   

 - http://bitcoincharts.com/charts/mtgoxUSD#rg10zczsg2013-05-21zeg2013-06-08ztgSzm1g10zm2g25

Oh well, it's not reliable for trading anymore but I'll keep an eye out to see if the pattern returns.