The Weekend Dip Myth

[N12]

Friday, Saturday and Sunday since start of rally.

[Crypt_Current]

Friday, Saturday and Sunday since start of rally.

Looks like an inverse dip, on average

[notme]

Looks like an inverse dip, on average

My favorite kind.

[finway]

Deposit stall?

[adamstgBit]

Deposit stall?

if you can't buy because you have no more money.... we are defiantly going up

[Elwar]

7 weekends down, 6 weekends up...

unambiquous

[Stephen Gornick]

The Weekend Dip strategy that had seen gains that were better than just maintaining a buy and hold position for much of 2011 is detailed below.  The reason this pattern might exist is because bitcoin exchanges are open 24/7 but bank transfers are only occurring on business days.  Add in the timezone difference between the U.S. and Japan (where Mt. Gox operates) and you get an even narrower window where new funds arrive at Mt. Gox.

When Bitcionica arrived, leverage made this weekend dip less likely to repeat as traders had the ability to move without waiting for cash transfers to clear.  Even so, there seems to be a recurring pattern.  Here's one way to try to trade it:

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From a long position, evaluate late Wednesday evening (U.S.) / Thursday (morning Europe, afternoon east).  If the 7-day high is below the previous 7-day high, then sell some.  If that 7-day high is above the previous (i.e., week-over-week is trending up), then this is not a good weekend to try to play the weekend dip strategy.

So if you sold, then wait and watch.  Put in some buy orders -- e.g., buy back a quarter of what was sold at 5% below where the bitcoins were sold at, another quarter at 10% below, another quarter at 20% and the last quarter at 33% below.

Wait and watch.

Around Saturday evening is generally the low point. Watch closely after that.  If the price just sits, you can wait longer, into Monday, but if the bids start changing the direction close back towards the price where you sold then cancel your bids and repurchase what you sold so that you aren't caught chasing the ball above where you sold.

If a big drop happened on Friday then bank wires from the West would reach Mt. Gox by Sunday evening (U.S) so try to be back in your position fully by then.  If Friday was flat, then if there are significant bank wires from the West they won't be heading to Mt. Gox until Monday evening (U.S.) so you can be more patient, as there could be a drop on Sunday night/Monday as well.   When there is a big drop, you want to be back in your position before those wires hit.

Now if instead the price rises from where you sold, check your emotions.  If there is no reasonable explanation for it to jump 10%, for example, it might just drop back down over the weekend to where you can buy back near even.  Or it might continue zooming up 33%.  It may be weeks before you re-enter your position anywhere near where you sold, or you may not end up with a chance to enter at the level you sold at.  But when trading the weekend dip, your gains over time will more than compensate for the hit taken when the rare occurrance that price had a big run even though conditions were ripe for a normal weekend dip (using the 7-day high test explained above).

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p.s., I'm not a financial advisor nor necessarily an active trader either.  You don't want to blindly follow a strategy like this -- I'm just explaining a strategy that seemed to work at certain points in history.  

That said, this strategy kicks off only by selling a long position -- so if you will beat yourself up for missing that 40% rise that happened over the weekend, don't follow this strategy.

[Elwar]

The Weekend Dip strategy that had seen gains that were better than just maintaining a buy and hold position for much of 2011 is detailed below.  The reason this pattern might exist is because bitcoin exchanges are open 24/7 but bank transfers are only occurring on business days.  Add in the timezone difference between the U.S. and Japan (where Mt. Gox) and you get an even narrower window where new funds arrive at Mt. Gox.

When Bitcionica arrived, leverage made this weekend dip less likely to repeat as traders had the ability to move without waiting for cash transfers to clear.  Even so, there seems a pattern recurs.  Here's one way to try to trade it:

--------------

From a long position, evaluate late Wednesday evening (U.S.) / Thursday (morning Europe, afternoon east).  If the 7-day high is below the previous 7-day high, then sell some.  If that 7-day high is above the previous, then this is not a good weekend to try to play the weekend dip strategy.

So if you sold, then wait and watch.  Put in some buy orders -- e.g., buy a quarter of what was sold at 5% below the , another quarter at 10% below, another quarter at 20% and the last quarter at 33% below.

Wait and watch.

Around Saturday evening is generally the low point. Watch closely after that.  If the price just sits, you can wait longer, into Monday, but if the bids start changing the direction close back towards where you sold then cancel your bids and repurchase what you sold so that you aren't caught chasing the ball above where you sold.

If a big drop happened on Friday then bank wires from the West would reach Mt. Gox by Sunday evening (U.S) so try to be back in your position fully by then.  If Friday was flat, then bank wires from the West won't reach Mt. Gox until Monday evening (U.S.) so you can be more patient, as there could be a drop on Sunday night/Monday as well.   When there is a big drop, you want to be back in your position before those wires hit.

Now if instead the price rises from where you sold, check your emotions.  If there is no reasonable explanation for it to jump 10%, for example, it might just drop over the weekend.  Or it might continue zooming up 33%.  It may be weeks before you re-enter your position anywhere near where you sold, or you may not end up with a chance to enter at the level you sold at.  But when trading the weekend dip, your gains over time will more than compensate for the hit taken when the rare occurrance that price had a big run when conditions were ripe for a dip (using the 7-day high test explained above).

---------

p.s., I'm not a financial advisor nor necessarily an active trader either.  You don't want to blindly follow a strategy like this -- I'm just explaining a strategy that seemed to work at certain points in history.  

That said, this strategy kicks off only by selling a long position -- so if you will beat yourself up for missing that 40% rise that happened over the weekend, don't follow this strategy.

Seems like this strategy would be correct for about 90% of that chart.

Which means that it should drop again this weekend.

[zby]

Friday, Saturday and Sunday since start of rally.

It worked on the up trend last year - then It stopped working on the down trend and it did not yet reestablish itself.

[Oldminer]

 

Edit: Im just glad I've been hanging around here long enough to see numerous weekend dips. I dont care what anyone says. Weekends are notorious for sell offs.

[gewure]

nice thing. i will deposit money and buy into next weekends low.

[Oldminer]

nice thing. i will deposit money and buy into next weekends low.

Interesting isnt it? Still falling.

[N12]

Oldminer, you don’t care about actual data from the past 12 weekends? OK, then keep up your confirmation bias.

[Oldminer]

Oldminer, you don’t care about actual data from the past 12 weekends? OK, then keep up your confirmation bias.

lol

[Stephen Gornick]

If the price just sits, you can wait longer, into Monday, but if the bids start changing the direction close back towards the price where you sold then cancel your bids and repurchase what you sold so that you aren't caught chasing the ball above where you sold.

So at the current rate this Sunday evening (PDT) of $5.28 and possibly creeping back up, the strategy recommendation is to cancel the remaining open bids and to buy back the remaining bitcoins needed to fully restore the position to where it was at before the Weekend Dip strategy was employed.

If the strategy was followed this past weekend, then conditions were favorable for a weekend dip.  Selling on Wednesday evening (PDT) would have been at the BTC/USD price of around $5.60.  Then following the strategy there would have been a bid paced at 5% less, at $5.32.  That bid would have been hit and a quarter of the bitcoins sold would have been bought back already.  And then to now get back to the original market position requires buying at market the remaining three-quarters, which would be at $5.28.

So to summarize, by following the weekend strategy the result was with no change in position (as the entire position was repurchased), a gain of about 4% (after subtracting exchange fees) was achieved.

[Oldminer]

Yes great weekend lol

[gewure]

Yes great weekend lol

bitcoin black february weekend+monday drop

this weekend till now:
5.8 -> 4.8
-17%

[Stephen Gornick]

Last weekend (dates for Thursday through Sunday April 5-8) was slightly profitable for the standard weekend dip strategy (sell on my Wednesday evening, watch closely starting late Saturday and get back in as price rises).  The gain was about 3%, less about 0.5% in fees (thanks to special discount available last week).   The weekend dip "indicator" (week's high is below previous week's high) at the time though was false, so this really doesn't count as a +1 if keeping score.

The week prior (March 29 - April 1) was almost a money loser but then a reversal on a weekend rally brought the price back almost to even.  So that was about a 1% loss after considering fees.  Again, the indicator was flat week over week, so no weekend dip was expected and thus wouldn't be a -1 if keeping score.  Someone with great timing could have picked up about 2% though.

The week prior to that (March 22 - 25) had the classic weekend dip indicator and depending on the timing, gains should have been 5% to 8%.  Solid +1.

The indicator for the week prior (March 15 - 18) was false, and trading the dip strategy would have either broken even or gain a percent or so.  So no +1 though..

Prior to that, (March 1 - 4) the indicator was true but just slightly so.  Regardless the condition was true so it counts.  Trading the weekend dip brought a 5% or so gain.  Going to take the +1 on that as well.

So, for the previous five weekends, trading the weekend dip when conditions were ripe scored two for two, and at least a 5% gain on each.  Trading the weekend dip strategy every weekend regardless of whether or not the indicator pointed true would have you possibly up another couple of percent.

This is being written while looking at conditions for this weekend (April 12 - 15).  The previous week's high is about flat compared to this week's high.  So the indicator is false and this weekend the weekend dip strategy probably shouldn't be traded.  Bitcoins should be held onto throughout the weekend, but keep some cash handy in case there is a buying opportunity if there is a dip.

Of course, that is boring.

So ...  deviating from plan means watching the chart closely.  If the weekend dip starts to occur (e.g., gets down into the $4.80s) then try to sell before it gets below $4.85.  The intention is that at some point over the weekend a better price, maybe $4.60s again or maybe lower, will present itself.   If after selling the price spikes, there will be some resistance at $5 so the worst loss after buying back in probably won't exceed 4% including trading fees.

There is something odd though.  Bitcoin transactions are at high levels (above 8K transactions per day), but no rally or selloff which usually is the reason for seeing higher transaction count levels resulting from bitcoins beng moved to and from the exchanges.      The number of bitcoins (raw output #s) is high ... over 1 million BTC per day.   There aren't a whole lot of BitcoinDays being destroyed either.    Yet Mt. Gox claims they can't keep up with all the cash being withdrawn to Dwolla.

So something interesting is happening, I just can't put my finger on it.  Is it something good for the exchange rate, or bad?  Hard to tell but generally higher transaction counts when not accompanied by either a selloff or rally is a good sign though.

Going to need be quick with the trigger finger to buy back come Saturday.

[Stephen Gornick]

Going to need be quick with the trigger finger to buy back come Saturday.

And that's exactly what was needed  If trading with perfect timing, the tiny little dip on Friday would have allowed a 1% to 2% gain after exchange fees.  By Saturday it was pretty obvious the direction was up so the ability to get back in a break-even levels or a 1% loss after exchange fees was a prudent move.

This current week's high is well above the previous week's high so another weekend to not consider the "weekend dip" strategy as a way to generate some trading profits.

[bitcoinBull]

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