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Author Topic: The grue/qo method  (Read 2431 times)
qo
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February 27, 2012, 01:16:00 AM
 #1

Place buy orders on Mt.Gox @ 15% or more below current price.  Ladder the volume higher with each percentage increase e.g.:

50 BTC @ 15% below current price
70 BTC @ 20 % below current price
90 BTC @ 25 % below current price
etc.

At some point they'll be hit (or not).

If they're hit, chances are the price will go up in the next several days.

Sell when the price exceeds your price by some small amount e.g. 5% (which isn't a bad return in the real world).  If the price continues down, your ladders will be hit, lowering your average price.

If your orders aren't hit.  No problem.  Cancel and start over.

This has worked consistently for me so far.

IMHO, it's low stress and you don't have to watch the market at all.  Set alarms for each of your order prices in Bitcoin Ticker on the iPhone, or one of the other BTC price apps that support alarms. With this method, you don't have to bother with charts, technical analysis, etc.  It does require patience though and might not result in high returns that other methods promise.

Thoughts?
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February 27, 2012, 01:30:08 AM
 #2

what happens when it goes down and dosent come up..?

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February 27, 2012, 01:46:35 AM
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what happens when it goes down and dosent come up..?

It's the usual momentum vs. contrarian divide. Contrarian strategies work for mostly stationary markets and momentum trading works for big trends. There's no single good strategy, ever, and you need to have additional (ideally, almost unbreakable) policies in place for dealing with (i.e., closing out and cutting losses) movements that go too far outside of your expectations.

If someone had stuck to this method blindly when we were deflating after June, they'd be pretty sad by now.
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February 27, 2012, 01:57:29 AM
 #4

Nobody can say the Bitcoin market is trendless.  Trends are very powerful in the Bitcoin market, so contrarian strategies like this won't work... you would've been buying from June to November, and perhaps you would've run out of money by the time your average price was $5.

(BFL)^2 < 0
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February 27, 2012, 02:01:28 AM
 #5

or...you could just succumb to my charting service and subscribe already  Wink

Place buy orders on Mt.Gox @ 15% or more below current price.  Ladder the volume higher with each percentage increase e.g.:

50 BTC @ 15% below current price
70 BTC @ 20 % below current price
90 BTC @ 25 % below current price
etc.

At some point they'll be hit (or not).

If they're hit, chances are the price will go up in the next several days.

Sell when the price exceeds your price by some small amount e.g. 5% (which isn't a bad return in the real world).  If the price continues down, your ladders will be hit, lowering your average price.

If your orders aren't hit.  No problem.  Cancel and start over.

This has worked consistently for me so far.

IMHO, it's low stress and you don't have to watch the market at all.  Set alarms for each of your order prices in Bitcoin Ticker on the iPhone, or one of the other BTC price apps that support alarms. With this method, you don't have to bother with charts, technical analysis, etc.  It does require patience though and might not result in high returns that other methods promise.

Thoughts?

qo
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February 27, 2012, 02:27:46 AM
 #6

what happens when it goes down and dosent come up..?

So far, that's not happened.  There's usually a bounce after every major decline.  But, if it does then, yeah, I'm screwed  Grin

But, the point of laddering down is to soften the blow of such events by lowering your average price as the market declines.

Part of my rational is that I got into bitcoin by catching the falling knife at around 18 or so.  Against everything I'd ever learned, I bought more and more on the way down until my average price was around 3.50ish.  Then sold around 4 in the last rally to 7 (missing a substantial part of that rally).  I suppose the other option would be to sell, lick your wounds, limit your loss, and remain solvent for the next trade.  Some folks have the demeanor for that, but it's just not a part of my mindset  Cheesy
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February 27, 2012, 02:36:33 AM
 #7

You stole my strategy that i worked on for 3 months straight! Angry

It is pitch black. You are likely to be eaten by a grue.

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February 27, 2012, 02:43:55 AM
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You stole my strategy that i worked on for 3 months straight! Angry

Haha.  I'd rename the thread to "The grue method" if the forum supported it.  As it is, I've retitled this post :-)
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February 27, 2012, 02:53:22 AM
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You stole my strategy that i worked on for 3 months straight! Angry

Haha.  I'd rename the thread to "The grue method" if the forum supported it.  As it is, I've retitled this post :-)

Re title your first post Wink
qo
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February 27, 2012, 03:06:31 AM
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Haha.  I'd rename the thread to "The grue method" if the forum supported it.  As it is, I've retitled this post :-)

Re title your first post Wink
Thanks!  And done.  Smiley
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February 27, 2012, 03:27:23 AM
 #11

Place buy orders on Mt.Gox @ 15% or more below current price.  Ladder the volume higher with each percentage increase e.g.:

50 BTC @ 15% below current price
70 BTC @ 20 % below current price
90 BTC @ 25 % below current price
etc.

At some point they'll be hit (or not).

If they're hit, chances are the price will go up in the next several days.

Sell when the price exceeds your price by some small amount e.g. 5% (which isn't a bad return in the real world).  If the price continues down, your ladders will be hit, lowering your average price.

If your orders aren't hit.  No problem.  Cancel and start over.

This has worked consistently for me so far.

IMHO, it's low stress and you don't have to watch the market at all.  Set alarms for each of your order prices in Bitcoin Ticker on the iPhone, or one of the other BTC price apps that support alarms. With this method, you don't have to bother with charts, technical analysis, etc.  It does require patience though and might not result in high returns that other methods promise.

Thoughts?

Sounds a lot like http://en.wikipedia.org/wiki/Martingale_%28betting_system%29

Yes, just like the martingale method, your method will work 9 times out of 10, hence the consistency you observe.  But, that single 10% loser will be really big, wiping out any profit, on average.

This method's a way of making your profits look consistent when they really aren't, by taking increasingly riskier bets.



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February 27, 2012, 03:42:21 AM
 #12

this is the exact reason why 90%+ of people that play the market lose everything. Think about it...if it was this easy to make money then everybody would be rich. The hard truth is that you must have an opinion of market direction, the technical backgound to make up a 'good' opinion in the first place, and the discipline to follow your method when trading while keeping emotions out.

Place buy orders on Mt.Gox @ 15% or more below current price.  Ladder the volume higher with each percentage increase e.g.:

50 BTC @ 15% below current price
70 BTC @ 20 % below current price
90 BTC @ 25 % below current price
etc.

At some point they'll be hit (or not).

If they're hit, chances are the price will go up in the next several days.

Sell when the price exceeds your price by some small amount e.g. 5% (which isn't a bad return in the real world).  If the price continues down, your ladders will be hit, lowering your average price.

If your orders aren't hit.  No problem.  Cancel and start over.

This has worked consistently for me so far.

IMHO, it's low stress and you don't have to watch the market at all.  Set alarms for each of your order prices in Bitcoin Ticker on the iPhone, or one of the other BTC price apps that support alarms. With this method, you don't have to bother with charts, technical analysis, etc.  It does require patience though and might not result in high returns that other methods promise.

Thoughts?

Sounds a lot like http://en.wikipedia.org/wiki/Martingale_%28betting_system%29

Yes, just like the martingale method, your method will work 9 times out of 10, hence the consistency you observe.  But, that single 10% loser will be really big, wiping out any profit, on average.

This method's a way of making your profits look consistent when they really aren't, by taking increasingly riskier bets.




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February 27, 2012, 04:21:17 AM
 #13

so, in addition to my previous post, to make money in any market including bitcoin, you must either put the 'time' in to learn how to technically trade the market, or you put the 'money' in to pay someone who did put the 'time' in to guide you. Don't be stupid and bet your money in the market like you would in a casino. As in a casino, the house always wins.  Wink

copumpkin
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February 27, 2012, 04:41:20 AM
 #14

so, in addition to my previous post, to make money in any market including bitcoin, you must either put the 'time' in to learn how to technically trade the market, or you put the 'money' in to pay someone who did put the 'time' in to guide you. Don't be stupid and bet your money in the market like you would in a casino. As in a casino, the house always wins.  Wink

And surely you have no vested interest in recommending this, right? Smiley
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February 27, 2012, 04:50:13 AM
 #15

 I was saying stuff like this before I even starting the service. I hate seeing people throwing around these 'obvious' strategies that have been tried so many times in the past by every trader in every market; it always 'always' ends in tears. I would actually say my last two posts here were pretty non-biased plain old good advice which anybody that has actually traded for a living will tell you.

so, in addition to my previous post, to make money in any market including bitcoin, you must either put the 'time' in to learn how to technically trade the market, or you put the 'money' in to pay someone who did put the 'time' in to guide you. Don't be stupid and bet your money in the market like you would in a casino. As in a casino, the house always wins.  Wink

And surely you have no vested interest in recommending this, right? Smiley

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February 27, 2012, 08:36:48 AM
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Quote
this is the exact reason why 90%+ of people that play the market lose everything. Think about it...if it was this easy to make money then everybody would be rich. The hard truth is that you must have an opinion of market direction, the technical backgound to make up a 'good' opinion in the first place, and the discipline to follow your method when trading while keeping emotions out.
THIS!
EDIT Big players! Do not say in this forum your book orders (or order book-vice versa)! Sometimes it's too easy to win against you!

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February 27, 2012, 10:01:35 AM
 #17

I am long term accumulate and hold, so if BTC is destroyed I lose anyway. I am ready for that.

If we assume I am ready to accept catastrophic failure then I can build a ladder big enough that it takes the collapse of BTC market to really screw things up. (my ladder goes down to around 0.14 cents a coin at which point I stop buying and have several thousand BTC) If I subsequently get zhoutonged on my bitcoinica holding then I lose 50% of my dollar investment. The other coins will just sit in my wallet perhaps they become virtually worthless the lottery ticket buyer in me will probably keep accumulating though!

This is my worst case scenario, I only focus on that because thats what is important to take care of. Profits can sort themselves out.

My ladder is tall and pretty fine grained. The recent (relative) stability if swings between 4 and 7 don't make much difference to me, I'm not here to day trade. My average price is about $3.63/BTC and 63% of that is real coins (i.e. not on bitcoinica) and my current bitcoinica zhoutong price is negative $9.59!!! so we have a way to go before I can even get zhoutonged. I also have more dollars 'written off' to bring that down. Those dollars are also ready to be lost if it so be.

So I am pretty comfortable with my risk, I am happy that if BTC collapses I lose everything. That's ok the money is already spent and I don't miss it anymore.

What's interesting is if BTC really takes off, what I could buy with my BTC and not how many USD's I could trade it for.

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February 27, 2012, 10:07:32 AM
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I was saying stuff like this before I even starting the service. I hate seeing people throwing around these 'obvious' strategies that have been tried so many times in the past by every trader in every market; it always 'always' ends in tears. I would actually say my last two posts here were pretty non-biased plain old good advice which anybody that has actually traded for a living will tell you.

so, in addition to my previous post, to make money in any market including bitcoin, you must either put the 'time' in to learn how to technically trade the market, or you put the 'money' in to pay someone who did put the 'time' in to guide you. Don't be stupid and bet your money in the market like you would in a casino. As in a casino, the house always wins.  Wink

And surely you have no vested interest in recommending this, right? Smiley


"Fooled by randomness" N.N. Taleb.

If you have read that you should know for sure that he (NNT) is not right, neither are you, and neither am I.

Once you understand this, only then can you trade.

(but of course you don't trade...)

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February 27, 2012, 10:23:28 AM
 #19

the difference with martingale is that with martingale you can lose everything, but with that system, there is a floor: 1BTC = 0.01$ , if you have enough money to go down to 0$, then there is no risk, am I wrong?
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February 27, 2012, 05:28:53 PM
 #20

the difference with martingale is that with martingale you can lose everything, but with that system, there is a floor: 1BTC = 0.01$ , if you have enough money to go down to 0$, then there is no risk, am I wrong?
There is always risk.

-If BTC goes down to 0$, it is likely due to something catastrophic.  If something catastrophic happens to BTC, it will likely never recover, meaning that you will be forced to

-In addition to market risk, there are other risks.   A critical flaw could be found in the private key cryptography BTC uses, allowing everyone to spend everyone else's money.  If this happens, you would not be able to get back your investment.

-If you ONLY trade when there is "no risk" (you can  buy all BTC), then it is likely that your orders will never be executed (since BTC isn't likey to drop to 0.01$ in normal circumstances).  The only way your orders would be executed is if something catastrophic happened, and if something catastrophic happens then you likely just bought something that is worthless.
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