I have made a 25% return this week trading *against* the pirate

[the joint]

The part I think a lot of people miss is the differences between a rally and a crash as far as how the market reacts.  So, I'll attempt to explain it.

During a...

rally a couple big buys cause people to jump on the train, riding it up the hill without much movement on the ask side of the order book.
crash a couple big sells induce panic that not only sell off coins but cause orders to be ripped from the bid side of the order book.  Driving prices into the ground.

Granted, there will be people buying at any price but the traders are smart and we've got some big players in the market this time.

My two cents are free.

-pirate

Read through Pirate's posts.  If you read inbetween the lines you will know exactly what he's doing.

[notme]

In a bear market Pirate's strategy makes a lot of sense. It just does not work very well in a bull market.

And why do you assume this is Pirate's strategy.  Do you really think he's that stupid?  I've discussed his risk profile with him and he's not as dumb as you assume.  Again, I'll ask: Where is one scrap of evidence that your claims have anything to do with reality?

We already know his strategy works very well in a bear market. The proof in that he has not missed a payment. Let us see how he does in a bull market particularly one where the BTC / USD price rises sharply.

Way to ignore the question.  We will see, but in the mean time can you quit with the strong assertions without a shred of evidence to back them up?  If you want to say "I think that...", fine, but going around acting like you know Pirate's every move/position makes you look like an idiot.

[ArticMine]

In a bear market Pirate's strategy makes a lot of sense. It just does not work very well in a bull market.

And why do you assume this is Pirate's strategy.  Do you really think he's that stupid?  I've discussed his risk profile with him and he's not as dumb as you assume.  Again, I'll ask: Where is one scrap of evidence that your claims have anything to do with reality?

We already know his strategy works very well in a bear market. The proof in that he has not missed a payment. Let us see how he does in a bull market particularly one where the BTC / USD price rises sharply.

Way to ignore the question.  We will see, but in the mean time can you quit with the strong assertions without a shred of evidence to back them up?  If you want to say "I think that...", fine, but going around acting like you know Pirate's every move/position makes you look like an idiot.

The evidence is there in plain view including in Pirate's own posts and comments to anyone willing to spend the time and effort to do their own research using publicly available information. I must say all I have seen for the most part is either it is a very profitable propriety business method that cannot be disclosed in order to maintain its profitability (supporters) or it is some kind of illegal ponzi or money laundering scheme (detractors). I am quite prepared to let time and the markets judge who is and who is not an idiot on both sides of this matter.

[notme]

In a bear market Pirate's strategy makes a lot of sense. It just does not work very well in a bull market.

And why do you assume this is Pirate's strategy.  Do you really think he's that stupid?  I've discussed his risk profile with him and he's not as dumb as you assume.  Again, I'll ask: Where is one scrap of evidence that your claims have anything to do with reality?

We already know his strategy works very well in a bear market. The proof in that he has not missed a payment. Let us see how he does in a bull market particularly one where the BTC / USD price rises sharply.

Way to ignore the question.  We will see, but in the mean time can you quit with the strong assertions without a shred of evidence to back them up?  If you want to say "I think that...", fine, but going around acting like you know Pirate's every move/position makes you look like an idiot.

The evidence is there in plain view including in Pirate's own posts and comments to anyone willing to spend the time and effort to do their own research using publicly available information. I must say all I have seen for the most part is either it is a very profitable propriety business method that cannot be disclosed in order to maintain its profitability (supporters) or it is some kind of illegal ponzi or money laundering scheme (detractors). I am quite prepared to let time and the markets judge who is and who is not an idiot on both sides of this matter.

Cool.  So you'll stop trying to decide for the market?

[the joint]

In a bear market Pirate's strategy makes a lot of sense. It just does not work very well in a bull market.

And why do you assume this is Pirate's strategy.  Do you really think he's that stupid?  I've discussed his risk profile with him and he's not as dumb as you assume.  Again, I'll ask: Where is one scrap of evidence that your claims have anything to do with reality?

We already know his strategy works very well in a bear market. The proof in that he has not missed a payment. Let us see how he does in a bull market particularly one where the BTC / USD price rises sharply.

This is too generalized a statement.

Rising 'sharply' isn't necessarily the issue -- it's when it rises sharply, and if that rise holds.

Keep in mind that unless he's retarded (and improbably lucky), he will never have 100% USD or BTC.  But, suppose that he is holding mostly BTC -- this BTC is what is needed to be sold and drive the price down so he can repurchase BTC for interest payments.

If the price rises sharply while he is holding BTC, this is a non-issue.  In fact, it rocks for him.  He will simply sell at a higher price and profit like crazy.

If, however, the prices rises sharply AFTER he cashes out his BTC, then this becomes a problem.  Pirate now needs to go to a secondary approach -- sparking a rally with hes newly acquired USD so that he will once again have an opportunity to sell higher than his purchase price.

So, Pirate will try to spark a rally in the same manner that he has before.  Typically, when Pirate sparks a rally, he initiates a sell-wall in order to invite more traders to create their own sell bids.  This sell-wall has 2 advantages -- 1)  It helps accumulate more sell orders around his sell-wall, or 2) it may encourage other traders to drop the price for him.  

Knowing this, there is a main, general way to fuck with Pirate, but it requires an insane amount of capital.  You will need an amount of capital equal to Pirate's capital.  But, the community at large has such capital.

Buy.  Buy like fucking mad.  This needs to begin after a crash.  You need to buy and keep buying.  You need to buy all of his sell walls and drive the price up.  BUT, you cannot fill in new orders in the order book.  There needs to be a permanent margin between the price at which this post-crash rally begins and the new price.  If this margin persists for 1 week, Pirate will eventually default on his interest payments.

For example, lets say the price is at $9 when Pirate crashes it to $8.  This is when you need to buy.  Buy buy buy up to $9, $10, $11, etc.  But, there needs to be a near empty order book on the buy side between $8 and the new price or else Pirate will be able to generate a profit still.  After all, Pirate will, of course, be among the first to buy once he sees a rally is occurring, so he will convert back to BTC.  But, if there are so few orders in the order book, he will not be able to profit.  The final icing on the cake would be an absolutely massive bid wall at $8, a wall so large that Pirate would lose all BTC holdings if he were to attempt to try to crash the market below $8 to spark a new crash and buy at even lower prices.

In other words.  Wherever the next crash stops, that needs to be where an insurmountable bid wall forms.  After that bid wall forms, go all in and Pirate will default.

The problem with this, of course, is that unless only a few people could pull off this massive bidwall stunt, it could never be coordinated with so many people involved, and some people would end up losing a whoooole lot of money.

[ArticMine]

There are many ways for even a small player to trade successfully against Pirate. One of the simplest is to arbitrage his MtGox trades on one or more of the smaller exchanges. This is simplest if both exchanges trade in USD. The net effect is to leverage the smaller market against him.

[elux]

Read through Pirate's posts.  If you read inbetween the lines you will know exactly what he's doing.

Beyond taking on debt at rates that even a love child of Warren Buffett and Bill Gates couldn't repay?

Fascinating quote though, where and when is this from?

The part I think a lot of people miss is the differences between a rally and a crash as far as how the market reacts.  So, I'll attempt to explain it.

During a...

rally a couple big buys cause people to jump on the train, riding it up the hill without much movement on the ask side of the order book.
crash a couple big sells induce panic that not only sell off coins but cause orders to be ripped from the bid side of the order book.  Driving prices into the ground.

Granted, there will be people buying at any price but the traders are smart and we've got some big players in the market this time.

My two cents are free.

-pirate

Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.

[the joint]

Read through Pirate's posts.  If you read inbetween the lines you will know exactly what he's doing.

Beyond taking on debt at rates that even a love child of Warren Buffett and Bill Gates couldn't repay?

Fascinating quote though, where and when is this from?

The part I think a lot of people miss is the differences between a rally and a crash as far as how the market reacts.  So, I'll attempt to explain it.

During a...

rally a couple big buys cause people to jump on the train, riding it up the hill without much movement on the ask side of the order book.
crash a couple big sells induce panic that not only sell off coins but cause orders to be ripped from the bid side of the order book.  Driving prices into the ground.

Granted, there will be people buying at any price but the traders are smart and we've got some big players in the market this time.

My two cents are free.

-pirate

Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.

It's from the middle of January.

https://bitcointalk.org/index.php?topic=58609.msg690372#msg690372

[ArticMine]

Read through Pirate's posts.  If you read inbetween the lines you will know exactly what he's doing.

Beyond taking on debt at rates that even a love child of Warren Buffett and Bill Gates couldn't repay?

Fascinating quote though, where and when is this from?

The part I think a lot of people miss is the differences between a rally and a crash as far as how the market reacts.  So, I'll attempt to explain it.

During a...

rally a couple big buys cause people to jump on the train, riding it up the hill without much movement on the ask side of the order book.
crash a couple big sells induce panic that not only sell off coins but cause orders to be ripped from the bid side of the order book.  Driving prices into the ground.

Granted, there will be people buying at any price but the traders are smart and we've got some big players in the market this time.

My two cents are free.

-pirate

Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.

I looked at the George Soros case because as with Pirate he was also a short. I am not convinced; however that George Soros had anywhere near the influence over GBP than Pirate has over BTC. A much closer case although in this case the manipulators were bulls is when the Hunt brothers tried to corner the silver market in 1979 - 1980. http://en.wikipedia.org/wiki/Nelson_Bunker_Hunt and http://en.wikipedia.org/wiki/Silver_Thursday

[VelvetLeaf]

Looks like pirate needs more money.  He has lifted the referral requirement so now anyone can invest again in this BCTST.  I am speculating this usually happens when business goes bad so more capital is require to remain "profitable."

I still can't see sign up button on BCTST (without referral), only Login button.
https://btcst.com

[asfas16123]

Do you really think someone as pirate would be stupid enough to tell everyone he is short if he wanted the price to go down?

[Raoul Duke]

Do you really think someone as pirate would be stupid enough to tell everyone he is short if he wanted the price to go down?

They seem to think that, yes...

Puppets being played. lol

[DublinBrian]

The part I think a lot of people miss is the differences between a rally and a crash as far as how the market reacts.  So, I'll attempt to explain it.

During a...

rally a couple big buys cause people to jump on the train, riding it up the hill without much movement on the ask side of the order book.
crash a couple big sells induce panic that not only sell off coins but cause orders to be ripped from the bid side of the order book.  Driving prices into the ground.

Granted, there will be people buying at any price but the traders are smart and we've got some big players in the market this time.

My two cents are free.

-pirate

I guess that explains what pirate is doing with the borrowed funds. He thinks he can daytrade the borrowed funds and beat the market.

That is indeed feasible, but not forever. That kind of activity been compared to "picking up nickels in front of a steamroller". Its profitable until the day he is wiped out.

[ArticMine]

Do you really think someone as pirate would be stupid enough to tell everyone he is short if he wanted the price to go down?

Actually many smart and successful investors make no secret of what their positions are, long or short, once they have invested. Pirate is more along the lines of keeping his overall strategy secret while dropping hints here and there so that someone willing to "connect the dots" can get a fairly good picture of what he is really up to.

[DublinBrian]

In a sophisticated market, yes.  This is as naïve a market as you can find.  You can use short-term trading strategies from the 30s and still do well on mtgox.

And by 30s, I mean 1630s.

Youre probably right.

Is there any way to know if pirate is finding success, with this strategy. BitPay seem to think not.

And secondly, what will pirates exit look like? A large dump? Or distribution of winnings back to the investors, in BTC.

[ArticMine]

I guess that explains what pirate is doing with the borrowed funds. He thinks he can daytrade the borrowed funds and beat the market.

That is indeed feasible, but not forever. That kind of activity been compared to "picking up nickels in front of a steamroller". Its profitable until the day he is wiped out.

In a sophisticated market, yes.  This is as naïve a market as you can find.  You can use short-term trading strategies from the 30s and still do well on mtgox.

And by 30s, I mean 1630s.

Of course!. The strategy is to sell tulip bulbs short after they peaked in value in February 1637. http://en.wikipedia.org/wiki/Tulip_mania

[smoothie]

Do you really think someone as pirate would be stupid enough to tell everyone he is short if he wanted the price to go down?

They seem to think that, yes...

Puppets being played. lol

I guess it takes one to know one eh...SC sockie 

[Raize]

Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.

Druckenmiller and Soros were already very well invested in both the German and British economies. It was when Druckenmiller realized that Germany was raising their rates and Britain had absolutely no intention to that he realized he could make a decent amount. He had already put a few million into the German mark prior to reunification, because he saw it was far more devalued than it should have been. At the time Soros basically said if he believed it would have a specific time frame for recovery, he should put in billions, not just millions, so he did, sure enough, the wall came down and Soros and Druckenmiller made hundreds of millions. People forget this.

After their sale, they had significant amounts of British pounds, but Germany was growing quite well, and their economy actually seemed more stable than even Britain's at the time, so when Germany thought it was a good idea to raise interest rates, and Britain basically said it wasn't going to, Druckenmiller saw another opportunity. Again, as the previous time, when he told Soros, Soros indicated that a few hundred million wasn't enough, and they should put in billions since it was basically a sure bet and they knew they had the British pounds to make it happen.

So they did. And more importantly, they told everyone about it, because they knew they had enough to do it. It was a psychological thing for the long term benefit of the pound. They needed the pound to be stronger so that when they bought back into it, it was stable. Perhaps not as stable as the US dollar at the time, but stable enough that it could be a safe store of value for the coming decade or more. In essence, when someone controls significant amounts of your money supply like Soros or other large traders, you're trusting them to decide public policy, because they can use the bulk of their money to voice a concern and make good on it.

Pirate may have a huge investor wanting a significant amount of Bitcoin, but he probably just aims to use vast amounts of cash to do what he is trying to do. He'd never puts up ask walls, instead he only plays the buy side, when he sees how weak the buys are, he drops his walls and uses borrowed funds to sell into it. This solution works if you are the major market buyer but stops working if another major market buyer steps in and sets up their bot to wait for the buy wall to drop then BUYS INTO the sells done USING BORROWED COIN. At that point, like everyone here says, they have to cover their short.

Like I said, I'm looking forward to the next time he does this. It looks like BitPay may have caught him a bit this time, too, he clearly didn't cause a beneficial sell off if that was his intention. Of course revealing that he controls the buy walls indicates he always trades in such a fashion so as to turn his cash back into USD, or like I indicated, he really does have a huge investor that wants/needs a lot of coin and wants it for the cheapest price they can get it.

http://www.investopedia.com/articles/forex/08/greatest-currency-trades.asp#axzz21ZKmUIcG

[ArticMine]

Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.

Druckenmiller and Soros were already very well invested in both the German and British economies. It was when Druckenmiller realized that Germany was raising their rates and Britain had absolutely no intention to that he realized he could make a decent amount. He had already put a few million into the German mark prior to reunification, because he saw it was far more devalued than it should have been. At the time Soros basically said if he believed it would have a specific time frame for recovery, he should put in billions, not just millions, so he did, sure enough, the wall came down and Soros and Druckenmiller made hundreds of millions. People forget this.

After their sale, they had significant amounts of British pounds, but German was growing quite well, and their economy actually seemed more stable than even Britain's at the time, so when Germany thought it was a good idea to raise interest rates, and Britain basically said it wasn't going to, Druckenmiller saw another opportunity. Again, as the previous time, when he told Soros, Soros indicated that a few hundred million wasn't enough, and they should put in billions since it was basically a sure bet and they knew they had the British pounds to make it happen.

So they did. And more importantly, they told everyone about it, because they knew they had enough to do it, it was a psychological thing, they needed the pound to be stronger so that when they bought back into it, it was stable, perhaps not as stable as the US dollar at the time, but stable enough that it mattered. In essence, when someone controls significant amounts of your money supply like Soros or other large traders, you're trusting them to decide public policy, because they can use the bulk of their money to voice a concern and make good on it.

Pirate may have a huge investor wanting a significant amount of Bitcoin, but he probably just aims to use vast amounts of cash to do what he is trying to do. He'd never puts up ask walls, instead he only plays the buy side, when he sees how weak the buys are, he drops his walls and used borrowed funds to sell into it. This solution works if you are the major market buyer but stop working if another major market buyer steps in and set up their bot to wait for the buy wall to drop then BUYS INTO the sells done WITH BORROWED COIN.

Like I said, I'm looking forward to the next time he does this.

http://www.investopedia.com/articles/forex/08/greatest-currency-trades.asp#axzz21ZKmUIcG

This is a great and very profitable strategy in a bear market, especially when combined with the borrowed BTC. Let us not forget that during the bear market in Bitcoin between July 2011 and December 2011 the effective inflation rate for Bitcoin in terms of the USD price was over 7% a week. But in a bull market?

[Raize]

No, it works best because you play emotions of everyone who bought when the bids were very thin and hope they sell based on those emotions. They often do, and at lower prices. In fact, if the buys are weak, you only have to spend ~5k to send it down in price $2 and then buy as the emotional investors sell it back to you at less than what they paid.

Anyone that was watching the level IIs that night saw that someone spent less than 5k in sells to get about 30k in buys at a much lower cost average in the same time frame. This is why traders should never use stop losses, people like pirate could take advantage of them. On the other hand, if that 30k purchase was actually BitPay, then kudos to them, they figured out what he was doing. That's why I think it'll be interesting if he tries this again, I imagine several of us may have our bots set to take advantage of it.