Amateur Traders Cause Bubbles - page 4.

jossiel

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Quote from: Golftech on June 19, 2021, 10:43:54 PM

There are more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

The influence is there from those wise investors and big investors and players in the market.

The amateurs are just followers for what they think is good for their own cause. But if they see that the market is not with them, they also don't do anything or take action just as the wise investors does.

They don't do anything if they don't let their emotions control them.

Silberman

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Quote from: andriarto on June 20, 2021, 08:42:04 AM

Quote from: Golftech on June 19, 2021, 10:43:54 PM

Quote from: famososMuertos on June 18, 2021, 01:44:29 AM

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

I see amateur traders as if they are being used by professional traders to launch their strategies. we know like the case of Elon Musk. he spreads the news so that amateur traders can follow, and once they invest in bitcoin, with the power of the media he can influence many amateur traders to buy, when he feels he has had enough, he seems to run away with the money

While that happened especially in the case of dogecoin I think it is fair to wonder if those people can actually be considered to be traders, after all if you come to this market knowing nothing about trading and relying completely on external influences to take your decisions, are you really a trader? In my mind they do not even qualify for that term, they are just sheep waiting for someone to follow and be slaughtered, but maybe I am being too harsh to them.

andriarto

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Quote from: Golftech on June 19, 2021, 10:43:54 PM

Quote from: famososMuertos on June 18, 2021, 01:44:29 AM

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

I see amateur traders as if they are being used by professional traders to launch their strategies. we know like the case of Elon Musk. he spreads the news so that amateur traders can follow, and once they invest in bitcoin, with the power of the media he can influence many amateur traders to buy, when he feels he has had enough, he seems to run away with the money

Golftech

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Quote from: famososMuertos on June 18, 2021, 01:44:29 AM

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

magneto

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What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

Nunoluck

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That's one of factors that influence bitcoin market volatility. I think amateur traders are mostly lack of skill so they tend to just follow market trend then doubt about their decision, many amateur traders could not distinguished which one is bulltrap or which one is bullish signal. Honestly, I also made many mistake like that but day by day I learn to do trading correctly and of course it is not easy than i think. So for now I just follow my personal pattern to deal with bitcoin volatility, I only buy when most of people sell and sell when most of people buy, I use this pattern and it works. Most of bitcoin or cryptocurrency users are traders so volatility will be very common thing in cryptocurrency investment. I believe that if Bitcoin spread evenly then bitcoin will be less volatile.

famososMuertos

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Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

Similificator

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Quote from: jaysabi on June 13, 2021, 09:19:41 PM

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles. The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders. It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

Your argument does make sense. New comers tend to just dive in without even knowing what they are getting themselves into. Just with the though of getting rich quick, they believe any exaggerated fantasies fed to them by some unknown source. Which only gives benefits to the developers of those shitcoins and the ones who know what is actually going on. Amd maybe because they got fcked by those shitcoins, they go ahead and invest on well established coins in an attempt to get back what they loss and if possible, get some profit along the way, which isn't really a bad idea. But the thing is, these people have too little to no knowledge about how things work in this industry. Thus, their hand are weak, they get easily swayed by fuds and carried away by their emotions which makes them buy or sell without proper planning or thinking. All this can result in a huge increase in unnecessary volatility.

Silberman

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Quote from: jaysabi on June 13, 2021, 09:19:41 PM

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles. The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders. It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

It explains some of the volatility but not all of it, we must remember that the whales have huge influence and they can crash the market if they want in an easy way, we know that a lot of traders use leverage and they overexpose themselves, this means that a strong reduction in the price is enough to wipe them out, so when the time is right whales take the decision to crash the market and when they do this creates a chain reaction which makes the price to go down.

ilovealtcoins

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Bubbles occur from many different causes.
First is the newness of the trend, we saw the dot-com bubble of 1999 with the birth of technology companies in the internet space.
Second, the law does not have an adjustment mechanism for new types of assets and items, leading to market manipulation and disruption. The most obvious examples are the ICO bubble of 2017 and the tulip craze of the past.
The third is the naivety of retail investors in an unknown trend. for example The sharp decline in the price of GAMESTOP stock
Investors seek profits and they are conscious of their behavior but sometimes excessive FOMO causes them to lose. That is the behavior of amateur investors. They are just one of the causes of the bubble.

inoes

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Amateur traders usually just follow someone's lead (YouTuber, artist, Twitter), follow the trend, and follow what people say on social media without further analysis. because the bubble is like a local pump, pump as soon as possible and dump as soon as possible. It is advised not to be tempted by any lure unless it is mastered. we usually know as DWYOR

Shenzou

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Quote from: jaysabi on June 13, 2021, 09:19:41 PM

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles. The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders. It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

Maybe this can be applied to small cryptocurrencies but i don't think that it could be applied to the bitcoin market, as bitcoin has became highly dominated by whales and the ones who trade it on a large scale with large amounts, and i don't think those one will do any move or make any decision just randomly that causes a bubble, and even then they would still won't have any large impact on the price since we are talking about a trillion dollar asset like bitcoin.

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Quote from: TheUltraElite on June 16, 2021, 02:30:47 AM

But you can sell when the price is rising, does that go against the trend? Being with the trend means doing what others are doing, meaning buying when everyone is buying. Am I missing your thought here?

Indeed, the trend means buying when everybody is buying. And when everybody is buying the price is going upwards.
Imho, if one sells when the price is rising, it means that he sells when the others are buying, so imho it's against the trend.

This would denote that the seller is either not really newbie and had a plan to sell after a certain profit, either knows how to read the news and TA and expects a reversal - i.e. again not a newbie.

TheUltraElite

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Quote from: el kaka22 on June 15, 2021, 04:45:42 PM

If it was always "new money needed to keep increasing the price" then we would be a ponzi scheme and whenever new money didn't come then it would crash and burn, but we had many moments when new people didn't join and we were still doing fine, all within ourselves. So do not be worried if new people do not come constantly, we will be fine.

It is defenitely not a ponzi, what I meant was that new meat in the market is a good thing for the whales to dump on. Whales are out there to cash in and cash out, not for the long term support of the project.

Quote from: swiftbits on June 15, 2021, 12:40:17 PM

It could be the case, considering how they were controlled by the media, the accumulation of their action can become a trend but would they last if they can be manipulated? they could lose the game.

Without regulation, a market is going to be manipulated once people see that the pump and dump is easy. Besides organic growth in price an inorganic growth is very common here. The effect of the media is evident on the market. These things are to be kept in mind for any trader. Does not mean they have to follow social media, but its effects on the market, yes.

Quote from: NeuroticFish on June 15, 2021, 04:57:43 AM

Even newbie trader wannabes know that "the trend is your friend" and it's counterproductive to piss against the wind.

LOL nice analogy there, you would not want to get your pants wet. Cheesy

But you can sell when the price is rising, does that go against the trend? Being with the trend means doing what others are doing, meaning buying when everyone is buying. Am I missing your thought here?

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Quote from: TheUltraElite on June 15, 2021, 01:42:54 AM

Newbies are the ones who take the fall in the whale game. If there is no new money coming in then how to do you explain the increasing market capitalization of bitcoin or for that sense altcoins too?

The growing interest in crypto added with the news media's sudden change of stance from "Why you should not invest in bitcoin" to "10 reasons for investing in bitcoin" - does bring in a lot of newbie meat into the market. Those who are unable to buy gold or stocks will try something alternative and the answer quickly ends up in bitcoin.

Point is that the whales need a place to dump their shitload. So the newbies are the ones. If they dont do the FOMO/FUD the cycles will become slowed. Lack of prior trading knowledge or knowledge of speculative markets makes them susceptible to manipulated markets.

This is not a ponzi scheme, you do not need new money to increase the price of bitcoin or any other coin, even the fact that people not willing to sell for cheaper is a good enough reason. So, let's say every single person who is selling right now decides not to and remove their orders then put that into 50k, suddenly the price is a lot higher and we didn't even spend a single dollar, which means price can go up without spending money, it is not always buyers that buy and increase the price, there are sellers that do not sell and hold as well.

If it was always "new money needed to keep increasing the price" then we would be a ponzi scheme and whenever new money didn't come then it would crash and burn, but we had many moments when new people didn't join and we were still doing fine, all within ourselves. So do not be worried if new people do not come constantly, we will be fine.

swiftbits

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It could be the case, considering how they were controlled by the media, the accumulation of their action can become a trend
but would they last if they can be manipulated? they could lose the game.

mu_enrico

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We used to the well-known phrases: smart money and dumb money, not necessarily all amateurs are categorized as dumb money.
But yeah, dumb money will contribute to any assets bubbles and they will be the primary victims when it all explodes.

Especially in the crypto market, it is too easy for anyone to register and start trading with small money, this almost-no-barrier thing contributes a lot to the pump.

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Quote from: fara_buduk on June 14, 2021, 06:37:39 PM

It's true that amateurs are more emotional, less cautious and tend to follow price trends without carefully watching and reading technical price movements, but these can't create bubbles. because they are only part of it, unlike whales and bears they are very likely to make it with experience and influence

I guess not just the amateurs can be more emotional because traders who have experience can also get panic or too emotional, especially they see the price can jump fast to the high or low price. It is normal to see we are panic because we never know when the price will move and what will happen later. But yes, the amateurs will cause bubbles because they do not analyze more to find the way to solve that.

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Quote from: palle11 on June 14, 2021, 12:33:22 PM

But to the contrary I think they can set a new trend. As you mentioned that that are subject to FUD and that means they can trade in panic, so if it happens the fear a spike and starts trading with the spike, that can change direction of price and at same time , a fundamental can hit the spike to happen, it is possible to totally change price direction. You already know that fundamental or news can be a reason to see huge spikes. Spikes that happens in a longtime hour like week or in the monthly candle is possible that trend will change to the direction of amateur.

Even newbie trader wannabes know that "the trend is your friend" and it's counterproductive to piss against the wind.
So FUD and panic will not make them sell if the price is growing, for example. Just my 2 satoshi... but yeah, no worries, I don't expect everybody agree with me Wink

semobo

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Quote from: jaysabi on June 13, 2021, 09:19:41 PM

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles. The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders. It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

Amateur traders causing the bubble to burst but they are not the one getting benefited from it, they always on the losing side because they sell when market dumps and buy when market bumps.

Every professional trader was once a noob who lost their money while trading as well.

Topic: Amateur Traders Cause Bubbles - page 4. (Read 817 times)