Topic: Can I predict the value of BTC/USD? - page 6. (Read 12932 times)

1. There's no prediction with absolute certainty. That's what I wrote the article for.
2. We're saying the same thing, only in a different manner; as it may suit you best.
3. No you didn't get that right. Read again the 1st & last paragraph and come back.
4. I like Plato; he was my favorite Philosopher, so please accept my sincere apologies.

Interesting point of view though; thank you kindly for your comments.

LOL! 

Who said you'd have to predict the price with absolute certainty? It would be enough to predict it often enough s.t., given the amounts you chose to trade with, you are in total profitable.

I believe predicting price (with a substantial error rate, true) is possible because it is mainly a function of human (group) behavior, and there is nothing in principle that makes predicting such a system impossible, difficult as it may be.

You on the other hand seem to think it is inherently impossible to model markets, did I get that right? I hope you don't take your linked to article as evidence for that, because it's not about modeling markets, but that a random stock selection beats a capitalization weighted index (couldn't find the actual paper either, I'm going to guess it's not peer reviewed, but feel free to correct me if I'm wrong about that).

And your little Platonic dialogue about chaotic systems is rather useless in its generality: you could equally well ask "Can I predict the weather conditions 5 minutes from now". And we know the answer to that one: not perfectly, but given enough information to run the best models we have, with high probability you will be able to do so.

What you're saying can be simplified to this:

The lowest value of USD/BTC is zero
The highest value of USD/BTC is the total capitalization/BTCs produced
The value can only go up and down (well, it can also be static for a while)

Again; the timeframe is of the essence. You lose any chance of prediction within a very short timeframe. Let me explain. Say you are an observer of a tiny piece of steam flowing into a sealed box. If you observe the trajectory for 2 sec you can predict with a relatively low possibility of being wrong where the H2O steam particle will be the next fraction of the second... After 2-3 seconds you may forget it.

Markets always bust after they boom.

Great and erudite analysis of why all TA is utterly useless, unless you have inside knowledge of what the big movers are about to do or know news before others do.

Which is why financial markets have a preponderance of insider knowledge cheats and market manipulators, it's the only thing that gives you an edge.

Perhaps it is possible to learn about sentiments, meaning sometimes it is possible to have a good idea of how others are likely to react - but this is again at best marginal and can of course go horribly wrong.

The lowest points the double pendulum can reach is the same as a single pendulum of the same length.
The highest point is at the origin of the pendulum plus the length of the lower part of the arm.
The upper part of the arm always swings back and forth and can not flip over.

So while the overall system may be chaotic it can be predicted with specific constraints.

This should be a compulsory reading for any wanna-be trader who knows what the future holds. Would save them a lot of money.

This is a long post and I beg you to bear with me. I have one question for you:

Can I predict the value of BTC/USD?

Lets please talk about a bit of theory here:
Is there a mathematical model to describe a chaotic system? Don't force it. The question is a trap. We must first define what IS a chaotic system. In science, a simple chaotic system can be described by a double pendulum. If one sets it in motion from an unknown angle, the trajectory will be totally different than when you start it from another one. The complexity of the system is enormous even after a few seconds; you can take your peek here (If it isn't visible click below to start it - at the time this was written forum wouldn't let gifs animate):

http://en.wikipedia.org/wiki/File:Double-compound-pendulum.gif

Now; lets make things simpler. Say we can set with a very good precision the initial conditions. We're now talking about a SIMPLE dynamic system here with fully determined initial conditions. Now pay attention: Even if you can set the initial conditions on such a system, small differences have a totally different outcome; so as the time goes by; your predictions are getting enormously difficult to be true, thus rendering the predictions useless. This system's behaviour is called "deterministic chaos" and was first observed by Edward Lorenz who defined it like this:

Chaos: When the present determines the future, but the approximate present does not approximately determine the future. ¹

Now; I need to get your attention a bit more:

Imagine an (easy) prediction of the USD/BTC trade value on MtGox within the next 5 minutes. This is a bit tricky as well. Can this model be defined as a "deterministic chaos" model? Do I see hands raising?

-Yes miss tell us:
-No it can't.
-Why do you believe so?
-Because I can read my MACD and RSI and EMAs and can predict the value.

OK. The above is a total BS and I can scientifically certify this. This is simply NOT happening. All the above BS are ways to eliminate errors (read: normalization) of an abnormal value trajectory. As much as you can read those and take the proper decision whether to buy or sell, there's also a great possibility of an average monkey can beat your odds and win more than you by randomly pushing buttons. ²

Do I see another hand raising?

-Yes sir, tell us:
-Yes it can.
-Why do you believe so?
-Because I know certain individuals that can control the market and at a specific timeframe I can control the initial conditions. THEN AND ONLY THEN I can predict the value for the next 5 mins without looking at anything and make a move on selling or buying.

True story. A deterministic chaos system (DCS for short) can be "settled" only under the above conditions. This means you have your pendulum and you have the ability to move it at will WHENEVER you feel comfortable. Then your system can be predictable. After that you can make money and be glad about you, be in a beautiful position of knowing such great movement "factors" of the "system".

The above are my scientific conclusions. I'm not claiming the non-false. If you think otherwise, please tell me your thoughts. I initially wanted to post it on the Wall Observer BTC/USD - Bitcoin price movement tracking & discussion but I thought it was a nice topic to start and maybe, it'll give people the chance to gather their odds before blindly jumping into trading.

Cheers.

¹Danforth, Christopher M. (April 2013). "Chaos in an Atmosphere Hanging on a Wall". Mathematics of Planet Earth 2013. Retrieved 4 April 2013.
²Article: http://www.ft.com/cms/s/0/abd15744-9793-11e2-b7ef-00144feabdc0.html