Topic: Goomboo's Journal - page 29. (Read 281462 times)

Hi all,

i first want to thank Goomboo for providing such great insights into trading! It actually made me start trading on mtgox just to see if it works out.

After reading the whole thread i am left with 2 questions:

1) are there any other trading strategies that actually work? i can't think about any other methods that would make a profit as safe as the one described here and all the strategies i think of are based on emotions ( i _believe_ the price will go up )

2) what triggers the trends? it seems that since i uploaded fiat into my account ( nothing more then i can withstand to lose ) the market has come to a stop. Prices dabble around $122 but nowhere near anything profitable

No worries, I knew what you meant :p  I just wanted to clarify it for the people who are new to the thread.

Profits are in dollars.  I'm a trader, I'm only after the kind of profits that I can grow in other markets.

As mentioned, no matter what system you use in a market which tends to increase on average, buy and hold will nearly always outperform.  The buy and hold people are sitting at +2000% vs. the +1700% of the system.  The difference is that the system has actually banked these profits whereas if BTC were to collapse, the buy and hold investors would...hold.

This has been the recurring debate throughout the year and a half that this thread has been in existence: buy and hold vs. active trading.  To restate my previous post:

It really boils down to your philosophy of the markets: are you an investor or trader?  Investors believe in a concept and invest in that concept (buy and hold).  Traders are after profit while maintaining the ability to live and fight another day (systematic/discretionary trading).

I'm a trader.

Yes, I immediately thought to come back and mention emotions, but then I got distracted.  Thanks for bringing that up.

From this same page even

Not necessarily true.  Intelligence is only one part of the equation.  A significant factor is emotional discipline.  Quite a few intelligent people have lost vast sums of money in the markets due simply to a lack of emotional discipline.  The appeal of a mechanical trading system is twofold:

- Remove "gut" feeling which, for the most part, ends up losing money
- Allow you to test and validate your method

Case in point: the system multiplied your money 17-fold over the last year.  I'd wager very few of the readers here have actually locked in a comparable return.

Yes, you can easily beat a mechanical system by applying a little intelligence.  But that's the appeal here... You only need to know 2 simple rules (buy on cross up, sell on cross down) and follow them mechanically.

But at that point, wouldn't the overall market trend have changed to "down"?
Wouldn't it take a VASTLY swift, totally unexpected direction change for even BTC to suddenly plunge to $10?
Don't you think that even slightly intelligent traders might have noticed said direction change and re-vamped their strategy accordingly by then?

Thank you goomboo, it's exactly what I was searching for
I've read the turtle system. And now I understand the market and limit order.
By the way the Bitcoin market isn't fluctuating this much this days...

I wonder if you could get the best of both worlds by adjusting the trading intervals with the volatility.
For example, switching to hourly if the price moves more than 10% per day. 

With a more nimble system (faster moving averages), you could catch that move.  The collapse and subsequent rebound happened too quickly for the 10/21 to grab it - interestingly enough, the trade immediately following the crash resulted in a 13% loss.

I'm trading daily - less noise, less commissions, longer holding periods.

Oh I completely agree.

I had simply the impression that the $266->$50 drop would have given you a huge boost.
(Sold at around $200, buy back at around $90)

Are you back in hourly?

In a market which tends to rise, on average, buy and hold will frequently outperform systematic trading.  The catch is that if BTC goes to $10, your buy and hold profit falls to 100% and your trading profit probably remains over 1000%.  I'd rather remain nimble and and defend my capital against the inherent risks of buy and hold.  Case in point - trade the S&P 500 for the past decade using buy and hold and the 10/21.  Buy and hold earned 5% (give or take a few) and trading earned 80% - different styles are rewarded in different market conditions.

It really boils down to your philosophy of the markets: are you an investor or trader?  Investors believe in a concept and invest in that concept (buy and hold).  Traders are after profit while maintaining the ability to live and fight another day (systematic/discretionary trading).

Just to put everything in context, a buy-and-hold strategy would have given you a little more than 2000%

That's a little odd; I expected Goomboo's strategy to return a little more, especially with the funds saved in the crash from $266 to $50.

Here's 1 year of performance of the system tested on the daily timeframe.  This chart demonstrates the growth of $1.00 if individuals had traded the system exactly as prescribed since May of 2012.  The chart below shows the profit in terms of percentage return.





- Disciplined followers should have earned a 1,700% return over the past year (if they had reinvested profits)
- It is very important to understand that the past is no guarantee of future performance - be skeptical of these results


The resounding lesson here is this: design a system, test the system, have the emotional discipline to trade the system.

At the time of writing, Bitcoinica was an alternative exchange which allowed shorting.  I have no recommendations as to any of the exchanges which will allow it these days - in other words, I haven't done the due diligence necessary to trust any except Mt. Gox at the moment, and they only allow buying of BTC.



I'm not exactly sure what you're asking here.  I think what you're trying to figure out is the difference between a market and limit order.  Read this and let me know if this is what you're looking for:

http://www.scotiabank.com/itrade/en/0,,3969,00.html

http://www.investopedia.com/ask/answers/04/022704.asp



Glad you enjoyed it!  Here's some information about the strategy:

An overview: http://www.investopedia.com/articles/trading/08/turtle-trading.asp
In-depth discussion: http://bigpicture.typepad.com/comments/files/turtlerules.pdf


C'est pas grave pour l'anglais.  C'est pas mal!  Best of luck with your trading!

Hello everyone! Just went through the 31 pages lol ! Goomboo that’s a very interesting strategy you’re exposing. I’m totally new in the world of trading and bitcoins so I have many things to learn… I still have some simple questions maybe you’ll say that they are noobish but I can’t find clear answers and not even the same questions lol!

So first, on which sites are you trading? I’m currently on Mt. Gox but I’ve read on one of the first page that it’s better to have 2 accounts, one for short and one for long… How can you do that? I mean you have to buy when it’s going “up” and sell when it’s going “down”.

Do you have any other site you recommend?

Second question it’s more a market/trading thing…
If for example I want to sell my BTC, imagine now at the current buying price (atm 124$ / 3 BTC available), if I sell 2 BTC, they’ll be sell immediately. But now if I want to sell 5 BTC I’ll sell 3 immediately and have to wait for someone to complete my offer? That’s it? But I’ll still have 3BTC available for trading.

I also wanted to thank you for this journal that is very helpful for me and it allows me to start trading with a strategy. I’ll of course study this strategy myself and change some settings. Could you tell us more about the turtle strategy? Or give us some links?

P.S.: sorry if my english is not that correct I'm french lol

Edit: for example use bitstamp/Mt. Gox but how would you do that?

Interesting thread I think I need to go through that list at some time

Baby Pips is great as well - a good source to help people get grounded in the basics of speculative trading.

I also recommend the babypips site, http://www.babypips.com/.  It does a pretty good job of teaching the basics without overwhelming the reader with technical details.  At the very least it is a good place to start.