Topic: Goomboo's Journal - page 44. (Read 281462 times)

There are a few things that I have been reticent to talk about, simply because I didn't want the general public to know the stuff that "we" know.  However, in the spirit of this thread - helping people to stop losing money - I have decided to share a little.

One of the main and widely-talked about issues is "the manipulator".  After watching time and again as individuals have "the hammer" dropped on them, I figured I might as well shed a little light on what may be happening.  There are several different strategies being used by a few individuals with "lots" of buying power, so I'll talk a little about the main strategy I see on a daily basis.

The manipulator is basically a large trader who is repetitively practicing a strategy we call "the hammer".  It's a simple strategy of deception and can lead to a "crack" in prices.  Prior to applying a systematic strategy to the BTC market, I used to trade with him and make a decent profit.

The Hammer (Long)
1.  Big trader posts large volume on the ask side
2.  Individuals see the ask and try and get in front of him by selling/shorting/lowering their offers
3.  He is simultaneously buying at the bid from the small guys
4.  As soon as selling volume dries up, he pulls his ask and enters long, causing a jump in prices
5.  He sells to the people who buy behind him, scalping a profit

How to Play the Hammer (Long)
1.  Watch the volume from the small traders that are trying to trade in front of him
2.  When the volume dries up and he pulls his ask - enter long
3.  If he doesn't follow soon with a large trade, exit your trade at a scratch or loss

There are several different variants of this strategy, but as a general rule of thumb - if you see a fake bid or ask, the markets are probably going that way soon.

This is more for informative purposes than actual trading advice.  See how subjective this is?  In my opinion, this type of trading isn't scalable and it doesn't possess long-term profitability, which is what this thread is about.  My suggestion is that you take this information as a little "FYI" and stick to a systematic and tested strategy, ignoring the games that go on in the order-book entirely.

Those who are trading on the hourly should have closed a short for a +5% profit and opened a new long position.

The last three trades were:

1.  Long Feb 1st - 3rd = +5%
2.  Short Feb 3rd - 7th = +5%
3.  Open long Feb 7th ~ unrealized PNL +1%

These percentages are actual price change, not change in account balance.  With leverage, these numbers will be multiplied accordingly (+5% * 2.5 = 12.5% return on account).

As always, leverage is a tool for risk management.  Use leverage consistent with your system.

+1. I learned more from him on money and banksters than from the university.

Oh man, I can vouch for that...

Mogambo Guru is a riot, highly recommended

I'm reminded of the blogger Mogambo Guru (Richard Daughty) on dailyreckoning whenever I see your alias:

http://dailyreckoning.com/author/mogamboguru/

Though, in my case, the human predilection for pattern matching sometimes goes to extremes 

If anyone's not heard of him, he's generally hilarious (HGH*).

* Inside joke for those who've read him...

With a great username comes great responsibility - as you should know.

Goomboo: where'd you get your wonderful username?

Best of luck in your trading!  I strongly believe that by sticking with a well-researched trading system, you can do very well.

Thanks for leading the herd ... A nice safe way to bounce around until the next whale comes along to make a splash.

For those who were excited about the system and then puked out after a string of losses: I quote this for emphasis.

For those on the H1 charts, it looks like you should have been able to lock in a 5% gain on the long side and are now sitting on an unrealized profit of another 5%.

I think Mt. Gox would do very well to look into liquidity rebates with a percentage set just below their lowest commission bracket.

Yeah, it's pretty sweet for professional scalpers - I've seen some people make $30,000 + per month simply from liquidity rebates.  Keep in mind though that this is in a market in which the typical professional trader doesn't connect directly to the exchange but rather goes through a broker-dealer who adds a commission to the trading.  The exchanges normally charge a small commission (few tenths of a cent) and the broker/clearing house charges an additional commission.

Since in BTC we have direct market access to the exchange (DMA), we have some serious potential to change the exchange-dealer-customer paradigm.

http://en.wikipedia.org/wiki/Direct_market_access

cool

Sure thing...day trading BTC can really be brutal with the 1-2% spread + 1% round-trip commission.  Basically this requires price to move 3% for you to break even on a trade.  Trade 1-2 times a day and if the market doesn't go in your favor, your account will be down 20-30% in a week simply from the costs of transacting (assuming no added slippage).

Mt. Gox would do very well to institute liquidity rebates.  For those who are unfamiliar, in the stock market you are typically paid a small amount of money if you trade using limit orders.  It's typically about $.003 / share.  This can seriously add up - a trader who trades 100,000 shares per day gets a paycheck of around $6,600 per month, simply for trading using limit orders.

Exchanges benefit from liquidity and they still earn the commission from the trader who entered at market to take the liquidity off the book.  With greater liquidity comes larger customers and more players to the market.  If anyone from Mt. Gox reads this, I'd love to hear your thoughts!

http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2

Thanks Goomboo

I have steered clear of BTC daytrading, too frustrating for me we BTC.

Want to ride the longer trends, so may go 12 hr or daily myself.

That signal was based on the hourly charts with the 10/21 moving averages.  I believe this is what most people are trading who are following this thread.

I've been trading the daily 10 / 21 moving averages for longer term trades - the recent run-up in prices caused me to exit my position (I exit with large price shock against my trade) at a 2% gain.


The lower the timeframe = more signals, more commissions, more whipsaw action, potential to catch the smaller moves

The higher the timeframe = less signals, less commissions, greater likelihood of catching a major move

Basically you need to choose a timeframe for trading based upon your desired activity - I prefer to trade bitcoin once a month so these days so I am on daily charts.  For the people who would like a signal every other day, the hourly charts fits perfectly.

Goomboo, just to verify on this signal...what was the chart time/interval for this?

Had you gone from 1 hour to daily with the 5-day/10-day?

Any advantage to using the 2/6/12 hour intervals with the EMAs?

Thanks!

99% after selling part of my position to put my base price down to around $3