Topic: Goomboo's Journal - page 58. (Read 281461 times)

This, and the contrarians! If everyone does the same thing, the price would plummet indefinitely. Or rise for that matter.

It can be traders reacting to the 21/10 crossover that prompted the shorting.  Over time 21/10 trading will become less and less profitable now that it's been made a topic of discussion here.

Real time stats (at time of posting):

http://i40.tinypic.com/xqfhfr.jpg

Applying the Goomboo system (I forgot the offical name of the system) it would seem too early to go long because there is no crossover yet (at 3pm)....

I can see the crossover at 10am(ish), followed by a large volume of red. This red represents traders going short in response to the crossover right?

Can anyone speculate out loud here, and just describe what might be happening at the 1pm-3pm. Whis is the cause of all the Green. I speculate one thing -- that it can't be traders on the 21/10 because theres no crossover yet..

Good point. But most important thing is not working met a big leverage. Because of the way it works on bitcoinica, the risk is to high. To protect you from this it would be quite easy. If your short on 6.5 just set a stop order on 6.7. This way you liquidate your position when the market turns against your position. This of course will lose you money. But it also protects it.

I was also wondering about the values to use for the moving leverages. Maybe the gap between the everages should be variable compared to the margins between the sell and buy price. (Because this is a direct loss your taking when selling/buying fast on bitcoinica). So if the sell/buy price is 6.13/6.25 the margin is 0.12 you should be using something like 10/22 for the moving averages.
Totaly not sure about this but it seems if theire is a great gap between buy/sell, the higher difference in your 'moving avarages' lines will only make you jump sides when it is clearly time to switch. (You need to be sure because a change of direction 'cost' more money)
On the other hand when there is almost no margin you can switch possibly cheap so your should switch faster to maximize profits.

This is just a theory but seems logical in a way to me.  

edit: your avatar is exactly the face i'm making while writing this.
edit2: Or maybe divide the margin by 2 and make this the difference between the moving averages

Right, until enough people do this, then when there's a crossover I watch everybody short, I put a few thousand in bitcoinica on 10:1 margin and squeeze everyone out.

Me too now

I think I'm feeling the gist of what you are explaining. Its like the wave of sell and buy becomes more exaggurated. So, the falls in price are steeper and deeper, and the rises are steeper and higher, or something close to that description.

Seems like a good thing, if you can ride the front of the wave.

So, extending on from this; could one say that the effect of introducing the 21/10 cross-over to an increased portion of the BTC trading population; that a more reliable (or profitable) wave of short and long momentum has been potentially created?

What are your thoughts on RSI? It seems like another simple yet popular indicator for overbought / underbought

So if you will short when there is a crossover (and many ppl do this). This creates a extra downward momentum so the way to make a profit from this is to also sort yourself. So in a way if many ppl use it. Don't really see how you could make extra profit of this.  If the market goes up again there is a new crossover so you if you this system, you will sell your shorts and go long.
(I'm not an expert just a enthusiastic noob.  )

That's what I meant when I said this isn't going to work for long.

Much gratitude and respect Sir Goomboo.

I notice on the first red arrow, the 10/21 didn't actually cross-over, but just met together for a moment. In retrospect, it was the time to sell. So I guess this means the lines don't strictly need to cross-over, but a coming-together can be enough to initiate a sell.

Now look, again (right now as I type this), the 10/21 have met... lets see if the strategy plays out.

http://i41.tinypic.com/bdwndi.jpg


Zoomed (1 day):

http://i43.tinypic.com/de4op2.jpg

Also Goomboo, the question which is probably on the tip of a few tongues right now. Pure skepticism -- I'd like to ignore it, but curiosity has the better of me. Although you instructed people not to use your 10/21 forumla, its almost impossible to expect anyone would not use it (Diffusion of responsibilty). If someone (such as youself) had a hunch that a bunch of people would be working explcitly with the 10/21 system, is there a way that you could use a counter-measure to make extra profits from this manipulation of the trend?

(this question is asked with much respect by the way).

I won't be joining this short, but I may buy a little more on the next long signal.

subscribing +1
Will try this out for fun  

Made the short @ 6.2866

Yea money management is just as important as a strategy.  I also recommend people back-test.  Do you use any oscillators with your EMA signals?

Hello Goomboo, do you have any experience trading stock in an industry you are an expert in? Or do you ignore such factors all together?

Hehe, trading on the MACD lines is the Rich Dad, Poor Dad tactic they try to sell you at their conferences. It really is a simple concept to grasp and easy to keep a watchful eye on.

Haha, yeah the irony of the markets: everyone is chasing "the secret", but there never really was a secret to begin with :p

dood

you are giving away the secrets man

 

I know exactly what you mean - emotion and lack of discipline have taken a huge chunk of my earnings in the past.  I've gone through and done rough calculations of how much money I would have made if I actually stuck with my plan since the beginning, it would have been millions.  I used to live in regret about this kind of stuff, but I found it influenced my trading.  I wasn't objective, I was emotional.

Here's the first stock trade I ever did.  I made 10% in a day...thought I was brilliant.  I cut my profits by 400%.



Here's the next stock trade I did.  Man, I thought I was on fire!  Made another 10%!  But cut my profits by another 200%.



There's a classic mantra in trading - cut your losses and let your profits ride.  Too often traders will do the opposite and take a profit and hide a loss until it overwhelms an account / you get a margin call.  Following these two trades in which I booked a fast profit, I held a stock for 7 months and watched my account fall by 50%.  Learning is difficult.

Here's some great advice from The Turtle Trading article I posted earlier:

Thank you for the kind words Holliday,

Emotion really is a killer in the financial markets.  I've lost thousands to emotional decisions.  I used to trade "pink sheet" stocks - basically scam companies with share prices around $.0001/share.  I did it because I became emotionally attached to the idea and realized that if it took off, I could make millions.  At one time I owned 7,000,000 shares in a company...and I lost nearly all of my money.

A trader who was very influential to my thinking once said "successful speculation begins with objective observation".  He wrote a book called Technical Analysis Using Multiple Timeframes and it ranks in my top 3 best trading books ever written.  If anyone desires to learn to trade, this is a great place to start.  If not, the quote alone is worth thousands.

http://www.amazon.com/Technical-Analysis-Using-Multiple-Timeframes/dp/1598795805/ref=sr_1_1?ie=UTF8&qid=1327124041&sr=8-1

You know, there is absolutely nothing wrong with not trading.  If your objective is to profit and you realize that trading is not a profitable venture for you, then hey, you made a very wise trade.  I will say though that if you are looking for something to invest in, I highly, highly recommend Currensee.  I highly encourage you to look into it.  Basically you allow professional traders to manage your money and the ONLY way they get compensated is if you make money.

http://www.currensee.com/

Me too. 
You know, back when I first got into Bitcoinica, I got zhou's $1 and started trading.  Made 44 cents.  I thought "whoa I am a good trader."  I bought and sold with equal willingness because I didn't have an emotional attachment to a single dollar at all.
Then I put in a few hundred, lost it, put in more, lost that too, etc.  Several times...
Since then, I have had nothing on Bitcoinica.  My forum posts, which are pretty accurate, are based on analyses conducted with no position at all in the market.  Whenever I actually try to trade, I fail.

@Goomboo: Excellent post.