Topic: I have made a 25% return this week trading *against* the pirate - page 5. (Read 12598 times)

Don't speak too soon.

Oops!  Anyone who sold at $9 expecting to buy back at $8 now has to buy back at $8.8.

I agree that we are not in a bear market; however my analysis of Pirate's trading strategy and borrowing structure is that it is very appropriate for a bear market such as the Bitcoin market from July 2011 - December 2011.

Congrats?

There's nothing bear market about this chart.  Any pullback to around 8 is bought aggressively.  

http://bitcoincharts.com/charts/mtgoxUSD#rg90ztgSza1gSMAzm1g20za2gSMAzm2g50zi1gVolzi2gMACDzi3gRSI

Also, Mt. Gox does not support stop orders.  nor do they allow any leverage.  So buying high in hopes of triggering others to buy higher, or selling low in hopes of triggering others to sell lower, just does not work in this market.  The act of "stop hunting" is also illegal in regulated markets, but it does occur regularly.

Anyone issuing a market-buy or market-sell order for 30,000 BTC will guarantee themselves the worst possible price on that trade.  That's ok, because you can trade against those people and profit quite handsomely.

The biggest buy I made was 3200 BTC below 8 the first time pirate pushed it down there, and bragged that he had the 8.00 ask wall.  I sold all of those coins over $9.00 within 24 hours.  

It works because it plays on the weakness of the bulls. This can be because of thin bids, lack of substantial buyers, lack of competition on the buy side etc. It can also work very well against bulls subject to a margin call. It also takes advantage of stop losses by the bulls very well. The impact on the ask side is to induce either the movement of an ask to a lower price or even better induce sale at market thereby further lowering the price. It is fundamentally a good bear market strategy sell high and later buy low.

No, it works best because you play emotions of everyone who bought when the bids were very thin and hope they sell based on those emotions. They often do, and at lower prices. In fact, if the buys are weak, you only have to spend ~5k to send it down in price $2 and then buy as the emotional investors sell it back to you at less than what they paid.

Anyone that was watching the level IIs that night saw that someone spent less than 5k in sells to get about 30k in buys at a much lower cost average in the same time frame. This is why traders should never use stop losses, people like pirate could take advantage of them. On the other hand, if that 30k purchase was actually BitPay, then kudos to them, they figured out what he was doing. That's why I think it'll be interesting if he tries this again, I imagine several of us may have our bots set to take advantage of it.

Druckenmiller and Soros were already very well invested in both the German and British economies. It was when Druckenmiller realized that Germany was raising their rates and Britain had absolutely no intention to that he realized he could make a decent amount. He had already put a few million into the German mark prior to reunification, because he saw it was far more devalued than it should have been. At the time Soros basically said if he believed it would have a specific time frame for recovery, he should put in billions, not just millions, so he did, sure enough, the wall came down and Soros and Druckenmiller made hundreds of millions. People forget this.

After their sale, they had significant amounts of British pounds, but Germany was growing quite well, and their economy actually seemed more stable than even Britain's at the time, so when Germany thought it was a good idea to raise interest rates, and Britain basically said it wasn't going to, Druckenmiller saw another opportunity. Again, as the previous time, when he told Soros, Soros indicated that a few hundred million wasn't enough, and they should put in billions since it was basically a sure bet and they knew they had the British pounds to make it happen.

So they did. And more importantly, they told everyone about it, because they knew they had enough to do it. It was a psychological thing for the long term benefit of the pound. They needed the pound to be stronger so that when they bought back into it, it was stable. Perhaps not as stable as the US dollar at the time, but stable enough that it could be a safe store of value for the coming decade or more. In essence, when someone controls significant amounts of your money supply like Soros or other large traders, you're trusting them to decide public policy, because they can use the bulk of their money to voice a concern and make good on it.

Pirate may have a huge investor wanting a significant amount of Bitcoin, but he probably just aims to use vast amounts of cash to do what he is trying to do. He'd never puts up ask walls, instead he only plays the buy side, when he sees how weak the buys are, he drops his walls and uses borrowed funds to sell into it. This solution works if you are the major market buyer but stops working if another major market buyer steps in and sets up their bot to wait for the buy wall to drop then BUYS INTO the sells done USING BORROWED COIN. At that point, like everyone here says, they have to cover their short.

Like I said, I'm looking forward to the next time he does this. It looks like BitPay may have caught him a bit this time, too, he clearly didn't cause a beneficial sell off if that was his intention. Of course revealing that he controls the buy walls indicates he always trades in such a fashion so as to turn his cash back into USD, or like I indicated, he really does have a huge investor that wants/needs a lot of coin and wants it for the cheapest price they can get it.

http://www.investopedia.com/articles/forex/08/greatest-currency-trades.asp#axzz21ZKmUIcG

I guess it takes one to know one eh...SC sockie 

Of course!. The strategy is to sell tulip bulbs short after they peaked in value in February 1637. http://en.wikipedia.org/wiki/Tulip_mania

Youre probably right.

Is there any way to know if pirate is finding success, with this strategy. BitPay seem to think not.

And secondly, what will pirates exit look like? A large dump? Or distribution of winnings back to the investors, in BTC.

Actually many smart and successful investors make no secret of what their positions are, long or short, once they have invested. Pirate is more along the lines of keeping his overall strategy secret while dropping hints here and there so that someone willing to "connect the dots" can get a fairly good picture of what he is really up to.

I guess that explains what pirate is doing with the borrowed funds. He thinks he can daytrade the borrowed funds and beat the market.

That is indeed feasible, but not forever. That kind of activity been compared to "picking up nickels in front of a steamroller". Its profitable until the day he is wiped out.

They seem to think that, yes...

Puppets being played. lol

Do you really think someone as pirate would be stupid enough to tell everyone he is short if he wanted the price to go down?

I still can't see sign up button on BCTST (without referral), only Login button.
https://btcst.com

I looked at the George Soros case because as with Pirate he was also a short. I am not convinced; however that George Soros had anywhere near the influence over GBP than Pirate has over BTC. A much closer case although in this case the manipulators were bulls is when the Hunt brothers tried to corner the silver market in 1979 - 1980. http://en.wikipedia.org/wiki/Nelson_Bunker_Hunt and http://en.wikipedia.org/wiki/Silver_Thursday

It's from the middle of January.

https://bitcointalksearch.org/topic/m.690372

Beyond taking on debt at rates that even a love child of Warren Buffett and Bill Gates couldn't repay?

Fascinating quote though, where and when is this from?


Why doesn't he keep his mouth shut, if he's going to burn it to the ground?

I mean, if you're George Soros and you're about to break the Bank of England by shorting the pound,
surely you wouldn't be letting people know in advance? Dun dun dun.