Topic: I have made a 25% return this week trading *against* the pirate - page 6. (Read 12653 times)

There are many ways for even a small player to trade successfully against Pirate. One of the simplest is to arbitrage his MtGox trades on one or more of the smaller exchanges. This is simplest if both exchanges trade in USD. The net effect is to leverage the smaller market against him.

This is too generalized a statement.

Rising 'sharply' isn't necessarily the issue -- it's when it rises sharply, and if that rise holds.

Keep in mind that unless he's retarded (and improbably lucky), he will never have 100% USD or BTC.  But, suppose that he is holding mostly BTC -- this BTC is what is needed to be sold and drive the price down so he can repurchase BTC for interest payments.

If the price rises sharply while he is holding BTC, this is a non-issue.  In fact, it rocks for him.  He will simply sell at a higher price and profit like crazy.

If, however, the prices rises sharply AFTER he cashes out his BTC, then this becomes a problem.  Pirate now needs to go to a secondary approach -- sparking a rally with hes newly acquired USD so that he will once again have an opportunity to sell higher than his purchase price.

So, Pirate will try to spark a rally in the same manner that he has before.  Typically, when Pirate sparks a rally, he initiates a sell-wall in order to invite more traders to create their own sell bids.  This sell-wall has 2 advantages -- 1)  It helps accumulate more sell orders around his sell-wall, or 2) it may encourage other traders to drop the price for him.  

Knowing this, there is a main, general way to fuck with Pirate, but it requires an insane amount of capital.  You will need an amount of capital equal to Pirate's capital.  But, the community at large has such capital.

Buy.  Buy like fucking mad.  This needs to begin after a crash.  You need to buy and keep buying.  You need to buy all of his sell walls and drive the price up.  BUT, you cannot fill in new orders in the order book.  There needs to be a permanent margin between the price at which this post-crash rally begins and the new price.  If this margin persists for 1 week, Pirate will eventually default on his interest payments.

For example, lets say the price is at $9 when Pirate crashes it to $8.  This is when you need to buy.  Buy buy buy up to $9, $10, $11, etc.  But, there needs to be a near empty order book on the buy side between $8 and the new price or else Pirate will be able to generate a profit still.  After all, Pirate will, of course, be among the first to buy once he sees a rally is occurring, so he will convert back to BTC.  But, if there are so few orders in the order book, he will not be able to profit.  The final icing on the cake would be an absolutely massive bid wall at $8, a wall so large that Pirate would lose all BTC holdings if he were to attempt to try to crash the market below $8 to spark a new crash and buy at even lower prices.

In other words.  Wherever the next crash stops, that needs to be where an insurmountable bid wall forms.  After that bid wall forms, go all in and Pirate will default.

The problem with this, of course, is that unless only a few people could pull off this massive bidwall stunt, it could never be coordinated with so many people involved, and some people would end up losing a whoooole lot of money.

Cool.  So you'll stop trying to decide for the market?

The evidence is there in plain view including in Pirate's own posts and comments to anyone willing to spend the time and effort to do their own research using publicly available information. I must say all I have seen for the most part is either it is a very profitable propriety business method that cannot be disclosed in order to maintain its profitability (supporters) or it is some kind of illegal ponzi or money laundering scheme (detractors). I am quite prepared to let time and the markets judge who is and who is not an idiot on both sides of this matter.

Way to ignore the question.  We will see, but in the mean time can you quit with the strong assertions without a shred of evidence to back them up?  If you want to say "I think that...", fine, but going around acting like you know Pirate's every move/position makes you look like an idiot.

Read through Pirate's posts.  If you read inbetween the lines you will know exactly what he's doing.

We already know his strategy works very well in a bear market. The proof in that he has not missed a payment. Let us see how he does in a bull market particularly one where the BTC / USD price rises sharply.

And why do you assume this is Pirate's strategy?  Do you really think he's that stupid?  I've discussed his risk profile with him and he's not as dumb as you assume.  Again, I'll ask: Where is one scrap of evidence that your claims have anything to do with reality?

Joel Katz hit the nail on the head.

With one exception (though he might have implied this when he said 'walls need to be replaced') --

Pirate is the one putting up the walls.

After a rally, Pirate places a buy wall.  Why does he do this if he doesn't intend to keep buying?  He is simply waiting for additional buy orders to fill in around the support wall.  When a sufficient amount of buy orders fill in, then he will sell like mad and crash the price.

After a crash, Pirate places a sell wall, even though he does not intend to keep selling.  Why does he do this?  He is simply waiting for additional sell orders to fill in around the sell wall.  When a sufficient amount of sell orders fill in, Pirate erects a true buy wall as a blockade for additional sellers and then starts buying to fuel a rally.

In a bear market Pirate's strategy makes a lot of sense. It just does not work very well in a bull market.

He's paying 7% weekly, so his strategy is to lose money?  Makes perfect sense .

Because he is paying a premium 7% a week to borrow BTC rather than say 2% a year to borrow USD. So it is pretty obvious we are talking about a bear rather than a bull here. 

Right, but in order to sell high, the market must first be high. He can't afford to wait for the market to rise on its own, so he has to buy to push it up. And in order to buy low, the market must first be low. Again, he can't afford to wait for the market to drop on its own, so he has to sell to push it down. In order for this to work, he has to wait for the walls to be replaced before he can change direction. Anyone who recognizes this strategy can buy into the walls on a change from down to up or sell into the walls on a change from up to down and take the profits the manipulator intended for themselves.

How do you know his strategy?

No. His strategy is to sell high and then buy low. The reason he may end up selling low and then buying high is because selling high and then buying low is a bear market strategy that does not work in a bull market.

Buying high pushes the price extremely high, allowing someone who can corner the market to profit by selling. Selling low pushes the price extremely low, allowing someone who can corner the market to profit by buying. If you're the one doing the high buying and low selling, you know when it's going to start and when it's going to stop, allowing you to time your trades until after the walls re-appear. Some lucky and/or wise counterparty recognizing this happening can both profit during the buy up or sell down (when you're buying high and selling low) by taking your trades and they can also profit during the buy low and sell high phases by taking the trades of the walls that other people put up.

For example, say that Bitcoins were trading at $9 or so and are stable there. And then say that last Thursday night, someone wanted to push the price down to $7 so they can buy low. In order to do that, they have to sell coins. So first they sell at $9. But then they have to keep selling all the way down to $7. So they have to sell below market price. Since the price will go back to $9 when they're done, a counter-party can profit. Now, while that someone is buying at $7.80, others can buy at $7.80 too. Since the price will go back to $9 when they're done, again a counter-party can profit. If people with sufficient resources recognize this manipulation and move on it, the person doing the manipulating will lose because they'll have to sell shares below market price and they will hardly get to buy any shares back below market price. Heck, they might not even be able to get all the way to $7, getting stuck just under $8. It could have happened .. last Thursday night.

You talking about his buy walls?

The next time he drops his walls he's going to have another thing coming, just watch.

LOL...that's funny...and I'm trying to look in my post history of where I might have put up a post like that...lol guess I never did.

NOTME! hahaha

Oh sorry, you jumped the middle of my reply to ArcticMine.  Way to pull a notme .