Charting Bitcoin

wifehunter

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The previous cycles is all we have to go by with Bitcoin. I find it striking that the fib retracement [in real terms] has been the same. Thanks to the perfect storm of FUD [SEC clamping down on ICOs, Bitcoin miners closing down, the hash wars, and Bakkt postponement] we even got the capitulation candle.
Black friday sale on BTC!!! Yay!
 

switch7

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The previous cycles is all we have to go by with Bitcoin. I find it striking that the fib retracement [in real terms] has been the same. Thanks to the perfect storm of FUD [SEC clamping down on ICOs, Bitcoin miners closing down, the hash wars, and Bakkt postponement] we even got the capitulation candle.
I got some data once for the probability that if a bull candle printed, the next candle would break the high of the previous candle, and vice versa for a bear. Over 10 samples the outcome could be 100 percent success ratio in some data, over 20 samples it could be 75% success, over 50 samples it could be 25% success ratio. The point i am getting at is that the probability of something happening has a random distribution over small sets of data. Statistically speaking, you need over 1000 samples to fully remove any random distribution and arrive at an average. The data i got for my scenario was easily quantifiable and thus easy to program a testing framework to collect the data. The probability that the trend would continue was something like 50.1% over 10,000 samples when using a reward of 1 to break the high of the previous candle, and a risk of equal distance (1:1 r:r). So there is an edge in trend continuation, but its really really small unless you start to combine other well researched edges.

To know that what you are dealing with will go up more than it will go down, you need over a thousand samples, mathematically speaking, otherwise you are still dealing with randomness. However if you are just investing, then you do not need a chart, you need fundamentals.
 

ChristopherColumbus

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I got some data once for the probability that if a bull candle printed, the next candle would break the high of the previous candle, and vice versa for a bear. Over 10 samples the outcome could be 100 percent success ratio in some data, over 20 samples it could be 75% success, over 50 samples it could be 25% success ratio. The point i am getting at is that the probability of something happening has a random distribution over small sets of data. Statistically speaking, you need over 1000 samples to fully remove any random distribution and arrive at an average. The data i got for my scenario was easily quantifiable and thus easy to program a testing framework to collect the data. The probability that the trend would continue was something like 50.1% over 10,000 samples when using a reward of 1 to break the high of the previous candle, and a risk of equal distance (1:1 r:r). So there is an edge in trend continuation, but its really really small unless you start to combine other well researched edges.

To know that what you are dealing with will go up more than it will go down, you need over a thousand samples, mathematically speaking, otherwise you are still dealing with randomness. However if you are just investing, then you do not need a chart, you need fundamentals.
It's pretty simple. You look at the R/R ratio. If you are in it for the medium/ long term as an investor, you establish a position. And the investor hedges.
 

switch7

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It's pretty simple. You look at the R/R ratio. If you are in it for the medium/ long term as an investor, you establish a position. And the investor hedges.
So if it is just a hedge to decrease exposure to another instrument then fair enough. What I am saying is that if you start throwing fibonacci retracements on your chart and looking at trends, and using TA, then these tools imply that you have a technical edge. What I am saying is that you only see a return from technical edges over 100's or 1000's of trades, and when done over 1 single long term trade, the odds are similar to a roulette wheel.
 

Bible_Belt

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So if it is just a hedge to decrease exposure to another instrument then fair enough. What I am saying is that if you start throwing fibonacci retracements on your chart and looking at trends, and using TA, then these tools imply that you have a technical edge. What I am saying is that you only see a return from technical edges over 100's or 1000's of trades, and when done over 1 single long term trade, the odds are similar to a roulette wheel.
I used to make.a living by spinning that roulette wheel. I always got a kick out of being told that successful traders could not exist, when I worked with them every day. I was small potatoes by far next to most of them. True, the company did eventually go under. Decimalization and computer trading changed intraday trading to make it much harder, and the company was built around the idea of massive leverage. It is much easier to borrow money if you do so in the morning and give it back by day's end. Overnight is much harder. The same predictable movements that used to occur intraday are still there, but are spread over several days or weeks. Day trading is dead, but trading will never die.

I used fibs, but only after a lot of selection beforehand. They are subjective to time frame, where you select the highs and lows from which to measure. They show key levels, but that is a vague prediction, sometimes they offer very little in the way of support or resistance. Mostly I traded off of new highs and lows. That which goes high will go higher, and vice versa to short. It is the opposite of bottom picking. When you narrow your population of securities to consider into those which are doing either the best or the worst, random walk falls apart. It is not random at all, at least when you select carefully.
 

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switch7

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I used to make.a living by spinning that roulette wheel. I always got a kick out of being told that successful traders could not exist, when I worked with them every day. I was small potatoes by far next to most of them. True, the company did eventually go under. Decimalization and computer trading changed intraday trading to make it much harder, and the company was built around the idea of massive leverage. It is much easier to borrow money if you do so in the morning and give it back by day's end. Overnight is much harder. The same predictable movements that used to occur intraday are still there, but are spread over several days or weeks. Day trading is dead, but trading will never die.

I used fibs, but only after a lot of selection beforehand. They are subjective to time frame, where you select the highs and lows from which to measure. They show key levels, but that is a vague prediction, sometimes they offer very little in the way of support or resistance. Mostly I traded off of new highs and lows. That which goes high will go higher, and vice versa to short. It is the opposite of bottom picking. When you narrow your population of securities to consider into those which are doing either the best or the worst, random walk falls apart. It is not random at all, at least when you select carefully.

Agree. What I am trying to say is that the outcome of one trade idea bares much more weight from random outcome than a series of trades. Take a coin toss. We know if we toss a coin there is a fifty fifty chance you will hit heads or tails. Yet the odds of you tossing a coin 10 times and getting 5 heads and 5 tails is not 50/50, because the distribution of outcome has a random nature to it which only disappears over a high sample size. You have to toss a coin a very high number of times to get an even 50/50 split of outcome. Probably over a thousand times. With this in mind it is not a good idea to put all your eggs in one basket over 1 trade idea, and why it is better to rinse and repeat the same strategy over thousands of trades to get the benefit from any edge..
 

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That which goes high will go higher, and vice versa to short. It is the opposite of bottom picking. When you narrow your population of securities to consider into those which are doing either the best or the worst, random walk falls apart. It is not random at all, at least when you select carefully.

I more or less follow this in my own trading. I learned the *hard way* that bottom picking can rack up losses quickly. taking losses quickly and admitting the market is moving against you is something that has saved me money in my trading. yet most people will never admit they are wrong. They will find new indicators, plot new charts, and find new reasons to buy the dip and remain married to their position. If I find a stock goes against me, I'll drop it faster than a prom dress and not think twice. No attachment. No emotion.

I don't mind being wrong. We are all always wrong some of the time. I do mind losing money. Controlling losses is the one thing we can systematically do. Bitcoin is sliding, and I would never advocate buying the dip at this point. Sure, it might rally, but the resistance at 6,000 will prove challenging given the number of trapped buyer at that level.
 

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So if it is just a hedge to decrease exposure to another instrument then fair enough. What I am saying is that if you start throwing fibonacci retracements on your chart and looking at trends, and using TA, then these tools imply that you have a technical edge. What I am saying is that you only see a return from technical edges over 100's or 1000's of trades, and when done over 1 single long term trade, the odds are similar to a roulette wheel.
The investment itself [BTC] is not the hedge. You hedge against the investment. Sitting in bullion or USD, or trading a volatile alt coin would be a hedge. I use TA on BTC in order to make sense in investing in it. And given the R/R ratio to the upside, why wouldn't you establish a position?
 

ChristopherColumbus

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I don't mind being wrong. We are all always wrong some of the time. I do mind losing money. Controlling losses is the one thing we can systematically do. Bitcoin is sliding, and I would never advocate buying the dip at this point. Sure, it might rally, but the resistance at 6,000 will prove challenging given the number of trapped buyer at that level.
I advocate averaging in slowly over a period of time here.... that could even be up to six months.
 

wifehunter

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I advocate averaging in slowly over a period of time here.... that could even be up to six months.
DCA (dollar cost averaging) is where it's at!!! No one knows for sure what BTC will do. TA is all based on probabilities, not certainties.
 

ChristopherColumbus

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DCA (dollar cost averaging) is where it's at!!! No one knows for sure what BTC will do. TA is all based on probabilities, not certainties.
Yes, given the long term chart, you want to have some skin in the game. And the best way to do this is DCA. Forget about day-trading this.
 

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I advocate averaging in slowly over a period of time here.... that could even be up to six months.
I used to believe this, gods honest truth. And for retirement accounts that invest in index funds which eliminate single point of failures ( stocks), its a sound strategy over the long term. But for individual securities, I have found this to do more harm than good. I have fully integrated this mindset into my trading and my record has improved meaningfully.

I fully expect bitcoin to be *very* volatile from here on out, and we could see another rally from here. Right now my range is to short at 5300 and cover close to current levels.

I emplore people, on either side of this trade - please be careful and manage risk ( amount you lose) carefully. I know this is an impersonal message board, but I am giving as honest view as I can. I still love the concept of Digital currency to be clear...we have a long ways to go.
 

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DCA was invented in the days of phone calling stock brokers, for when you sold a guy a stock and it went down. Then the broker would call and say this was great news, now you should buy more.
 
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ChristopherColumbus

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DCA was invented in the days of phone calling stock brokers, for when you sold a guy a stock and it went down. Then the broker would call and say this was great news, now you should buy more.
Blind DCA is a dumb idea. But when you have a long term chart looking like this.....
 

ChristopherColumbus

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I'll be buying bitcoins in December provided it hit new lows.

Any insight @ChristopherColumbus Christopher?
Consider yourself very lucky to have come in at this point of the market cycle.

If you have a lump sum earmarked to invest, I think you should split it up into say 10 parts, and start averaging in over the next six months to a year. Seeing price observe the growth curve would confirm your strategy.
 

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Consider yourself very lucky to have come in at this point of the market cycle.

If you have a lump sum earmarked to invest, I think you should split it up into say 10 parts, and start averaging in over the next six months to a year. Seeing price observe the growth curve would confirm your strategy.
I won't be averaging my buys. I don't have the time needed 4 that. I'll buy at 1 go, perhaps starting off with 30K in bitcoins. And then looking to offload within the next 3 months of 2019.
 

Bible_Belt

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Blind DCA is a dumb idea. But when you have a long term chart looking like this.....
If you change from exponential scale to linear on that chart, it does not look so great. Regardless, I wish you the best with your position.
 
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