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Adventures in the Bitcoin Market

I started flipping bit coins near the beginning of the rally. After looking at the insane volatility behind bitcoin, how powerful breakouts and breakdowns were at predicting price action, and how dynamic and interrelated prices were across exchanges, I though why not give it a try.

At first I lost some money, I was trying out a variety of methods, such as trend following, RSI on different time frames, looking at price action over a period of time to determine how much juice the engine might have or not have left. But then I started learning what mattered, what actually gave me odds in the market. The hardest part about this, compared to say some “pure” game, where the odds are mathematically clear, In trading you have to be willing to take a position, decide whether it’s a short term, medium term or long term position based on how you derived on that decision, and then decide what threshold or what would have to happen for you to conclusively to take a loss.

By far the most powerful instruments in determining price movement in the bit coin market is trend following, and trend following on multiple time frames. Namely the 15 minute, 1 hr. , 4hr and daily time frame. Sooner or later everything has to catch up with its time frames. Plays on the 15 minute are more frequent than 1 hr which is more frequent than 4 hr and so on and so forth, but the price always returns to the mean, or at least corrects somewhat to the mean on each timeframe. The beauty with bitcoin is with all the volatility comes potential for very large gains.

With my new outlook in mind, having read up on candle sticks and trend following, and looking into various charts and taking calculated risks with upper and lower bounds I preceding to double the amount of bitcoins I had by just sitting calm, playing crashes. Bit coins also continued to uptrend, which meant the profits kept rolling in, and even with this week’s major crash, because I bought in so early and traded decently well, I am up significant amounts.

With this in mind I continued to trade, but shortly after the crash from two weeks ago, something seemed wrong. The rebound was on to a good start, the price had already corrected once to 1.2k after coming down from a prior 1.2k. I played that intra crash surprisingly well, and I was trying to make some profits along the way up, but the majority of the time I was asleep or too late. Regardless I continued to look out for opportunities I considered in my odds. Then after the price hit over 1040, out of the blue, China began to go down a little, around 50-60 dollars. It was weird, everyone was up trending, the market was still bullish. Regardless, I found the situation unpredictable. Did some news come out? What caused this? Was it predictable? While I was trying to figure out whether I could have had an edge in this situation I just kept trying to see if anything new developed. Then it happened again, chine went down another 50-80 dollars for seemingly no reason. The price then rebounds come 30 dollars, where it traded within a 20 dollar price range for 3 days. I was obsessed at this point. I was looking at the price action constantly, and everything just looked exhausted. Bitcoin wasn’t hitting new high, and wasn’t anywhere near the last high. I decided, at 5410 china price (around 880~ dollars) to cash out everything and just wait. I did just that,…..but I rebought 10 minutes later when the price went down 10 dollars thinking that was a good deal. I was so distracted and focused on short-term trades that I forgot to look at the chart on the 4hr and 1d period. The inability to reach new highs was a major sign of a dead cat bounce and bad things to come. Furthermore, the super low volume and near boring price movement after such wild swings signaled that this time it was it. In speculative assets, when new highs aren’t constantly being made, people get weary and desperate.

Manish - I am Full of Shit

On Tynan

I overslept on my earlier nap today. Ty calls and is like "are you sleeping, I'm coming over" I'm like "No, No, I'm always up", not feeling like taking a verbal berating in my fragile state. I think we both knew I was full of shit.

I thought I was done. I had no extra naps last night, and felt good throughout. But I slept right through the alarm this morning. I had turned down the volume on my computer to listen to some music and forgot to turn it back up before the nap. Also, I think I might be associating the wake up song with sleep now that I've had it waking me up 10+ times in 2 days. So now I have a presleep ritual:

1. Check volume
2. Check timer
3. Change the song.

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