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Show HN: Bitcoin investing using Dollar Cost Averaging strategy

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Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#31
Some years ago everybody involved with the cryptocurrency universe had a relatively good understanding of economics, markets, agent incentives, game theory and so on -- even if these people didn't mention any of these terms, they seem to have a natural, logical, grasp of everything that was needed (not much).

Now it seems that people come to cryptocurrencies without knowing a thing, misunderstanding the way people act and the incentives involved, but at the same time making heavy usage of the terms "cryptocurrency game theory", "cryptocurrency economics" etc.

Not to say that this DCA thing is wrong or anything, but I've seen people here trying to create speculation strategies using charts and correlations produced by Python scripts, and lots the new cryptocurrencies and tokens are deadly wrong on their assumptions and incredibly poor in their features, like Bancor or Tezos.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#32
post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

Are you sure? Would you bet your money on that?

If yes, then I must say that black swans are just around the corner waiting for you.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#33
post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

Standard momentum strategy, sure, but there's no way you can claim this outperforms buy-and-hold for certain.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#34
post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

[deleted]

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#35
The re-balancing system (of which dollar averaging is a variant) is described in the Fortune's Formula book [1] as something that Claude Shannon [2] would demonstrate in his lectures at MIT as a mathematically proven guaranteed winning strategy. At the end of the talk there was a Q and A, and the first question always was "do you yourself use this system", to which he replied "Naw, the commissions alone would kill you".

[1] https://www.amazon.com/Fortunes-Formula-Scientific-Betting-C...

[2] https://en.wikipedia.org/wiki/Claude_Shannon

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#36
post #10

Earlier quoted context omitted.

Pieter Levels wrote pretty much the same thing a few days ago, but most people that know about Pieter know he likes to automate things. I'm pretty sure he set his up as a cron job. https://gist.github.com/levelsio/ee9539134035492ba77a7be1b49...

yes you should add a cron to automate it daily

How do you automate money transfers?

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#37
post #28

A better approach with an extremely volatile asset like Bitcoin is a simple tactical asset allocation strategy. For example, the following system significantly outperforms both buy-and-hold and dollar-cost averaging strategies. 1. Buy when the monthly price of Bitcoin is greater than its 10-month simple moving average (SMA). 2. Sell (and move to cash) when the monthly price is less than its 10-month SMA. That's it. M…

>Market timing improves the risk-adjusted returns

Unless you've got a crystal ball, market timing isn't something you can count on for investment returns.

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#38
I wrote a bot that did something similar on the cryptsy exchange - it didn't pull in any new cash, it just tried to re-balance every time it ran.

It was making a small profit until cryptsy got hacked and lost all of my coins :(

Here's the source if anyone is interested though: https://github.com/nfriedly/Coin-Allocator

Re: Show HN: Bitcoin investing using Dollar Cost Averaging strategy

#40
post #11

Earlier quoted context omitted.

Buying on coinbase doesn't leverage the Dollar Cost strategy?

can't you set recurring purchases at set intervals on coinbase?

Yes, Coinbase supports daily / weekly / every 2 weeks / monthly recurring buys. They have fees on every buy though.
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