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Cryptocurrency Analysis with Python – Buy and Hold

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Re: Cryptocurrency Analysis with Python – Buy and Hold

#51

Post by adjkant »

AznHisoka wrote: post #33
sillysaurus3 wrote: post #29

Earlier quoted context omitted.

I've told people to buy at $3,800, $5,900, and $14,000 and got shouted down each time. All of these were after major crashes, so of course the price was about to bounce back. Even if you know when the music hasn't stopped yet, it's very hard to get anyone to listen.

For what is worth, I also thought that ~5500 dip in mid november was a good time as well. I wish I had money in the exchange that weekend because it quickly recovered days afterward. The recent dip was scarier though and time will tell whether we are still on the rise or just a temporary recovery.

A friend and I used to joke that a crash was a sale. Stock up while supplies last!

Re: Cryptocurrency Analysis with Python – Buy and Hold

#52

Post by throwaway30yo »

davewritescode wrote: post #39
down wrote: post #24

Earlier quoted context omitted.

if Gold can be irrational for 2k years, I don't see why not bitcoin can't, the only think gold has going for "longer history", yet HN folk love to say "past performance are not an...bla bla", yes it also has the 5% - 10% industrial use, but bitcoin has that too by being able to transfer it without third party, so will also not go to zero because will be useful as transfer of value.

Gold has a price floor because it has some industrial utility and is useful for making jewelry. All that has to happen to destroy bitcoin is a flaw in the implementation. Seriously, look at OpenSSL and tell me the same issues aren’t possible in bitcoin. When did we get so trusting of software that we decided it’d be a good idea to base currency on a distributed algorithm?

The project can always fork if major issues are found.

Bitcoin is very very far from a perfect solution, but it is a solution to many problems currencies have.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#53

Post by ValentineC »

dperfect wrote: post #34
thisisit wrote: post #23

Earlier quoted context omitted.

Not to be rude but I stopped reading at "MACD". TA is not the go-to strategy in stock trading for a reason. Indicators like MACD, RSI, Bollinger Bands etc re-paint a lot. So the perfect signals everyone sees on the charts are, for the most part, are just "profitable system" mirage.

Thanks. The conclusions may be obvious to experts in algo trading (and I heard similar things about the problems of TA for stock trading prior to doing this), but it was educational for me to go through the exercise because (1) it confirmed to me that the crypto markets behave similar to other markets, and (2) it helped me understand exactly where and how a technical indicator like MACD falls short for making trade d…

> Only after trying it myself did I gain insight as to why they don't actually work so well.

Would you care to elaborate on which indicators you tried, and what happened?

Re: Cryptocurrency Analysis with Python – Buy and Hold

#54

Post by huphelmeyer »

jcoffland wrote: post #26
thisisit wrote: post #20

Earlier quoted context omitted.

> Just avoid hodling the bag when the music stops... and how do you know exactly when the music has stopped?

It's easy to tell when the music has stopped. The hard part is anticipating the stopping.

Is it that easy? The Nasdaq bubble took roughly 6 years to inflate and 3 years to "pop". The real estate bubble took about 11 years to inflate and 6 years to fully deflate. Even Enron took the better part of a year to fully deflate.

Maybe balloon is a better word than bubble.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#55

Post by down »

davewritescode wrote: post #39
down wrote: post #24

Earlier quoted context omitted.

if Gold can be irrational for 2k years, I don't see why not bitcoin can't, the only think gold has going for "longer history", yet HN folk love to say "past performance are not an...bla bla", yes it also has the 5% - 10% industrial use, but bitcoin has that too by being able to transfer it without third party, so will also not go to zero because will be useful as transfer of value.

Gold has a price floor because it has some industrial utility and is useful for making jewelry. All that has to happen to destroy bitcoin is a flaw in the implementation. Seriously, look at OpenSSL and tell me the same issues aren’t possible in bitcoin. When did we get so trusting of software that we decided it’d be a good idea to base currency on a distributed algorithm?

making jewelry is in the store of value spectrum, with only industrial use, would be at 5% - 10% of current price.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#56

Post by cortesoft »

AlexCoventry wrote: post #13
minimaxir wrote: post #5

Unless you can include the complete irrationality of the users fueling the crypto bubble to get rich into the statistical model, any statistical analysis of those prices will be misleading. Traditional historical trend analyses of stock prices assume the market is somewhat rational. (but not 100% efficient, which is where money can be made)

It's not irrational. It's an asset whose price is rising. If you want to make money, it's a good asset to trade. Just avoid hodling the bag when the music stops...

If the assumption is that the price will crash, then every dollar made by someone on bitcoin is a dollar lost by someone on bitcoin, since the underlying asset had no intrinsic value at all. Given that there are a lot of people who have more resources than me, and can do better research and better market manipulation, I am pretty sure I have a better chance of being in the group that loses the money.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#57

Post by htormey »

down wrote: post #24
minimaxir wrote: post #5

Unless you can include the complete irrationality of the users fueling the crypto bubble to get rich into the statistical model, any statistical analysis of those prices will be misleading. Traditional historical trend analyses of stock prices assume the market is somewhat rational. (but not 100% efficient, which is where money can be made)

if Gold can be irrational for 2k years, I don't see why not bitcoin can't, the only think gold has going for "longer history", yet HN folk love to say "past performance are not an...bla bla", yes it also has the 5% - 10% industrial use, but bitcoin has that too by being able to transfer it without third party, so will also not go to zero because will be useful as transfer of value.

Well ~78% of gold is used for jewelry and only ~19% is used as a store of value:

https://goldprice.com/facts-about-gold

Re: Cryptocurrency Analysis with Python – Buy and Hold

#58

Post by spookthesunset »

unethical_ban wrote: post #50
thisisit wrote: post #23

Earlier quoted context omitted.

Not to be rude but I stopped reading at "MACD". TA is not the go-to strategy in stock trading for a reason. Indicators like MACD, RSI, Bollinger Bands etc re-paint a lot. So the perfect signals everyone sees on the charts are, for the most part, are just "profitable system" mirage.

TA is "Technical Analysis", according to Google. You're telling me those indicators are NOT used by rules-based traders in the stock market?

The reason TA is a bunch of malarkey is because if somebody could simply look at a chart to predict future price movements than everybody else would do it to, making such prediction worthless. Same is true of anything else that is public knowledge. Once everybody has that knowledge, you lose the ability to profit off it.

It is one of the core foundations that underpin up modern finance (something that Bitcoin advocates would be keen to learn about...) - see also [Efficient Market Hypothesis](https://en.wikipedia.org/wiki/Efficient-market_hypothesis), [Modigliani and Miller Capital Structure Theory](https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...), or the [Modern Portfolio Theory](https://en.wikipedia.org/wiki/Modern_portfolio_theory).

In short, TA has refuted time and time again. It's complete garbage used only by amatures.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#59

Post by pertsix »

diogofranco wrote: post #38
pertsix wrote: post #22

Earlier quoted context omitted.

a lot more people sell than buy cryptocurrency

How would that work? Any coin that is bought is also sold, so you're saying that the buys come from a few people buying big amounts? But all those sellers were buyers at some point...

buyers are willing to trade USD for more bitcoins. the price might never go to zero, but it will approach it.

Re: Cryptocurrency Analysis with Python – Buy and Hold

#60

Post by dperfect »

ValentineC wrote: post #53
dperfect wrote: post #34

Earlier quoted context omitted.

Thanks. The conclusions may be obvious to experts in algo trading (and I heard similar things about the problems of TA for stock trading prior to doing this), but it was educational for me to go through the exercise because (1) it confirmed to me that the crypto markets behave similar to other markets, and (2) it helped me understand exactly where and how a technical indicator like MACD falls short for making trade d…

> Only after trying it myself did I gain insight as to why they don't actually work so well. Would you care to elaborate on which indicators you tried, and what happened?

From my experience with MACD specifically, it basically came down to the fact that with longer periods (or less sensitive thresholds), you lose out on most of a price swing by the time your trigger fires, and with shorter periods (or more sensitive thresholds), you end up making a lot of trades that don't move the needle (can also rack up significant fees if you aren't careful). You can find something reasonable in the middle, but by doing so, you're decreasing both risk and potential returns.

There are at least two other important considerations apart from the indicator itself: how to actually execute effectively with limited funds (when your trigger fires, do you trade everything you can, only a certain percentage, or some variable amount based on technical factors? - that's an entirely separate algorithmic rabbit hole); and even if you do find a good algorithm and it performs great in backtesting historical data, it's almost always harder to achieve the same results in real market conditions (it's difficult to simulate the spread and dynamics of limited market depth).

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