Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Are You Trading or Gambling?

investinglessons.substack.com

Post reply on HN
Print view View original

321–330 of 419 posts

Re: Are You Trading or Gambling?

#321

Post by 8note »

solosoyokaze wrote: post #305
ac29 wrote: post #287

Earlier quoted context omitted.

> money that can't be inflated The supply of Bitcoin has been inflated, on average, every 10 minutes for the past ~11 years.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

How does Bitcoin continue to have transactions once that limit is met? Arent the miners executing transactions in exchange for Bitcoin?

When there's no more coins to mine, there's no reason for anyone to be running their bitcoin operations. It'll fall to governments? At that point, can't they introduce more Bitcoin?

Re: Are You Trading or Gambling?

#322

Post by ReggieCommaRose »

Raidion wrote: post #133
ab111111111 wrote: post #104

"Gambling occurs when you have a poor understanding of risk, resulting in either (1) negative expected value bets, or (2) poor bet sizing that leads to ruin." Not so. Top poker players are still gambling, but have an excellent understanding of the risks. Their skill doesn't turn them into investors. Gambling is taking a high risk bet. Whether the expected pay off is high enough to justify the risk and whether you can…

I (and I think a lot of poker players) would disagree. Everything in life involves some sort of risk, but doesn't mean it's gambling. Gambling is defined exactly by those two properties. You could die driving to the store, but the odds are tiny and the benefits are huge. Driving to the store isn't gambling. Are casinos gambling when they let you play blackjack? No, the bets are +EV, even those they are only a few % d…

I used to play full-time and I currently work in trading.

Poker is definitely gambling. Casinos are gambling, they’re just doing so with massive volume and tiny risk (afaik). Trading is gambling. Gambling well is a subset of gambling.

Re: Are You Trading or Gambling?

#323

Post by solosoyokaze »

albntomat0 wrote: post #319
solosoyokaze wrote: post #305

Earlier quoted context omitted.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

I understand and appreciate the point you're making (I want to add this as my response is slightly flippant). How many BTC will it take to buy a Toyota Corolla in Feb 2022?

Hopefully less than in Feb 2021.

I think a better question would be, how many BTC will it take to buy a house in 2050? I think the three things that have experienced the most drastic inflation are: housing, healthcare and education. It would be interesting to measure Bitcoin's long term value next to those highly inflating costs. Say a house now costs 10 BTC/$500,000 and in 2050 10 BTC/$2,000,000.

Re: Are You Trading or Gambling?

#324

Post by 8note »

mitchdoogle wrote: post #277
toss1 wrote: post #174

Earlier quoted context omitted.

Yup. And that key feature of "sending money over the internet" thing hasn't worked out very well so far I've been in it, found the entire system wanting, and got out. May get in again to enjoy gamble in speculative bubbles, but as a technology, it is still in the early and massively-sucking and increasingly-sucking days. Like railroads in the 18th century, they utterly changed society, but most investors lost their s…

I know I'm just a single point of data, but I routinely buy things on the Internet with Bitcoin that cost $200-300 USD. I always set the fee to just under a dollar and have never had any issues with the transaction being confirmed within 20-30 minutes, including in the last few weeks. Of course, paying with Bitcoin saves the seller about 3% of the final cost, and they need not worry about chargebacks, which saves the…

It's only a win for you if they weren't a scammer, or they didnt send you a broken item. Otherwise you've lost the chargeback feature

Re: Are You Trading or Gambling?

#325

Post by [deleted] »

8note wrote: post #321
solosoyokaze wrote: post #305

Earlier quoted context omitted.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

How does Bitcoin continue to have transactions once that limit is met? Arent the miners executing transactions in exchange for Bitcoin? When there's no more coins to mine, there's no reason for anyone to be running their bitcoin operations. It'll fall to governments? At that point, can't they introduce more Bitcoin?

[deleted]

Re: Are You Trading or Gambling?

#326

Post by spekcular »

throw0101a wrote: post #228
elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

> Second, the "stock perspective". An investor would ignore the underlying company, but look at the stock itself. It didn't really matter if the company was doing good, but only if the stock itself had good potential. […] > Finally, the "game perspective". An investor would not really care about the stock, but only about the behavior of other investors. Well, momentum investing does give good returns over the market…

It seems like these excess returns are a special case of the general principle that taking on more risk yields higher average rewards at the cost of more volatility. (Compare stocks vs. bonds, for example [0].)

Quoting from the third link above:

> So it has high excess returns and has worked basically everywhere it has been tested, what’s not to like? As the authors go on to say, this incredible performance is also accompanied by periodic, soul-crushing declines:

> "In 1932, the winners-minus-losers (WML) strategy [momentum] delivered a -91.59% return in just two months. In 2009, momentum experienced a crash of -73.42% in three months. Even the large returns of momentum do not compensate an investor with reasonable risk aversion for these sudden crashes that take decades to recover from."

> This is why momentum investing can be so deadly. When things are going right, they can go very right, but when they go wrong, it can get ugly fast.

[0] See https://www.investopedia.com/terms/e/equityriskpremium.asp or the corresponding Wikipedia article.

Re: Are You Trading or Gambling?

#327

Post by albntomat0 »

8note wrote: post #321
solosoyokaze wrote: post #305

Earlier quoted context omitted.

It's known exactly how many Bitcoin will be produced and at what rate. There will never be more than 21 million BTC. This was known and agreed upon by all participants in the system. How much USD will exist in 10 years?

How does Bitcoin continue to have transactions once that limit is met? Arent the miners executing transactions in exchange for Bitcoin? When there's no more coins to mine, there's no reason for anyone to be running their bitcoin operations. It'll fall to governments? At that point, can't they introduce more Bitcoin?

Each transactions has a fee value set by the sender, that goes to the miner. Miners select the top N transactions by fee, so miners will still have an incentive.

Re: Are You Trading or Gambling?

#328

Post by gerritsg »

jw1224 wrote: post #252
bredren wrote: post #221

Earlier quoted context omitted.

Sounds like a fun project. How much rope does your bot have? What did you write it in / what’s the deployed stack?

I was really hoping nobody would ask me about the stack... because... it's PHP! Hahahaha! Most hobbyists write these things in Python, which I did give some serious consideration to learning... But I know what I'm like — my interest in anything is very short-lived (ADHD!), so I wanted to get a prototype built with a language I'm already proficient in. It's built with Laravel 8, and hosted on DigitalOcean. It stores a…

Also curious about the platform you're using, because I was kind of dissuaded from using Alpaca when I learned about the good old pattern day trading rule. Are you trading with > 25k in whatever platform you use, or do you have a limited number of trades you execute to stay away from PDT?

Re: Are You Trading or Gambling?

#329

Post by dosenbrot »

orangeoxidation wrote: post #309
colordrops wrote: post #282

Earlier quoted context omitted.

Yes, 11 years after its debut and nearly a trillion in valuation, still ridiculously ignorant statements like "delivers no value". It delivers no value you care about. Many people care about money that can't be inflated, can't be stopped from being traded, and can't be controlled across international borders. Those are hugely valuable to some people, whether you find it valuable or not.

> money With built in and inevitable deflation. Bitcoin could never replace a national currency. With transaction times in the tens of minutes and with a maximal global transaction rate of 5-10 per second. The Blockchain couldn't replace the banking system of single mid-sized town. It's not money. It's at best "digital gold", but more realistically it's just a ponzi scheme.

> With built in and inevitable deflation. Why is everyone thinking deflation is a bad thing? "Oh no, how horrible, my money isn't loosing value over time so I dont't have to buy things I don't need and can start to save money without loosing value"

Re: Are You Trading or Gambling?

#330

Post by pashamur »

dalbasal wrote: post #30
elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

Well put. I am picturing as a triangle of three perspectives. That also gives you three (or 6) possible cross-perspective stories. The dynamics between these perspectives are where things start to get squirrely. 2021 memestocks like gme are good examples. Game perspective (no. 3) was the main story. Short squeezes. Retail investors getting cut off, etc. The stock perspective (no. 2) is now all about game investors. C…

The most important concept to understand about today's market is not short squeeze - it's gamma squeeze (which can lead to shorts being squeezed). It's about how traders got their hands on an unusual amounts of leverage (when you buy a call option, the market maker that sells it to you has to buy 5-10x the amount of stock in $$ value that it cost you to buy the option in order to hedge, and the closer the stock gets to your option price, the more hedging stock they have to buy)

GME, Tesla, all of the high-flyers and all the craziness of the last few months were driven by gamma squeezes and the YOLO call option buying of /wsb (with some hedge funds obviously jumping on board)

Post reply on HN