Here is my take on it:


You could use rebalancing, which means you always have 50:50 in Bitcoin and USD. It isn't a very useful method for generating money, but makes risk aversity an option.

Basically: Bitcoins rise, you sell, Bitcoins go to valley, you buy. Trying to keep the ratio right.

You could do this with 90% of your Bitcoins. And keep most of these bitcoins in a secure wallet at home, not on the exchanges, if it is there, you WILL tempt yourself.

With the remaining 10%, you trade. See it is a game, where you play with it.

Read this book first though:
http://www.amazon.com/The-Disciplined-Trader-Developing-Attitudes/dp/0132157578/ref=sr_1_1?ie=UTF8&qid=1367153859&sr=8-1&keywords=the+disciplined+trader

This book does not give you any technique for daytrading or trading in general. It largely takes on the psychological side.
You see, I know my share of traders and investment bankers.

I am a psychologist by trade and we have usually worked with them on only one thing: Their attitude, their psychology.

Trading is partly about technical knowledge. But the psychology is more important, because you need to know when to act and stop doing things that you know are stupid. And you WILL do them.

I talked to an investment banker involved in complex derivative trading from the London City trading floors some time ago and asked him:

"How do you do it? Stay cool, when you hit a button and it just might blow a billion? With your managing director ready to send you off in no time and even sue you if things fuck up?"

His answer might be something to ponder:

"Because it is NOT MY MONEY. I don't give a fuck. We all don't. Our bonuses are paid by the bank, the customers leave their money here and they want to see results. So we don't give a fuck. If this was my money in the bank, MAN, I would piss my pants every time I send a trade. I'd get a heart attack when I turn 40 my friend. You see, I don't play with my money, I play with the money of others, that makes things easy."

Another friend of mine that is successful with daytrading, however with Forex, not derivatives, said the following being asked the same question:

"I just love the rush. I do the calculations, I do the technical things, I do my analysis. But then, when it comes to commit, that is like a fucking bungee jump. Im not gonna do this anymore when im 40, im gonna retire. But man, I love this thrill. But you gotta be able to be both: Do your calc, be really cold hearted, smart thinking and then just go nuts, go wild and go risky without looking back once you made your decision. And this is what is so stressful, you go from being the math nerd to being a crazed mofo sending off his whole fortune into the limbo of currency exchanges..."


So, the people who are doing this, largely have a trading mindset. Whatever their strategy is, they usually program some of it. I have seen guys do trading bots because they said hitting the button themselves every time is gonna make their heart blow once they hit 35



Is this something you want to be in? If yes, read the book first. If you still want to be in there, get yourself info on really basic analysis charts and basic math. Play around with maybe litecoin or namecoin, something that isn't worth that much but could hurt a little when you loose it, to keep you in the feeling of "i lost money" when you fuck up.

Another thing to ponder: You will loose money sometimes even if you make the right decisions. I am not sure if you ever played poker a little more seriously before. Playing poker, you have a closed system of probabilities you can work with. You can, at every point in time, do math that will tell you the expected value of your next move. You might have gone with two aces on the flop. Probability tells you that you will win 80% of the hands. You raise, someone checks the raise and here comes the flop with two kings and a 2. You barrel another opening into the pot on the flop and the other guy just raises you with three times the amount. You have an 80% chance of winning before. The chance that the guy has the other king is now 2/48 and he might beat you with a 22 pair also. Are you willing to bet on that? Are you willing to put 10k in the pot?

A poker player does this and he looses in a lot of cases. And although he looses, he will gladly do it again, because he was right. Because the numbers will add up.

Trading is less deterministic, your systems will be more voodoo than most poker strategies and you will loose money even if you were right.

Can you stomach that? If yes, go for it. I got into the whole bitcoin thing because my trader friends told me that it is real fun, considering that the order fees are so small, that you can profit with minimal wins. He also said that the market manipulation by bigtime capital holders going on for BTC-E and Gox is so funny, because if it were done on an exchange, they would be gone for insider trading. In Cryptocurrencies, this is all allowed. And fun, if you can stomach it. If not, hold it and stay conservative. This isn't for everyone and you risk loosing EVERYTHING.

I just bought hosting at Namecheap and we will be migrating there today  

My work blocks the site.

Category: Malicious Sources

Right, it is not 7% per day, but some weeks I do better and some weeks I do worse. If I took more risky positions I might be able to get more, but I try to have a moderate risk profile.

This sounds more like a flaky order matching algorithm than anything -- bids over asks should be executed at the ask (or the other way round if the ask comes in later). I.e. it should never happen on an exchange.

remember bitstamp as auto trading built in....ppl may have orderbooks open at stated price

It just seems wrong to see bids exceed asks on an exchange. Why weren't those trades executed? I've also seen the exact same price on the bid and ask side, and wondered what went wrong.

(Yes - matching orders can be hard - like I wrote here...)