Lesson: Contrarian Trading

[whifmoi]

Manipulation, greed and panic: How to compete and profit from it.

In todays world manipulation done by the "elite" is leading to greedy buys and panic sells. And everybody who is dreaming to be millionaire by owning cryptos can loose everything. Nearby: why do you want to be a millionaire, what is the reason for this?

I'm a socialist, and doing this for human beings (and wild animals and plants). If you are a millionaire already, or want to get rich quick, stay away.

1) Choose real values as assets
For my lesson I choose Bitcoins and PPcoins as my assets. I have no preference between the two. I really believe in these assets, like I would into gold and silver, the own house, or company shares. I know its risks, and its advantages. If you have no trust, then do not own them.

2) Choose a ratio in between the assets
Because I have no preference, I choose to own 50% of my assets in BTC, 50% in PPC. On many different assets the independent ones should have equal weight. Don't change the choosen weight of one asset without a very good reason.

3) Trade
Trade ONLY the way that you get closer to the weight target of 2). You can use timing, meaning you can wait for larger price jumps before you execute. If you miss this good trading point, you have missed an opportunity only, but you have not lost your assets.

For some time I will do real trades. You will see how I will gain value out of manipulation, greed and panic. Yourself must withstand it, this is no easy task at the beginning. Start with small values if you wish, this is one very big advantage of cryptos. You can try to reproduce this strategy, and compete me in timing. If you have questions then you can ask. Convinced trend traders please stay away.

In the next post I will list all trades done by me. I trade on vircurex for this. Because I don't want to influence the price, I will not give any estimation, and my trades will be filled into the next post AFTER execution.

I will modify this post if new important information needs to be added.

[whifmoi]

My  Trades

Date       Time     Type PPC_Quantity BTC_Price  BTC_Balance PPC_Balance   Spot    BTC_weight PPC_weight
2013-09-29 01:57:46 init -            -          4.93166438  1155.82162320 0.00180 70%        30%
2013-09-29 04:13:26 buy  396.98890000 0.00180100
2013-09-29 04:13:36 buy   16.53175000 0.00180100 4.18691370  1568.51523190 0.00190 58%        42%
2013-09-29 12:28:51 buy    3.02294894 0.00190100
2013-09-29 16:10:56 buy   52.08333333 0.00191999
2013-09-29 16:10:57 buy   37.91666667 0.00192000
2013-09-29 16:11:34 buy    1.04248033 0.00192000
2013-09-29 16:11:34 buy   49.91000000 0.00192312 3.91038314  1712.20271033 0.00192 54%        46%
2013-09-29 21:03:36 buy   90.00000000 0.00193100 3.73659314  1802.02271033 0.00192 52%        48%
Date       Time     Type PPC_Quantity BTC_Price  BTC_Balance PPC_Balance   Spot    BTC_weight PPC_weight
2013-09-30 01:49:47 buy    1.00361300 0.00196100
2013-09-30 04:58:01 buy    9.00000000 0.00198100
2013-09-30 04:58:08 buy    8.98190000 0.00197100 3.69909274  1820.97025231 0.00195 51%        49%
2013-09-30 05:13:26 buy    7.87830938 0.00196100
2013-09-30 05:16:26 buy    9.00000000 0.00195100 3.66608438  1837.81480508 0.00194 51%        49%
2013-09-30 06:44:18 buy    8.98190000 0.00196100
2013-09-30 06:45:31 buy    9.00000000 0.00195100
2013-09-30 06:45:57 buy    9.00000000 0.00193100
2013-09-30 06:45:57 buy    9.00000000 0.00191100 3.59633388  1873.72474128 0.00192 50%        50%
2013-09-30 09:40:42 sell   1.00000000 0.00197000
2013-09-30 09:40:42 sell   1.00000000 0.00198000
2013-09-30 09:40:42 sell   9.00000000 0.00198890
2013-09-30 09:40:45 sell   9.00000000 0.00199700
2013-09-30 09:47:11 sell   9.00000000 0.00204900 3.65448146  1844.72474128 0.00202 50%        50%
2013-09-30 10:02:07 sell   9.00000000 0.00206890
2013-09-30 10:02:07 sell   9.00000000 0.00207900
2013-09-30 10:02:07 sell   9.00000000 0.00208900
2013-09-30 10:07:09 sell   9.00000000 0.00209900 3.72935452  1808.72474128 0.00210 50%        50%
2013-09-30 10:17:54 buy    4.82549465 0.00201100
2013-09-30 13:01:59 buy    4.17450535 0.00201100
2013-09-30 13:13:46 buy    9.00000000 0.00200100 3.69324653  1826.68874129 0.00205 50%        50%
2013-09-30 16:14:51 sell   9.00000000 0.00212900
2013-09-30 16:14:56 sell   9.00000000 0.00214900
2013-09-30 16:15:05 sell   8.05997000 0.00216900
2013-09-30 17:50:14 sell   0.94003000 0.00216900
2013-09-30 18:01:10 sell   8.99950000 0.00217900
2013-09-30 18:10:55 sell   9.00000000 0.00218900
2013-09-30 18:11:06 sell   9.00000000 0.00219400
2013-09-30 18:11:10 sell   9.00000000 0.00219900 3.82984372  1763.68924129 0.00215 50%        50%
Date       Time     Type PPC_Quantity BTC_Price  BTC_Balance PPC_Balance   Spot    BTC_weight PPC_weight
2013-10-01 00:08:32 buy    8.98190000 0.00213100
2013-10-01 00:13:14 buy    8.98190000 0.00211100
2013-10-01 00:21:18 buy    8.88625235 0.00209100
2013-10-01 00:21:21 buy    0.11374765 0.00209100
2013-10-01 00:21:21 buy    9.00000000 0.00207100
2013-10-01 00:21:21 buy    9.00000000 0.00205100 3.73582552  1808.56311370 0.00215 49.0%      51.0%
2013-10-01 02:35:38 sell   2.28253178 0.00212900
2013-10-01 02:36:29 sell   5.71746822 0.00212900
2013-10-01 02:37:59 sell   8.00000000 0.00214900 3.76998108  1792.56311370 0.00214 49.6%      50.4%
2013-10-01 03:53:26 sell   8.00000000 0.00214900
2013-10-01 03:53:26 sell   8.00000000 0.00216900
2013-10-01 03:53:27 sell   8.00000000 0.00218900
2013-10-01 03:53:27 sell   8.00000000 0.00220900
2013-10-01 03:53:27 sell   8.00000000 0.00222900
2013-10-01 03:53:27 sell   8.00000000 0.00224900 3.87532200  1744.56311370 0.00215 50.8%      49.2%
2013-10-01 04:42:13 buy    9.00000000 0.00217100
2013-10-01 04:43:03 buy    9.00000000 0.00218100 3.83615400  1762.52711370 0.00215 50.3%      49.7%
2013-10-01 04:58:04 buy    0.49040382 0.00215100
2013-10-01 08:16:34 buy    2.00000000 0.00216100
2013-10-01 08:16:35 buy    2.00000000 0.00215200 3.82647315  1767.00853672 0.00213 50.4%      49.6%
2013-10-01 08:44:51 buy    4.00000000 0.00214200
2013-10-01 08:44:51 buy    9.00000000 0.00213100
2013-10-01 08:44:51 buy    9.00000000 0.00211100
2013-10-01 08:44:51 buy    9.00000000 0.00209100
2013-10-01 08:44:52 buy    9.00000000 0.00207100
2013-10-01 08:44:52 buy    9.00000000 0.00205100
2013-10-01 08:44:52 buy    9.00000000 0.00203100
2013-10-01 08:44:52 buy    9.00000000 0.00201100 3.68743215  1833.87453672 0.00214 48.4%      51.6%
2013-10-01 10:17:28 sell   7.99950000 0.00212900
2013-10-01 10:33:52 sell   7.99990000 0.00212900
2013-10-01 10:36:38 sell   8.00000000 0.00212900
2013-10-01 10:36:54 sell   8.00000000 0.00213900
2013-10-01 10:37:12 sell   8.00000000 0.00214900
2013-10-01 10:37:13 sell   8.00000000 0.00215900
2013-10-01 10:37:13 sell   8.00000000 0.00216900
2013-10-01 10:37:26 sell   8.00000000 0.00218900 3.82469182  1769.87513672 0.00218 49.8%      50.2%
2013-10-01 11:55:47 buy    1.00000000 0.00215100
2013-10-01 11:55:55 buy    2.00000000 0.00214200
2013-10-01 11:56:02 buy    4.00000000 0.00213200
2013-10-01 13:07:44 sell   1.00000000 0.00214900
2013-10-01 13:09:48 sell   0.99999999 0.00215900
2013-10-01 13:14:01 buy    1.00000000 0.00213101
2013-10-01 13:14:57 buy    1.00000000 0.00213100
2013-10-01 13:14:57 buy    2.00000000 0.00212100
2013-10-01 13:14:57 buy    4.00000000 0.00211100
2013-10-01 13:14:57 buy    9.00000000 0.00209100
2013-10-01 13:14:57 buy    9.00000000 0.00207100
2013-10-01 13:14:57 buy    9.00000000 0.00205100
2013-10-01 13:14:57 buy    9.00000000 0.00203100
2013-10-01 13:14:57 buy    9.00000000 0.00201100 3.70478520  1827.75513673 0.00208 49.4%      50.6%
2013-10-01 13:42:51 sell   1.00000000 0.00204900
2013-10-01 14:36:53 buy    1.00000000 0.00203100
2013-10-01 14:36:53 buy    2.00000000 0.00201100
2013-10-01 14:50:32 buy    4.00000000 0.00199100
2013-10-01 14:50:32 buy    9.00000000 0.00197100
2013-10-01 14:50:33 buy    9.00000000 0.00195100
2013-10-01 14:50:33 buy    9.00000000 0.00193100
2013-10-01 14:50:33 buy    9.00000000 0.00191110
2013-10-01 14:50:33 buy    9.00000000 0.00189100
2013-10-01 14:50:33 buy    9.00000000 0.00187100   
2013-10-01 14:50:33 buy    9.00000000 0.00185100
2013-10-01 14:50:33 buy    9.00000000 0.00183100
2013-10-01 14:50:33 buy    9.00000000 0.00181100 3.53964121  1914.57913673 0.00206 47.3%      52.7%
2013-10-01 15:02:52 sell   8.00000000 0.00204900
2013-10-01 15:02:54 sell   8.00000000 0.00205900
2013-10-01 15:38:25 sell   8.00000000 0.00206900   
2013-10-01 15:55:23 sell   8.00000000 0.00204900
2013-10-01 15:55:23 sell   8.00000000 0.00205900
2013-10-01 15:55:24 sell   8.00000000 0.00206900
2013-10-01 15:58:15 sell  24.00000000 0.00207899 3.68807154  1842.57913673 0.00205 49.4%      50.6%
2013-10-01 16:05:21 sell   1.19212618 0.00207899
2013-10-01 16:32:19 buy    1.00000000 0.00203100
2013-10-01 16:38:27 sell   6.80787382 0.00206900
2013-10-01 16:38:28 sell   8.00000000 0.00208900
2013-10-01 16:38:28 sell   8.00000000 0.00210900
2013-10-01 16:38:28 sell   8.00000000 0.00212900
2013-10-01 16:38:28 sell   8.00000000 0.00214900
2013-10-01 16:38:28 sell   8.00000000 0.00216900
2013-10-01 16:38:28 sell   8.00000000 0.00218900
2013-10-01 16:38:28 sell   8.00000000 0.00220900
2013-10-01 16:38:28 sell   8.00000000 0.00222900
2013-10-01 16:38:28 sell   8.00000000 0.00224900   
2013-10-01 16:38:28 sell   8.00000000 0.00226900   
2013-10-01 16:38:28 sell   8.00000000 0.00228900
2013-10-01 16:39:48 sell   8.00000000 0.00230900
2013-10-01 16:39:48 sell   8.00000000 0.00232900
2013-10-01 16:39:48 sell   8.00000000 0.00234900   
2013-10-01 16:39:48 sell   8.00000000 0.00236900
2013-10-01 16:39:48 sell   8.00000000 0.00238900 3.98859020  1707.57713673 0.00205 53.3%      46.7%
2013-10-01 17:11:17 buy   79.99990000 0.00212893 3.81827602  1787.41703693 0.00210 50.4%      49.6%
2013-10-01 17:27:26 buy    1.00000000 0.00213100
2013-10-01 17:34:17 buy    1.82895000 0.00211100
2013-10-01 17:34:18 buy    0.17105000 0.00211100
2013-10-01 17:34:34 buy    1.82151038 0.00209100
2013-10-01 18:24:53 buy    2.17404000 0.00209100
2013-10-01 18:28:02 buy    8.98190000 0.00207100
2013-10-01 18:32:39 buy    3.15807000 0.00205100
2013-10-01 18:47:39 sell   1.00000000 0.00214900
2013-10-01 18:47:44 sell   2.00000000 0.00216900
2013-10-01 18:48:50 sell   4.00000000 0.00218900
2013-10-01 18:52:12 sell   8.00000000 0.00220900
2013-10-01 19:46:39 sell   8.00000000 0.00222900
2013-10-01 19:46:39 sell   8.00000000 0.00224900
2013-10-01 19:46:39 sell   8.00000000 0.00226900
2013-10-01 19:46:40 sell   8.00000000 0.00228900
2013-10-01 19:46:40 sell   8.00000000 0.00230900
2013-10-01 19:46:40 sell   8.00000000 0.00232900
2013-10-01 19:46:40 sell   8.00000000 0.00234900
2013-10-01 19:46:40 sell   8.00000000 0.00236900
2013-10-01 19:46:40 sell   8.00000000 0.00238900 3.97725437  1719.51428627 0.00240 49.1%      50.9%
Date       Time     Type PPC_Quantity BTC_Price  BTC_Balance PPC_Balance   Spot    BTC_weight PPC_weight
2013-10-01 23:48:48 sell   7.00000000 0.00238900
2013-10-02 00:30:53 sell   7.00000000 0.00238900   
2013-10-02 00:39:57 sell   3.10982043 0.00238900
2013-10-02 01:05:00 buy    0.97044162 0.00233100
2013-10-02 01:05:05 buy    0.51292894 0.00233100
2013-10-02 01:06:52 buy    0.25738445 0.00233100
2013-10-02 01:07:00 buy    0.12915653 0.00233100   
2013-10-02 01:29:38 buy    0.06480833 0.00233100
2013-10-02 01:34:53 buy    0.06527670 0.00233100
2013-10-02 02:20:49 sell   7.00000000 0.00250000
2013-10-02 02:21:35 sell  35.00000000 0.00250000 4.11817604  1662.40046245 0.00250 49.8%      50.2%
2013-10-02 02:48:12 sell   1.00000000 0.00248900
2013-10-02 02:48:12 sell   2.00000000 0.00250900
2013-10-02 02:48:16 sell   1.99960000 0.00252900
2013-10-02 02:48:21 sell   2.00030000 0.00252900
2013-10-02 02:51:12 sell   7.00000000 0.00254900
2013-10-02 02:52:56 sell   7.00000000 0.00256900 4.17151791  1641.40056245 0.00257 49.7%      50.3%
2013-10-02 03:11:56 sell   7.00000000 0.00258900
2013-10-02 03:13:12 sell   7.00000000 0.00260900
2013-10-02 03:56:46 sell   7.00000000 0.00262900
2013-10-02 03:56:46 sell   7.00000000 0.00264900 4.24470327  1613.40056245 0.00262 50.1%      49.9%
2013-10-02 05:28:07 buy    8.00000000 0.00255100
2013-10-02 05:28:07 buy    8.00000000 0.00254100
2013-10-02 05:28:07 buy    8.00000000 0.00253100
2013-10-02 05:28:08 buy    8.00000000 0.00252100
2013-10-02 05:28:12 buy    8.00000000 0.00251100
2013-10-02 05:28:16 buy    2.50792000 0.00250100
2013-10-02 05:37:34 buy    5.49208000 0.00250100
2013-10-02 05:37:38 buy    5.48100000 0.00249100
2013-10-02 05:42:11 buy    2.51386000 0.00249100
2013-10-02 05:43:03 buy    7.99990000 0.00247100 4.08377234  1677.26733293 0.00246 49.7%      50.3%
2013-10-02 05:56:07 buy    7.96790000 0.00245100
2013-10-02 05:58:18 buy    0.99800000 0.00243100
2013-10-02 05:58:19 buy    0.99800082 0.00243100
2013-10-02 06:39:44 sell   7.00000000 0.00250900
2013-10-02 06:50:11 sell   7.00000000 0.00250900
2013-10-02 06:51:17 sell   7.00000000 0.00252900
2013-10-02 07:09:47 sell   7.00000000 0.00254900
2013-10-02 07:49:06 sell   7.00000000 0.00256900
2013-10-02 08:22:03 sell   7.00000000 0.00258900
2013-10-02 08:24:59 sell   7.00000000 0.00260900
2013-10-02 08:26:39 sell   7.00000000 0.00262900
2013-10-02 08:27:06 sell   7.00000000 0.00264900
2013-10-02 10:20:09 buy    7.99990000 0.00243100
2013-10-02 10:20:28 buy    8.00000000 0.00241100
2013-10-02 10:20:47 buy    7.99990000 0.00239100
2013-10-02 10:20:47 buy    8.00000000 0.00237100
2013-10-02 10:21:05 buy    7.91999543 0.00235100
2013-10-02 10:21:39 buy    0.08000457 0.00235100
2013-10-02 10:21:40 buy    7.91999543 0.00233100
2013-10-02 10:22:49 buy    0.08000457 0.00233100
2013-10-02 10:22:49 buy    7.91999543 0.00231100
2013-10-02 10:23:12 buy    0.08000457 0.00231100
2013-10-02 10:23:12 buy    8.00000000 0.00229100
2013-10-02 10:23:12 buy    8.00000000 0.00227100
2013-10-02 10:23:13 buy    8.00000000 0.00225100
2013-10-02 10:23:13 buy    7.91999543 0.00223100
2013-10-02 10:24:00 buy    0.08000457 0.00223100
2013-10-02 10:24:00 buy    7.91999543 0.00221100
2013-10-02 10:24:18 buy    0.08000457 0.00221100
2013-10-02 10:25:27 buy    8.00000000 0.00219100
2013-10-02 10:25:27 buy    8.00000000 0.00217100
2013-10-02 10:25:27 buy    8.00000000 0.00215100
2013-10-02 10:26:52 buy    8.00000000 0.00213100
2013-10-02 10:26:52 buy    8.00000000 0.00211100
2013-10-02 16:08:48 sell   7.00000000 0.00266900
2013-10-02 16:08:48 sell   7.00000000 0.00268900 3.94962937 1745.93910640 0.00246 47.9%      52.1%
2013-10-02 17:56:55 sell   3.13462201 0.00248900
2013-10-02 19:51:45 sell   3.86488000 0.00248900
2013-10-02 19:54:08 sell   7.00000000 0.00250900
2013-10-02 23:35:57 sell   7.00000000 0.00252900 4.00221177  1724.93960439 0.00240 49.2%      50.8%
Date       Time     Type PPC_Quantity BTC_Price  BTC_Balance PPC_Balance   Spot    BTC_weight PPC_weight
2013-10-03 14:11:18 sell   1.00000000 0.00234900   
2013-10-03 14:11:18 sell   2.00000000 0.00236900
2013-10-03 14:11:18 sell   4.00000000 0.00238900
2013-10-03 14:11:18 sell   8.00000000 0.00240900
2013-10-03 14:11:18 sell   7.00000000 0.00242900
2013-10-03 14:11:18 sell   7.00000000 0.00244900
2013-10-03 14:11:18 sell   7.00000000 0.00246900
2013-10-03 14:11:19 sell   7.00000000 0.00246900
2013-10-03 14:11:19 sell   7.00000000 0.00248900
2013-10-03 14:11:19 sell   7.00000000 0.00250900
2013-10-03 14:11:19 sell   7.00000000 0.00252900
2013-10-03 14:11:19 sell   7.00000000 0.00254900
2013-10-03 14:11:19 sell   7.00000000 0.00256900
2013-10-03 14:11:19 sell   7.00000000 0.00258900
2013-10-03 14:11:19 sell   7.00000000 0.00260900
2013-10-03 14:11:19 sell   7.00000000 0.00262900
2013-10-03 14:12:02 sell   7.00000000 0.00264900
2013-10-03 14:12:02 sell   7.00000000 0.00266900
2013-10-03 14:12:02 sell   7.00000000 0.00268900
2013-10-03 14:12:02 sell   7.00000000 0.00270900
2013-10-03 14:12:02 sell   7.00000000 0.00272900
2013-10-03 14:12:02 sell   7.00000000 0.00274900
2013-10-03 14:12:02 sell   7.00000000 0.00276900
2013-10-03 14:12:03 sell   7.00000000 0.00278900   
2013-10-03 14:12:03 sell   7.00000000 0.00280900
2013-10-03 14:12:03 sell   7.00000000 0.00282900
2013-10-03 14:12:03 sell   7.00000000 0.00284900
2013-10-03 14:12:03 sell   7.00000000 0.00286900
2013-10-03 14:12:03 sell   7.00000000 0.00288900
2013-10-03 14:13:14 sell   7.00000000 0.00290900
2013-10-03 14:13:14 sell   7.00000000 0.00292900 4.54190640  1520.93960439 0.00236 55.9%      44.1%
2013-10-03 16:09:31 buy    8.00000000 0.00240100
2013-10-03 16:09:48 buy    8.00000000 0.00239100
2013-10-03 16:10:45 buy    8.00000000 0.00238100
2013-10-03 16:11:31 buy    8.00000000 0.00237100
2013-10-03 16:11:34 buy    0.38388600 0.00236100
2013-10-03 16:13:44 buy    7.61611400 0.00236100
2013-10-03 16:35:12 buy  160.00000000 0.00242000 4.05946641  1720.53960440 0.00238 49.8%      50.2%

This post ran out of space, so for next day details see post #7:
http://ppcointalk.org/index.php?topic=528.msg4464#msg4464

My  Wealth
Because I have no preference for one coin, have no preference for any real asset I own, I will calculate my inital wealth and intermittent wealth in both PPC and BTC. And no, Dollars or Euros are no assets for me, there's no reason why I should calculate the wealth in fiat money. Looks good, but makes no sense.

Date       Time      BTC_Balance PPC_Balance   Spot     BTC_wealth PPC_wealth     gain
2013-09-29 01:57:46  4.93166438  1155.82162320 0.00180  7.01214330 3895.63516764  -
2013-09-29 21:03:36  3.73659314  1802.02271033 0.00192  7.19647674 3748.16497075  2.324%
2013-09-30 18:11:10  3.82984372  1763.68924129 0.00215  7.62177559 3545.01190176  0.206%
2013-10-01 19:46:40  3.97725437  1719.51428627 0.00240  8.10408866 3376.70360710  0.598%
2013-10-02 23:35:57  4.00221177  1724.93960439 0.00240  8.14206682 3392.52784189  0.469%
2013-10-03 16:35:12  4.05946641  1720.53960440 0.00240  8.22283918 3426.18299190  0.992%
2013-10-04 23:58:20  5.25114522  1337.16048899 0.00400 10.59978718 2649.94679399 -0,367%
2013-10-05 23:43:27  4.99617018  1434.11029585 0.00345  9.94385070 2882.27556541  1,038%
2013-10-06 23:33:47  5.09171915  1412.97349526 0.00355 10.10777506 2847.26057977  0.215%


Legend

Date Time
Date and time of a trade. For ease of use I simply take the time stamp from vircurex, it's not my local time.

Type
buy for buying PPC and selling BTC
sell for selling PPC and buying BTC

PPC_Quantity
how many PPC have been bought or sold

BTC_Price
The exchange rate of the trade

BTC_Balance
how many BTC I own after the trade

PPC_Balance
how many PPC I own after the trade

Spot
Current market price from btc-e and vircurex, it's an estimation, accuracy is not necessary here

BTC_weight
How many BTC do I hold, relative in %, after the trade. It's calculated this:
BTC_weight = BTC_Balance / ( all values )
70% = 4.93166438 BTC / ( 4.93166438 BTC + 0.00180 BTC/PPC * 1155.82162320 PPC )

PPC_weight
How many PPC do I hold, relative in %, after the trade. It's calculated this:
PPC_weight = PPC_balance / ( all values )
PPC_weight = 100% - BTC_weight
30% = 100% - 70%

BTC_wealth
My total wealth measured in BTC

PPC_wealth
My total wealth measured in PPC

gain
My increase in coins to the previous day. I compare my balances of the two adjacent days with the mean value of both spot prices. I'm not yet absolutely sure, that this is a correct calculation.

This is a super simple spreadsheet, use the standardized ODF (Open Document Format) for this, computed with LibreOffice for example.

How to calculate the maximum amount of PPC that I can buy or sell at a special price?
PPC_ToBuy = 50% * ( BTC_Balance / price - PPC_Balance )
792 PPC = 50% * ( 4.93166438 BTC / ( 0.00180 BTC/PPC ) - 1155.82162320 ) (maximum buy)
963 PPC = 50% * ( 4.93166438 BTC / ( 0.00160 BTC/PPC ) - 1155.82162320 ) (maximum buy)
-85 PPC = 50% * ( 4.93166438 BTC / ( 0.00500 BTC/PPC ) - 1155.82162320 ) (maximum sell)

I will modify this post if new important information needs to be added.

[whifmoi]

Some hours after my start I now have (with the last small panic sell) reached the point with the target distribution of 50% of the assets in BTC and 50% in PPC, see time stamp 2013-09-30 06:45:57

By simply dividing my balances, I can calculate my internal spot price. Below it I can buy some PPC, above it I can sell some. At this point in time it calculates like this:
BTC_Balance/PPC_Balance = 3.59633388/1873.72474128 = 0.00192

I invite all manipulators to destroy my strategy and make me look bad :-O

[mhps]

There is a systemic risk in this strategy. If one of the asset components (PPC or BTC) go down toward zero and never comes back again (doesn't have to reach zero but reaching zero is a possible scenario), your will beforced to buy the losing component again and again, reducing your entire asset value toward zero (and totally losing it if one of the component dies).

[whifmoi]

There is a systemic risk in this strategy. If one of the asset components (PPC or BTC) go down toward zero and never comes back again (doesn't have to reach zero but reaching zero is a possible scenario), your will beforced to buy the losing component again and again, reducing your entire asset value toward zero (and totally losing it if one of the component dies).

You are completely right. Every asset has it's risk. Gold can be stolen, an encrypted crypto wallet not. A successfull company can fail in short time, if a corrupt or unprofessional managing board does wrong decisions, gold can not. This is the reason for spreading the property over several real assets with hopefully different risks.

My constraint does not mean, that you must invest, you can wait as long as you want, and clarify the situation. But you must not run with the herd. My last trades have been with many small limit orders. This way I keep the spread myself. But I also can wait on large price jumps and buy/sell against a "wall" at once.

[whifmoi]

Goog morning. Nice run. Now it's time to explain why it can be better to wait on large price jumps.

The last three days I have profited from large volatility around a spot, as you can see in my order execution list. In the last run, while all my small orders have been executed all the way up the run, my gain in coins is very low. It had been better to have no limit orders and wait on this jump. The direction does not matter, if you have no preference.

Can you really make money in them [stocks] without taking a serious risk? Yes indeed if you can find enough of them to make a diversified group, and if you don’t lose patience if they fail to advance soon after you buy them. Sometimes the patience needed may appear quite considerable. [But] most of the bargain issues in our experience have not taken that long to show good profits.
Benjamin Graham

The wait on large price jumps has many advantages. You can leave the exchange in between the jumps, so not beeing burned in an exchange shutdown. You have time for your real live, doing more reasonable things. You can make your holiday. If you are lucky, you had a price run or crash all along your absence. If there was a price spike, you lost only an opportunity, not your assets. You will miss many opportunities, but they are coming again and again.

[calian]

What is your goal here? To hedge currency risk/volatility? To gain purchasing power? To ensure you're invested in the long term cryptocurrency leader? I agree on your choice of coins, but can't possibly convince myself to hold equal value in PPC at this time. There just isn't the infrastructure and I'm uncertain if proof of stake will be integrated into a BIP at some point. If so PPC could really suffer if it hasn't established a market niche for itself.

I'll be interested if your strategy could result in a long term increase in absolute quantity of both types of currency.

[whifmoi]

What is your goal here? To hedge currency risk/volatility? To gain purchasing power? To ensure you're invested in the long term cryptocurrency leader? I agree on your choice of coins, but can't possibly convince myself to hold equal value in PPC at this time. There just isn't the infrastructure and I'm uncertain if proof of stake will be integrated into a BIP at some point. If so PPC could really suffer if it hasn't established a market niche for itself.

My goal is a riskless rise in total wealth. I want a gain in coins. I wouldn't compare it with hedging, because I own the real assets. Hedging is like an insurance or option on an asset. I don't need this, because contrarian trading is doing the risk balance automatically.

It's on your choice to take another target balance, perhaps 80% in BTC and 20% in PPC. This makes the calculation moderately more sophisticated.

I'll be interested if your strategy could result in a long term increase in absolute quantity of both types of currency.

The contrarian strategy makes this impossible. I can buy the falling asset, and sell the rising one. You can see the movement of my two assets, BTC balance is rising, PPC balance is dropping.

If you own gold and it rises heavily, you should sell all or part of the gain of your gold. Nobody expects you to hold more gold even after a heavy price increase, but for you are a gamer.

[whifmoi]

An increase in wealth of nearly 0.6% (2013-10-01 19:46:40) is incredible high for a contrarian strategy for one day only. It's due to the massive spikes in both directions that we have seen.

If I had waited on the price jump before selling PPC against a wall, my gain would be much higher. But I do not predict anything, and I have not foreseen it.

[MUTO]

Hi whifmoi, your strategy is very interesting. What's your indicator to go out of a currency completely? Or, when do you stop your investment? Is there some point you whould say: That's enough, I don't see more potenital (for example in PPC) I will invest in "whatever"?

[whifmoi]

Hi whifmoi, your strategy is very interesting. What's your indicator to go out of a currency completely? Or, when do you stop your investment? Is there some point you whould say: That's enough, I don't see more potenital (for example in PPC) I will invest in "whatever"?

At this time my internal spot price is:

InternalSpot = BTC_Balance / PPC_Balance = 4.24470327 BTC / 1613.40056245 PPC = 0.00263

This simple calc tells me, I can buy PPC below 0.00263, and sell some PPC over 0.00263.

If you have a dozen different assets, you can sell your gain as a maximum, or buy the descend as a maximum. Waiting on large jumps is more profitable. In this special case with only two assets half of your gain can be sold, or half of your descent can be bought.

I never go out of an asset completely, that I believe in. It's always a compromise.

I see a potential in PPC, but not in the sense you and most others think of it. I think of it as a useful tool to help people to move payments easily all over the world. The gain in price is simply lucky, and I have to spread the gain in one asset to my other assets to reduce risk. Because it can come to a sudden end as any other asset can do also.

[mhps]

My constraint does not mean, that you must invest, you can wait as long as you want, and clarify the situation. But you must not run with the herd.

That is where the slippery slope is. Sometimes the price of an asset can go down and down for years. Usually at these times there are all sort of stories, theories, evidences, and real possibility that the price will never go up again, or worse, that the asset will go bust. How can you objectively make a judgement to hang on or to stop loss (which probably would look like a "run with the herd" because the herd have been leaving due the reason you are to accept). BTC is less than 5 years old. PPC is even younger. These are high risk assets.
The contratian method has its place. I have been using a slightly different one between BTC and LTC and telling people about it. However one has to understand the risk with this method.

[whifmoi]

Next day has gone, my gain in coins is 0.469%. This is a very surprising rise to me, because I missed to place the sell orders up to 0.003, where the last spike finished.

Please be patient, I will answer every question. Need some time to express my thoughts in a comprehensible fashion.

[whifmoi]

That is where the slippery slope is. Sometimes the price of an asset can go down and down for years. Usually at these times there are all sort of stories, theories, evidences, and real possibility that the price will never go up again, or worse, that the asset will go bust. How can you objectively make a judgement to hang on or to stop loss (which probably would look like a "run with the herd" because the herd have been leaving due the reason you are to accept).

Sounds like you speak of gold. There are rumors that gold is manipulated down.

I don't know, but it's possible. Manipulation can last years, we don't know when it stops. If you sell your gold on falling price, they've got you. This long lasting manipulation is the reason of why someone has to spread his assets. No more than 10% into one asset. One has to wait this long time before selling his low priced gold, manipulation will fail at some time. And if it fails, the jump into the opposite direction can be excessively.

With gold it's the same as with other real assets: I think about a buy after a panic sell, I can wait even longer if I want.

[whifmoi]

... How can you objectively make a judgement to hang on or to stop loss (which probably would look like a "run with the herd" because the herd have been leaving due the reason you are to accept). ...

Objectively I can not make a judgement on how the exchange rate will develop, but for I'm an insider. This is the reason I do not use stop loss, because I stick to the price of my limit order.

This becomes even more important with buying/selling company shares or investment fonds. Because I do not anticipate the price movement, I cannot set a stop loss. I expect that I have to reinvest in about 50% of all executed stop loss orders, so my loss is 50% of fees and spread at least. It's for sure a win to banksters, and I will not support them. The only orders I use are limit orders.