Hive Mind v Irrational Markets
Actualizado
This ed post is not aimed at anybody and thinking that it was aimed at you should in itself make you think why you would think that. Money Man knows the day he does not approach trading with humility, will be the day he regrets.
Big predictions are normally related to “hot inpatient money” that homerun (not necessarily big) traders make on markets with this money they calculated would be fine to lose. This is fine for them, if they calculated their risks reasonably, but lethal to inexperienced traders who might not have. These big predictions have potential great rewards at great risk and only come to pay on big moves.
Reasonably, these big moves happen when there are fundamental shifts. The two major recent fundamental shifts in BTC have been the opening of futures and then the virus. Major fundamental happenings are thus things like addition or manor change in tradability (the start of shorting, legislation, closure of exchanges, etc), macroeconomics (recessions, lock downs, trade restrictions, etc) and integrity issues (like Satoshi’s stash, his identity, major 3rd party hacks – Mt Gox, etc). Please comment below if you can think of more.
The market is a collective of traders causing a current price. A quick note to illustrate how big the thinking is behind this: The price is derived from a seemingly ‘invisible hand’ according to Adam Smith and Bastiat, before him. Max Planck, the Quantum Theory guy, said that he wanted to study economics, but it was too complex a subject for him. These guys are giants of thought. Irrelevant? A recent big idea is that of the Hive Mind. We have all heard of the six degrees of separation and that, to me, makes this something to think about when trying to explain market moves.
I listened to a respected crypto guy asking: why is it that major events seem to coincide with decision points on the chart? Is the market anticipating the event or is the event motivated by the market? The crypto analyst is a nice guy, but I reason that this is a chicken or the egg argument: we have chickens after all (a fact like a chicken).
Looking at the chart tells us that BTC always seem to look for the decision points and then move with intent from there to the next one. Most times, the next decision area is not all that far away (Hive Mind related), but then we have a few black swan events thrown in.
Looking at great non-trader achievers around us today, and their pearls of wisdom, and thinking about trading lessons learned at the same time, makes it obvious that trading is such a great educator about life, that it would be a loss to everybody if a beginner trader would have to quit trading because of taking on uncalculated risk and blowing up their account. To me, trading is not a zero-sum game where I win if you lose. Trading is multifaceted and I plan to make a case for this in the future and thus why I am humbly sharing what I have learned.
Conclusion: A good trading strategy to start with would allow for using the ‘Hive Mind moves’, but prevent a sudden Black Swan move from undoing all the profits and more – allowing new traders to stick around for long enough to get to grips with what is cooking. So, what I am alluding to is to always have your current position in perspective, (combine the 2 ed posts related to this added below with a sound strategy). Very important to me: Please leave a like if you appreciate the effort, please comment to develop this further, Please follow if you might like to know about where this leads.
PS Have a look, with a trader’s mindset, at Hive Mind if you are that way inclined (six neighbours to starlings, headbutting bees and cannibalistic locusts – great stuff). Warning: this post is not alluding to hive mind interconnected black box trading, sociological arguments, intelligence warfare, political manipulation, or The Borg. This was to tie two trading discipline edu posts together with a market psychology strategy.
Big predictions are normally related to “hot inpatient money” that homerun (not necessarily big) traders make on markets with this money they calculated would be fine to lose. This is fine for them, if they calculated their risks reasonably, but lethal to inexperienced traders who might not have. These big predictions have potential great rewards at great risk and only come to pay on big moves.
Reasonably, these big moves happen when there are fundamental shifts. The two major recent fundamental shifts in BTC have been the opening of futures and then the virus. Major fundamental happenings are thus things like addition or manor change in tradability (the start of shorting, legislation, closure of exchanges, etc), macroeconomics (recessions, lock downs, trade restrictions, etc) and integrity issues (like Satoshi’s stash, his identity, major 3rd party hacks – Mt Gox, etc). Please comment below if you can think of more.
The market is a collective of traders causing a current price. A quick note to illustrate how big the thinking is behind this: The price is derived from a seemingly ‘invisible hand’ according to Adam Smith and Bastiat, before him. Max Planck, the Quantum Theory guy, said that he wanted to study economics, but it was too complex a subject for him. These guys are giants of thought. Irrelevant? A recent big idea is that of the Hive Mind. We have all heard of the six degrees of separation and that, to me, makes this something to think about when trying to explain market moves.
I listened to a respected crypto guy asking: why is it that major events seem to coincide with decision points on the chart? Is the market anticipating the event or is the event motivated by the market? The crypto analyst is a nice guy, but I reason that this is a chicken or the egg argument: we have chickens after all (a fact like a chicken).
Looking at the chart tells us that BTC always seem to look for the decision points and then move with intent from there to the next one. Most times, the next decision area is not all that far away (Hive Mind related), but then we have a few black swan events thrown in.
Looking at great non-trader achievers around us today, and their pearls of wisdom, and thinking about trading lessons learned at the same time, makes it obvious that trading is such a great educator about life, that it would be a loss to everybody if a beginner trader would have to quit trading because of taking on uncalculated risk and blowing up their account. To me, trading is not a zero-sum game where I win if you lose. Trading is multifaceted and I plan to make a case for this in the future and thus why I am humbly sharing what I have learned.
Conclusion: A good trading strategy to start with would allow for using the ‘Hive Mind moves’, but prevent a sudden Black Swan move from undoing all the profits and more – allowing new traders to stick around for long enough to get to grips with what is cooking. So, what I am alluding to is to always have your current position in perspective, (combine the 2 ed posts related to this added below with a sound strategy). Very important to me: Please leave a like if you appreciate the effort, please comment to develop this further, Please follow if you might like to know about where this leads.
PS Have a look, with a trader’s mindset, at Hive Mind if you are that way inclined (six neighbours to starlings, headbutting bees and cannibalistic locusts – great stuff). Warning: this post is not alluding to hive mind interconnected black box trading, sociological arguments, intelligence warfare, political manipulation, or The Borg. This was to tie two trading discipline edu posts together with a market psychology strategy.
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A previous ed contribution 
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The other ed contribution 
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The previous forecast contribution: 
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The next BTC contribution 
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