One of the Most Devilish Conundrums Faced by Traders

One of the most devilish conundrums faced by traders is what to do when an instrument they are following gives a valid signal but this signal is either at an all-time high or low. Such a situation has recently occurred with wheat, which according to my system gave a valid sell signal as it moved to a new low.

Another example of this is the GBPUSD daily chart for November 2015 to February 2016. It can be seen that within the stipulated period, the pair dropped 1500 pips, while rallies along the way offered short-selling opportunities. Now, when everything looked oversold at the end of February 2016, and you trading system gave you a valid “sell” signal, would you sell? Or would you simply go against the trend or buy?

The rues that govern trading often run counter to the rules that seem to govern the rest of society – in our daily lives we seem to have a built in barometer of what we think things are worth. This barometer is generally correct in our daily lives. For example, we know that if on Wednesday we walk into our local baker and the price of a loaf of bread has risen from $5.00 to $15.00 that we are being ripped off. Our value scale in this instance has worked. Similarly, if we walk into a car yard and see a car advertised for a fraction of its value we know that something strange is going on and all sorts of alarm bells go off.

Yet, in trading this inbuilt sense of the economics of life is useless. Granted, there are people who think they know what something is worth and they generate all manner of models and hyperbole to justify this judgment. They make the mistake of believing that the market is somehow listening to their internal narrative. These are the sort of people who are convinced that oil is worth $100 a barrel and that the market is just wrong. The only value in trading that is true and correct at all times is the value given to something by the market. You will often hear statements along the lines that the market is incorrect in its assessment of the value of something. As a basic principle the market can never be wrong – if we assume that the market is a synthesis of all opinions and knowledge then the price and trend it sets for an instrument is correct and anything else is simply tilting at windmills.

As a basic rule we have no idea how high or how low prices will go.

Author: Chris Tate

Article reproduced with kind permission of www.tradinggame.com.au. For more helpful articles, trading products and services, and to pick up a free 5-part e-course, please visit: http://tradinggame.com.au

What Super Traders Don’t Want You To Know: Super Traders

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BITCOIN: IS THE CRYPTO-CURRENCY DOOMED?

A high-profile Bitcoin developer has said the crypto-currency has failed and he will no longer take part in its development.

Mike Hearn, a Zurich-based developer and long-time proponent of Bitcoin, surprised many this weekend when he published a blog calling Bitcoin a "failed" project.

Mr Hearn, who had until recently been working on new software for the currency, says he has now sold all of his own bitcoins and will no longer take part in the crypto-currency's development.

So, is Bitcoin doomed?

What is Bitcoin?

Bitcoin is a crypto-currency - a system of digitally created and traded tokens to which value is assigned. Computers have to solve cryptographic problems in order to add blocks to the blockchain - a ledger that records every transaction that has ever occurred with Bitcoin.

In return, those computers receive bitcoins in a process known as bitcoin "mining".

Users have a "bitcoin address", to which bitcoins may be sent or from which they may be used.

Addresses are stored online in wallets that function like bank accounts.

Although most people refer to Bitcoin as a currency, it is worth noting that for regulatory reasons many countries - including the United States - have decided to define it as a commodity instead.

What are the problems?

The act of 'mining' Bitcoins is sometimes carried out by specially built hardware.

The act of mining bitcoins is sometimes carried out by specially built hardware

The biggest issue most bitcoin users acknowledge is how quickly new transactions can be processed. The size of blocks being added to the blockchain has been increasing steadily with the rise of Bitcoin.

As a result, the rate at which transactions can be processed has been slowing.

Indeed, some transactions face significant delays, hampering payments.

Some fear the network will eventually become oversaturated and cease to be usable.

Who is Mike Hearn?

Mike Hearn has advocated the adoption of software for Bitcoin called Bitcoin XT, which he helped to develop.

Mike Hearn has advocated the adoption of software for Bitcoin called Bitcoin XT, which he helped to develop.  Mike Hearn is a software developer who has worked on Bitcoin technologies for over five years.

In 2014, he left his job at Google to focus on Bitcoin full time.

He has worked closely with Bitcoin chief scientist Gavin Andresen on alternative software for Bitcoin called Bitcoin XT, which aims to address capacity issues facing the network.

Mr Andresen is generally thought of as next in the chain of influence over the currency's development after Bitcoin's mysterious founder, Satoshi Nakamoto.

How might the capacity of the network be increased?

Gavin Andresen, Bitcoin's Chief Scientist, had backed the Bitcoin XT.

Bitcoin's chief scientist Gavin Andresen had backed the Bitcoin XT project

Currently, each block can be no more than 1MB.

But in May last year, Mr Andresen said bigger ones should be adopted.

He later wrote, "It is more likely people [will] just stop using Bitcoin because transaction confirmation becomes increasingly unreliable."

The Bitcoin XT version developed by Mr Hearn, Mr Andresen and others offers to increase the block size limit to 8MB. There are alternatives, however.

Nic Cary, co-founder of Bitcoin start-up Blockchain, points to BitcoinClassic, which would increase the block size limit to 2MB.

Why is there a dispute over this?

There is often lively debate within the Bitcoin community over how the currency should be developed.

There is often lively debate within the Bitcoin community over how the currency should be developed.

Bitcoin's history as a "decentralised" currency has led to much hesitation over decisions that might change its fundamental nature. Any proposal relating to Bitcoin is likely to encourage fierce debate and, in some cases, stagnation.

Some have argued vehemently against Bitcoin XT, causing a deep divide in the community. The New York Times has reported that death threats had even been made against some Bitcoin developers.

Mr Cary says the need to update the block size limit is not as urgent as some say.

"This is a matter of perspective," he told the BBC.

"The Bitcoin network has been updated safely dozens of times and will continue to be the most reliable, affordable, and efficient way to send value around the world."

However, there are some who feel that Bitcoin's potential as a currency has already been exhausted.

"I'm sure there are smart people right now working out what the next generation [of Bitcoin] should look like but I have to say I'm not convinced that money or payments is the optimum [use] of the technology," Dave Birch, a director at consultancy firm Consult Hyperion, told the BBC.

Part of the problem was the lack of consensus over what Bitcoin was and how it should be used, he added.

How 'healthy' is Bitcoin?

In the past, Bitcoins stored in online exchanges have been lost or stolen - leaving their owners out of pocket.

In the past, Bitcoins stored in online exchanges have been lost or stolen - leaving their owners out of pocket. Bitcoin's price fell quite sharply over the weekend, following the publication of Mr Hearn's blog.

One bitcoin is now worth $380 (£265), down from about $430 on Thursday.

However, the price of Bitcoin is notoriously volatile.

It has been classed as the best performing currency in the world in 2015.

But authors of that analysis, The Money Project, also noted it was the worst performing currency the previous year.

Besides price, Bitcoin has also suffered from a litany of cases in which bitcoins have been stolen from online exchanges in which they were stored, in some cases due to negligence or poor security. Such incidents generally result in a complete loss of funds for the victims, since it is very difficult to trace where stolen bitcoins have been transferred.

Meanwhile, the currency continues to grow - a sign of good things to come, say many.

What will happen next?

An increasing number of businesses - even pubs - have started accepting Bitcoin.

An increasing number of businesses - even pubs - have started accepting Bitcoin

Bitcoin remains popular.

There is still huge interest in developing both the currency and technologies based on the blockchain idea of recording data.

It seems unlikely the currency will collapse overnight.

But it certainly look as though fundamental questions over how Bitcoin works are now coming to a head.

Whether the community that uses and supports Bitcoin will be able to come to a consensus on these matters remains to be seen.

Mr Hearn has lost faith in the project, of that there is no doubt.

But many others are refusing to throw in the towel just yet.

Source: http://www.bbc.com/news/technology-35343561

What Super Traders Don’t Want You To Know: Super Traders

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What Super Traders Don’t Want You To Know: Super Traders

THE LOOMING PROBLEM THAT COULD KILL BITCOIN

The way things are going, the digital currency Bitcoin will start to malfunction early next year. Transactions will become increasingly delayed, and the system of money now worth $3.3 billion will begin to die as its flakiness drives people away. So says Gavin Andresen, who in 2010 was designated chief caretaker of the code that powers Bitcoin by its shadowy creator. Andresen held the role of “core maintainer” during most of Bitcoin’s improbable rise; he stepped down last year but still remains heavily involved with the currency.

 Andresen’s gloomy prediction stems from the fact that Bitcoin can’t process more than seven transactions a second. That’s a tiny volume compared to the tens of thousands per second that payment systems like Visa can handle—and a limit he expects to start crippling Bitcoin early in 2016. It stems from the maximum size of the “blocks” that are added to the digital ledger of Bitcoin transactions, the blockchain, by people dubbed miners who run software that confirms Bitcoin transactions and creates new Bitcoin.

Andresen’s proposed solution triggered an uproar among people who use or work with Bitcoin when he introduced it two weeks ago. Rather than continuing to work with the developers who maintain Bitcoin’s code, Andresen released his solution in the form of an alternative version of the Bitcoin software called BitcoinXT and urged the community to switch over. If 75 percent of miners have adopted his fix after January 11, 2016, it will trigger a two-week grace period and then allow a “fork” of the blockchain with higher capacity. Critics consider that to be a reckless toying with Bitcoin’s future; Andresen, who now works on Bitcoin with the support of MIT’s Media Lab, says it is necessary to prevent the currency from strangling itself. He spoke with MIT Technology Review’s San Francisco bureau chief, Tom Simonite.

How serious is the problem of Bitcoin’s limited transaction rate?

It is urgent. Looking at the transaction volume on the Bitcoin network, we need to address it within the next four or five months. As we get closer and closer to the limit, bad things start to happen. Networks close to capacity get congested and unreliable. If you want reliability, you’ll have to start paying higher and higher fees on transactions, and there will be a point where fees get high enough that people stop using Bitcoin.

Why take the provocative step of releasing an entirely new version of Bitcoin?

It was a difficult decision. I’ve been lobbying pretty hard behind the scenes for the last eight months, but  was having trouble even getting developers to agree that there was a problem. I had to go public and actually release the code and let people essentially vote with their feet. Now that we’ve done that I think you see people finally coming around to the idea that this is a high priority problem. I’m not happy that it had to come to that, but I think in the long run it will be a good thing.

Some major Bitcoin companies have endorsed your proposed way of increasing the block size, and some miners have even adopted BitcoinXT. Other companies and prominent Bitcoin developers have attacked your move, and suggested alternative solutions—not all backed by working code—that are rapidly gaining support. What’s happening?

It’s somewhat chaotic. There’s no well-defined process for coming to a decision about changes to Bitcoin and there’s no one correct answer for how to solve this problem. Things are pretty messy – but that’s by design. There’s no central committee. There’s no single person making these decisions for Bitcoin; it takes consensus among the people running the software. It’s a good thing that decisions like this are really hard to make happen.

Do you think that consensus can be reached?

It’s pretty clear that the maximum blocksize is going to increase. I don’t know exactly how or exactly when. I don’t think it’s clear yet that my proposal will generate enough consensus among miners and the other ecosystem players.

What will happen if nothing is done?

Transactions will get unreliable and it’ll get worse and worse over time. My fear is there’ll be no critical event that causes people to react—Bitcoin just kind of has a long slow death. I’m trying to set off alarm bells for ‘You know, guys, if we don’t do this, Bitcoin will be dead in four years.’ It’s not easy to sell that, especially when there’s so much controversy.

If BitcoinXT activates, it will recognize existing Bitcoins. But not new Bitcoins created by miners who don’t switch. Is that dangerous?

It’s pretty hard to get left behind. Once the Bitcoin core software sees that 50 percent of mining power has upgraded and you haven’t, it’s going to warn you that you need to upgrade. It would be awfully difficult to be taken by surprise. The economic incentives to switch would be so strong—you want your Bitcoins to be the same Bitcoins that everyone else is using.

How widely established is Bitcoin now anyway?

It’s firmly established in a few niche areas and growing there. An early use case is people who pay international contractors in Bitcoin because it’s easier than figuring out how to transfer dollars into local currency. The major barrier to it going mainstream anywhere is there has to be some way of getting Bitcoin as part of your normal activity. Until part of your paycheck is regularly paid in Bitcoin, I’m not sure how it would really go mainstream. I can imagine places in the world where there are not functioning banking systems, or payroll systems, where it could go mainstream first, because you’re not trying to replace the way people are already doing something.

I still say do not invest your life savings in Bitcoin. It is still an experiment and it could still fail.

Source: https://www.technologyreview.com/s/540921/the-looming-problem-that-could-kill-bitcoin/ 

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Annual Trading Forecast on Alibaba (2016)

Alibaba stock (NYSE:BABA) has been making some bullish effort recently, which has given hope beyond a reasonable doubt that the bias for this year would be bullish.

The stock made some bullish attempt last year, but started coming down this year. At the lower Trendline, further bearish movement was rejected in February 2016, and since then the stock has been trading upwards.

So far, the price has been moving upwards as the RSI period 14 is above the level 50. This is a bullish signal, which means more and more supply levels would be breached this year.

This forecast is ended by the quote below:

“Stocks themselves are theoretical entities that are not much different than they were decades (or even centuries) ago. And human psychology is pretty constant over the ages - not that this makes it easy to deal with people.” - Dr Brian Bloch 

Azeez Mustapha

Market Analyst, Trading Signals Provider and Coach

What Super Traders Don’t Want You To Know: Super Traders

Source: http://uk.advfn.com/newspaper/authors/azeez-mustapha

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