Silk Road forums
Discussion => Silk Road discussion => Topic started by: lelmeriodici on March 26, 2013, 03:56 am
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Just wanted to share a little advice I just typed up to someone in a PM, it's a little trick I recently figured out. I'm lazy, so I'll just copy the original text of the PM (I'll leave it outside quotes so you can actually read it):
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Yeah, it's something I just figured out the other day and I'm more than happy to share. I think we'll be the only two who know about this, I haven't heard of anyone else figuring this out. 8)
If you go to mtgox.com and look at the 'Weighted Average' (in the upper right hand corner) you'll find the number used to calculate the value of 1 BTC in USD throughout Silk Road. If you put something in your SR cart and go to the cart page, you'll see the number there as well (plus or minus 5% for whatever reason, possibly just delay). This number is steadier than the "Last Price" you see everywhere on exchanges because it is a weighted average of the prices over the past 24 hours. The "Last Price" is a quote of the price of the last transaction that occurred on the exchange, this number can vary wildly (look at the tall red line at 5:30 here: http://bitcoincharts.com/charts/mtgoxUSD#rg2zig30-minztgOzm1g48zm2g90 the top of the line is the highest price Bitcoins were being sold for in that 30 minute interval, the bottom of the line is the cheapest they were going for –– about a $6, or 9%, difference in just 30 minutes).
In order to find the best time to convert USD to BTC and then the best time to spend BTC on something pegged to the USD (as 99% of SR things are), you can use charts that show both values, the last price and the weighted average. Take a look at these charts
10 day / 1 hour - http://bitcoincharts.com/charts/mtgoxUSD#rg10zigHourlyztgSza1gWMAzm1g12zm2g90zv
5 day / 1 hour - http://bitcoincharts.com/charts/mtgoxUSD#rg5zigHourlyztgSza1gWMAzm1g24zm2g90zv
1 day / 15 minutes - http://bitcoincharts.com/charts/mtgoxUSD#rg1zig15-minztgSza1gWMAzm1g96zm2g90zv
Note: If you're not familiar with candle stick charts you can change the 'Chart Type' to median price for now, then go read up candle sticks, they're great. Also, you may want to uncheck "Show Volume Bars" to begin with. You'll notice that each chart has a weighted average, shown on the graph with a brown line. The period number put in the little box varies depending on the graph resolution selected under "Time Period." If it's 1 minute, the value in the box is 1440, since there are 1440 minutes in one day. If it's 5 minutes, the value is 288. 15 minutes = 96, 30 min = 48, 1 hour = 24, 2 hours = 12, and so on.
The brown line on each of these is the 24 hour weighted average, the number used on SR. It varies, however, from the price Bitcoins are bought and sold at, the "Last Price," indicated by the candlesticks or dark blue line. By looking at the "Last Price" and checking quotes on Mt.Gox, you are able to see in advance where the value of your Bitcoins is headed and react accordingly. If you look at Mt.Gox and see the BTC/USD is up to $95, you might think it's a great time to go on SR and start buying stuff. However, if it's only been at $95 for 1 hour and it was below $70 for the previous 23 hours, the weighted average hasn't had time to adjust accordingly, so wait it out for that little brown line to start creeping up. Conversely, if see the "Last Price" BTC/USD tanking, you will have a few hours to spend those coins before you really start to lose value.
Last night I was going to buy something on SR worth a few hundred USD, but I saw that value of Bitcoins (the "Last Price") was a few dollars above the weighted average. I decided to go to bed without buying since the price kept going up quickly. With about 9 BTC in SR and the weighted average going up 17 cents per hour, I could have another $15 in my account after 8 hours of sleep and I could hold on to my Bitcoins if the growth continued. When I awoke, I had about $17 more in my account and Bitcoins began their climb to an all time high of 77.5. I continued to hold on to them, even as the Bitcoin eventually went down from 77.5 to 73.5 because the weighted average was still lagging behind this sudden increase in value. Then, right as SR went offline, the two intersected, marking the beginning of a downturn in the weighted price. Right then, when the blue line and the brown line intersect, is the best time to buy.
This little trick of course only works when you're buying things with BTC that are pegged to the USD via a 24-hour weighted price. It also works best with larger amount of money, with just one BTC I would have made only $1.88 overnight.
Now you know the secret to timing your transactions. 8) Hope this makes sense. Feel free to ask me any questions you have.
lelmeriodici
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By the way I anticipate comments saying that I'm screwing vendors by giving them coins when they are tanking. That's a valid concern, but I don't think vendors sell their coins immediately. They fluctuate before they sell them as it is.
lelmeriodici
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Bitcoins are similar to shares in a company publicly traded on wall street. You can invest money can buy them at price X and then resell higher at price Y. Works best when the price of btc is fluctuating a lot like the last few days. I was able to make some money too, buying at $63 & selling at $73.5.
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Yes, namuld, you can certainly make money just trading Bitcoins on an exchange like Mt.Gox or CampBX, but buying on SR (which uses the weighted average) changes the game a bit. As I type the weighted mean is $7 below the last price!
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cool info.
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thats good info lelmeriodici thanks for sharing - you get my first +1 :)
Do those graphs you linked update in real time or do you need to refresh them to see the changes?
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Thanks, ladyjane. Those graphs update every few minutes automatically, but I wouldn't call it real time. Mt.Gox updates their figures every 60 seconds, so nothing is quite real time. If you do want a faster graph, however, look at these:
http://bitcoin.clarkmoody.com/
http://bitcoinity.org/markets?theme=dark
lelmeriodici
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so am i correct in saying its around the ideal time to buy because the blue line and brown line are matching up (or really close)
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Yes, in fact I placed an order 15 minutes ago. Now, however, its going up again....
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Well done lelmeriodici. +1
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Your awesome lelmeriodici ---- + 1234
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Why is BBB always so rude.
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Yeah, you can make some serious money if you just set a limit order for 20% less than what the BTC/USD is at right now, and just wait for it to crash (as it will) then work its way back up. $47 to $90 is awesome!
lelmeriodici