On Small Profit Indicators and Long-Term Analysis – Profiting with Ethereum at Kraken

FOREX may have a holiday on the weekends, but in reflecting about a previous week’s trends, analysis may certainly not have any such holiday.

Not as though to indulge the whimsy of any passing Unicorns or of the Bitcoin community’s latently centralized empires of the early adopter’s mining megaliths, for all of the slow-moving trends and overall limited volumes being bought and sold in the Bitcoin and altcoin exchanges of the Modern Web, daily, a short practice in day trading with Bitcoin may serve to make for an interesting manner of profit indicator. To such an effect, the thesis of profiting in Bitcoin day trading – though to a very small net profit – may be reinforced with a literal proof of profit, as to which one presents another thesis: On following a “Down Trend” in the Kraken ETHXBT exchange, to a net profit in ETH Volume. 

It is no secretive kind of a system denoted in that article. Rather, it is a simple algebraic inversion of a strategy of “Buy Low, Sell High,” factored onto the trend of an exchange momentarily favoring the Base Currency of a currency pair – in which, the currency pair is ETHXBT i.e Ethereum and Bitcoin, and the Base Currency therefore, Ethereum. Though the “Down trend” in the market does not immediately favor a volume of Ethereum juxtaposed to a volume of Bitcoin, but in following the trend with a series of subsequent tades, it may serve to net a profit overall in accumulation of a greater volume of Ethereum altcoin – even so far a that it ultimately serves as a profit in a single reserve currency.

The ETHXBT exchange being one of the more liquid exchanges at Kraken, but of course – in the peculiar characteristics of the Bitcoin and altcoin exchanges – it may not be terribly easy to illustrate any quick and hugely profitable manner of a profit indicator with those exchanges, sufficient to indulge the no-doubt many of us looking for quick and hugely profitable investments, hypothetically.

That a profit of approximately $2 is a profit nonetheless, a simple system to such an effect is illustrated in the article – as linked-to in the previous. It is, ostensibly, a successful system, thus – as it gains a net profit to a manner of not any ethical or material loss – of course it might seem like a greater profit if more volume was invested immediately, but – then again – if more of a volume had been invested, immediately, then in the particular dyamics of that singular exchange, the trade pattern may not ever have advanced at all, not even to a net of $2 profit.

Contrasted to any manner of a broker’s leverage as may be available for trades posted in a FOREX exchange, any trades made in the Bitcoin and altcoin exchanges may be made without a calculable leverage, such that – ostensibly – if a leverage option was available, it might otherwise serve to “Level the playing field” as for entry by low-volume investors in a market then materially shared with high-volume investors and not at any loss to either scale of investment, then. At some point in time, however, Kraken had stopped offering any option for leverage as an option on bids — and thus, we are all left with a 1:1 leverage ratio. We must therefore all contend at a 1:1 scale  with all of the market-clogging large volumes levied at singular price-points on the Bitcoin and altcoin markets.

Regardless, it may be theoretically possible to turn a profit in trading in the Bitcoin and altcoin markets anyway. It may be theoretically possible, but a profit indicator as such might not be able to advance at any more than a one tenth of glacial pace.One may credit, mostly, the — as previously denoted — the market-clogging large volumes levied at singular price-points on the market.

As may be logically and algebraically illustrated of a history of  market exchanges at Kraken, when the market rate is advancing along  as would be under any singular market trend – such as towards an immediate favor of volumes in Bitcoin, in the ETHXBT market’s latest trend – the trend ceases to progress forward by any appreciable magnitude, when the market exchanges must first buy or sell off a large volume of Bitcoin, e.g. at a scale of 1000 or more Bitcoin invested alongside volumes of e.g 0.5 Bitcoin at any single price point.

That even as a slow-going trend it is certainly to a learning experience, the profit of $2 might not seem completely matched by one’s greater understanding about the singular market, then. In short, the absence of any system of leverage for bids, such that  – if it was available and implemented well – could serve to “Level the playing field”  for all investors, the absence of any such leveraging system … it is just as it is?

Of course, then, although the FOREX exchanges are always closed for the weekend, but so far as the week’s previous market data in FOREX, itself, may be available via any single trading platform – e.g the boldly if not intoxicatingly overwhelming MetaTrader platform (MT4) (MT5) …. and its nonetheless intriguing, if not in all ways immediately simplistic MQL (MQL4) (MQL5) programming language – both of which may available with most brokers on FOREX … thus, the analysis need not take a holiday.

The simple, algebraic logic of a system might ever seem obscured for its description, perhaps? If so, but perhaps a further proof may serve to illustrate how an algebraic inversion of “Buy Low, Sell High” and a $2 profit has become – in all ways already – quite a profound learning experience, after all.

A Short Thesis About Trend Analysis

Having taken up a manner of a hands-on study of trading practices, in studying about the Kraken Bitcoin/altcoin exchange, and lately diversifying my own attentions also onto a domain of FOREX exchanges, it’s proving to be a nice diversion aside to the limited canon of the scholastic fare of my own immediate studies. As I am certain that there may be any number of numeric methods that may serve to be of any notable relevance for numeric and semantic analysis of exchange trends, and the immediate trends of a Kraken or FOREX currency pair exchange may not seem in any ways immediately easy for anyone to politicize in any regards – moreover, that any number of trade offers may be posted to any such exchange, ideally to a real, ethically cogent, and capital profit in the transaction – I believe that it may represent something close to an ideal setting for succeeding in capital transactions, but – of course – beside the convenience of so many web services, yet it may not seem in all ways an instantly accessible thing to succeed at day trading, whether with Kraken or with any single broker at FOREX.

Not as though to mix up the academia of applications of numeric methods in practcices of electrical engineering and of statistical methods in practices of currency trading, theoretically the dynamic and socially responsive nature of currency exchange rates – though not in so far like a physical electrical signal – an exchange rate under any single currency pair – in any single broker or exchange – the singular rate represents, to a perspective, a quantity that changes over a duration of time.

Of course, the manner in which a currency rate changes over time – as whether to any manner of a remarkable “Up Trend” or “Down Trend” of any single currency when traded immediately to any single other currency – the hypothetical trend may seem to differ, to an extent, depending on the scale of durations of time at which the respective market rate is calculated..

Adopting a thesis of that a linear trend line as r = mt + b is reified of an exchange rate when any three or more coordinates of time and rate as (t, r) are “On” the same trend line, and that the slope of the linear trend line – i.e the value of m in the formula – that the slope of a trend line, as such, may be interpreted as representing a trend across the duration and scale of the graph of r = mt + b … but the concept of scale, as such, may not seem to occur naturally of the continuous geometric model.

In a sense, such manner of scale would be semantically analogous to a sampling rate in a telemetry analysis about a physical electrical system. Assuming that the numeric magnitude of an exchange rate is changing continuously across exchange transactions, in a duration¹ of an exchange’s forward progress, in that regards: The magnitude of an exchange rate might then be represented as it being analogous to the magnitude of voltage, current, inductance, or other physically measurable or mathematically calculable quantity of a closed loop electrical system.

That any manner of a measure of a quantity of a time-varying manitude – that a measured or calculated magnitude, thus in an abstract sense, may represent a numeric datum to a numeric analysis, but – of course – there may be some principally material differences as to the nature of each measurement system of which the respective datum is produced.

Thus, in a model of numeric analysis of trends of rates, in any principally algebraic and/or geometric model, the model and the analysis itself may not be completely removed of the measurement system by which the data is calculated to the model. Assuming that an exchange rate would be calculated in all of a materially accurate regards, and with no lengthy criticism as across the analogy about electrical systems, this short thesis article will presently return to a topic of sampling rates.

It may be, in short, to a simple synopsis about the meaning of different scales in graphs about exchange rates, viz a viz OANDA fxTrade for Android

OANDA fxTrade for Android – 1 Day Graph of AUDUSD

OANDA fxTrade for Android – 1 Hour Graph of AUDUSD

OANDA fxTrade for Android – 1 Minute Graph of AUDUSD

The respective graphs differ on a basis as of the sampling rate for the graphing of the exchange rate data, in each respective graph. All three of the graphs are from the same approximate instant of time – i.e at approximately 6:50 in the morning, in local wall clock time. All three of the graphs are consistent at scale – each graph being developed onto a progressively differing duration of magnitude of sample rate, for modeling of changes in the magnitude of the same market rate onto the single currency pair, in the example – however, the three graphs may seem to differ visually, in any immediate view.

Thus, without delving too deeply into a mathematical analysis of the respective graphs, perhaps this simple example may serve to illustrate an intuitive thesis as in regards to the relevance of magnitude of sample rate in graphs for trend analysis.

 

Notes:

1. thus, towards a discussion of the by-in-large slow-moving dynamics of exchange rates at Kraken, so far as that any one the exchanges may not be seeing a lot of volume being transferred in any short time. Candidly, such slow-moving exchanges may not allow for any lot of a quick turnover to a capital profit in the exchange, but – in consideration – perhaps it may serve as something of an introduction to a simple mechanics of trading in a capital exchange.