Back in Action... maybe

Well I've decided to start writing posts again, let's see how long I keep at it this time ;)

I wanted this to be a professional blog, with oxford grammar and technical topics, but my interests change frequently. I'm in a constant state of discovery, and I usually feel too humbled to assert myself as a publisher(ha) on any one topic. Maybe that's all normal.

Time seems more valuable each day. Between two jobs I can hardly find time to really probe my curiosities. I do have time for some though ;) I'm lucky enough to be working for a small ISP that allows for a late afternoon/evening work shift. My mornings are completely free, so I've passed my Series 56 and saved up some initial capital to start day trading. I went live early last week and I can't believe how eye opening this process has been.

It's late so I'll be keeping this short. I'm obviously a little nooblet when it comes to trading, but I was expecting daily number crunching and mind boggling formulas that would force me into deep calculations. The Series 56 was somewhat technical, more about the numbering of regulations than anything else.

From the bit I've read in a Mark Douglas book called 'The Disciplined Trader' I've realized the markets give a trader so much freedom, so much control over his own destiny, that the main reason for failure is not always the lack of direction, but the lack of perseverance to focus on that direction, the very root of which are subjects that I can relate to anything in life.

What I'm reading and learning to be the foundation of any successful trader is attitude, expectation, personal philosophy; things that I didn't expect to be learning at all. The book is covering simple topics about objectivity and discipline, with interesting points. For instance the markets are a reflection of yourself. The market does not show pity, it doesn't listen to you, you can't control it(at least not for long), and it's continuous. The only thing you can control is yourself and what you do. The successful trader has unlimited freedom and understands he is completely accountable.

The book refers to the market as a river, with participants making up the waves. There's a small group that consistently profit from the market, and these are individuals that know exactly what they're doing and why, they are the highest points on a wave in the middle is everyone else trying to stay as close to these people as possible, being lower and lower points on a wave going outwards from the middle with the lowest point of the wave being the trader last to jump in and out, the clueless trader.

I've always been interested in how we think and why we think the way we do, and this book brings that deduction to trading. The main idea being that once you surpass your own limitations, you'll be able to identify these limitations as a movement in the market (Easier said than done!)

There's also so many emotions that come into play in a trade. To actually analyze what these emotions are and why they come up has changed my trading style already. I'm starting to understand how a sloppy entrance into a trade can snowball into not only a bad trade, but a bad habit, and eventually a hole in my wallet. Big losses become 'psychological damage' which manifests fear. Fear being the one thing that paralyzes a poet or an artist from expressing himself through his craft. I've only read a small piece of the book but I'll have to pick a topic like fear or greed and cover them one at a time. I should probably finish at least one book first ha. Anyway that's enough for tonight!

The Spotlight on High Frequency Trading

Michael Lewis, had a segment on 60 minutes(watch the link, seriously) to discuss the topic of his new book, "Flash Boys: A Wall Street Revolt". Lewis was a bond salesman in the '80s and '90s, which was the subject of one of his first notable works, "Liar's Poker". He's also written "Moneyball" and "The Big Short", among other works. The first line in his 60 minute segment was;

"Stock Market's rigged." BAM!

It's not this line that's exciting, it's that there's someone who has decided to do something about it. Brad Katsuyama started IEX, an exchange that's actually focusing on creating a fair marketplace, which is extremely refreshing to see from an intermediary.

The 60 minute spot scratches the surface, but in short, HFT(High Frequency Traders) in the market receive market order data from investors before it's reflected on the exchange, then act on those orders, again before it's reflected on the exchange. This happens SO FAST that the ordinary investor's order isn't completely filled with traditional routing, effectively frontrunning the investor. The biggest players in the game have price data before the exchanges do. The solution Brad Katsuyama and company came up with is clever; staggering their routing, so that the order is sent to the furthest exchange first, and the closest exchange last. All these orders come to their destination exchanges within one or two milliseconds of each other, cutting out the frontrunner.

Here's a clip from CNBC with William O'Brien(President of Global Markets at BATS), Michael Lewis, and Brad Katsuyama hashing it out.


O'Brien is shocked that anyone would vilify ANYTHING about the industry. Haven't we seen this card played before? Yes, because the financial industry has repeatedly shown itself to be the pinnacle of virtue and ethics! Yes, of course! How dare ANYONE claim there's frontrunning! ...with empirical data... and testable ideas... that any trader can verify for themselves...

Doesn't this emotional outburst show your cards more than it hides them? You claim to be upset because you think Lewis and Katsuyama are scaring people away from the market and attempting to gain traction for IEX, but I see no crashes... I see record highs... An ordinary investor is ATTRACTED to the market when whistle blowers like this come to light. This kind of unveiling takes power from those that have no divine right to it. This is EXACTLY what the market needs to restore investor confidence.

Turns out O'Brien was lying anyway.

I have yet to read the book, but I've ordered it.

"You're not really providing liquidity if you're not taking market risk." - Lewis

Bitcoin Crash and the Alternatives...

After hitting a great high of $1242 back in November on the Mt Gox exchange, Bitcoin has recently taken a plunge down to $220. The majority of this huge loss occurred just recently in early February. The price steadily dropped from $900 to the $220 price point in just 16 days!
Click on the image below to see a screenshot, or better yet just visit the widget yourself here(use the scroll wheel of your mouse to zoom in and out, time frame options can be found in the bottom left.)
The Mt Gox exchange, formally one of the largest Bitcoin exchanges in the world, has even halted withdrawals. Ironically this recent run on their exchange seems to be stemming from failed USD withdrawals. Users wait weeks after requesting their money, only to see the transaction fail. Some users report that even a repeat attempt fails. This problem of inconsistent payouts coupled with vague "we're working on it" responses from Mt Gox could be eroding the very trust they need for the exchange to function. The exchange seems to constantly be tackling some giant issue, from delayed account creation, to DDOS attacks, to a 30% payout success rate.

If you're at all interested, this coinwatch blog has some more detailed info on the crash.
It's sad to see such low volume being pumped through the exchange nowadays, and it's not uncommon to see a $20 spread. Hopefully the exchange can regain some traction and finally make a noticeable dent in their technical issues(of which they've been having for a suspiciously long time). The bigger concern seems to be the lack of feedback from Mt Gox. There's just no sense of damage control coming from them, as if this is completely normal.
Granted, this is a completely unregulated, extremely volatile market based on a currency that doesn't tangibly exist...
When you've swallowed that, bitstamp is showing a price of double that of Mt Gox, currently sitting at $615 while Mt Gox at $300. Since this currency is meant for easy transfer, what's to stop a purchase on Mt Gox, a transfer to Bitstamp, then a sell off? AKA arbitrage. What stops most arbitrage is simply that some exchanges do not accept deposits or withdrawals in USD.
In the meantime there are plenty of Litecoin derivative cryptocurrencies that have popped up and become reasonably profitable as a form of triangular arbitrage. For instance dogecoin, has absolutely no mining limit. This is a currency that can be created at will, has a mining difficulty just like bitcoin, but absolutely no limit on the amount that can be mined. This is a completely intangible currency that can be converted to USD, without limit on creation. It'll be interesting to see if/when the doge market becomes extremely saturated. Would this force the value down? What's currently keeping the value up?
Fascinating stuff!

Bitcoin Trading and API Setup

So I'm sure you've heard about bitcoins, and how valuable they've become since their inception. The value of a single bitcoin was as high as $266 on April 9th, 2013, and is currently fluctuating around $115(according to the MtGox exchange). I assume you understand what a bitcoin is, if you have absolutely no clue, check out the FAQ on the bitcoin wiki.

There are different exchanges around the world that will take my USD or whatever currency, and let me invest in bitcoins. I can always mine bitcoins, but the focus of this post is on trading bitcoins. There's currently no licensing required to trade bitcoins, and no minimum deposit for a trading account. An exchange is just an organized market for trading. The most prominent exchange with the highest trading volume is MtGox which seems to be based out of Japan. Recently they've been caught in some trouble, causing the US Federal Gov't to get involved. There are other exchanges like campbx, but the price of a bitcoin between exchanges vary (arbitrage anyone?!). The price of a bitcoin at campbx may be a couple dollars off MtGox at any given time, and MtGox could trade at values that campbx never reaches just because there are more people trading on MtGox to move the price.

Before going any further it's important to note how much information I can see about the orders. Ideally I would want to see not only the highest bid and offer (seeing only the top bid and offer is the 'top of the orderbook'), but the second highest bid, and the third, and so on (seeing all orders would be full book rather than top of book). It also makes a huge difference to see the volume of the order. If someone puts an order in to buy bitcoins, I want to know how many bitcoins they're looking to buy or sell. There are 3 different levels of order insight in tradable markets, Level I, Level II, and Level III. They're described fairly well here at investopedia.

Ideally I would want Level III. I want to be able to see all the orders, the size of those orders, who's ordering, and I want to be able to put an order in at any time to execute a trade at the press of a keystroke. Unfortunately once I set up an account on any bitcoin exchange, the options given by the site UI are barely giving me Level I access, and it's all with the mouse(ugh). So trading is tedious and is meant to be for long term holding. I can only input one buy or sell order at a time, and it's extremely time consuming to flip through different pages of the exchange's site, trying to modify, cancel, or add more orders.

Luckily there's hope! All I have to do is write my own program, that connects to the exchange's API through a full-duplex websocket connection. A nice challenge would be to make an program that will make it easy to trade on multiple exchanges, all with a simple keystroke, such as with popular trading platforms for stock trading. There's a nice charting and Level II type resource for bitcoin that's publically available, and that's bitcoin.clarkmoody.com. If you want to dedicate a screen just to the chart, just go to http://bitcoin.clarkmoody.com/widget/chart/. As you can see the service only reflects prices on MtGox. It's nice just because the clarkmoody site uses the charts from RTBTC, and RTBTC is currently in private beta, so there's no real other way of getting these charts short of creating your own or begging RTBTC.

Resetting Your Address Bar Search Engine (Firefox)

Remember those sneaky AVG and Ask toolbars that are hidden in certain software installation wizards? There's others, but I've noticed AVG is extra invasive as it changes your default homepage and the default search engine for your address bar. The most recent time I contracted the AVG toolbar bologna there was no question. It was either my installation goes through with the AVG bar, or not at all.

These sneaky installations really benefits AVG, since they hijack your search engine option, every query sent through them gives them some money from yahoo or whichever engine they're routing to. It's funny but this is how firefox originally got most of its funding. The homepage for firefox is a google search bar, but every query sent through the firefox version gives mozilla a little coin. I recently found this nifty add on for firefox that puts all these sneaky settings back to default.
It's called SearchReset, https://addons.mozilla.org/en-US/firefox/addon/searchreset/

All this temporary add on does is change some settings in about:config

Mining an Asteroid

The idea of mining an asteroid is astonishing. Let's explore this idea a bit more.

Here's a video showing us that there have been more than 500,000 asteroids discovered orbiting our sun between Mars and Jupiter. The 'Asteroid Belt'.

Elon Musk, the same man who started Paypal and Tesla motors also started Space X. Space X seems to be focusing on commercial space flight. But there's also a company called Planetary Exploration, which is planning to send drones to mine asteroids. Strangely the founder of Planetary Exploration said the goal is not to mine minerals and bring them back to Earth, but to refine them where they are found, creating usable resources for a space adventure.

Here's a nice TED talk about how we would divert an asteroid too big to blow up that was headed straight for Earth. We could change its trajectory, and have it orbit our planet, or our moon, then mine it!


To see companies ALREADY hopping on this idea is mind blowing! Many of the asteroids in the asteroid belt are rich with all kinds of rare earth minerals and even water. Water can be broken down into hydrogen and oxygen on site to create rocket fuel. So imagine a space mission that will rely on fuel that's sitting on an asteroid, which we've pulled into orbit around our moon or mars. And the fuel has been mined and refined by drones sent there months earlier. It's like some sort of science fiction, and yet there are already billion dollar private companies turning these ideas into reality. Asteroid space stations here we come :O

Cat 5 Cabling Tips

Here's a nice video describing the wiring difference between 568A and 568B RJ45 modular plugs.



here's also a nice video showing how to properly punch down a cat5 into a 66 block.



I like the BlOG acronym for remembing the Blue, Orange, Green, Brown wire order. Always remember the white primary color; white blue is first, then blue, same for orange, and so on.

Here's a useful diagram:


It's also useful to note that PCs send information on pins 1 and 2, and receive information on pins 3 and 6. So you would need a 'cross over' cable if you wanted a PC to talk directly with another PC. 

PC to PC = cross over cable. Some machines are smart enough that such a cable isn't needed, but that can be our secret.

Straight through cables are for plugging to a jack, meaning both sides of the RJ45 cord are 568A or 568B. This is why you've probably had trouble connecting two PCs directly. With the straight through cable both PCs are sending on pins 1 and 2, and both receiving on 3 and 6. This doesn't work! PC 1 needs to receive on the send pins of PC 2! Thus the cross over cable is born! This means the cable is 568A on one side, and 568B on the other! Look at the above diagram again... notice how the Orange White and Orange wires from 568A on pins 3 and 6(receiving pins) are pins 1 and 2(sending pins) on 568B. It makes sense now right?

You also need a cross over cable between switches and hubs. PC to switch just needs a straight through cable. A mod plug adapter is used to turn a connection from 568 A to 568 B, or vice versa. Cheers!