CNBC's Fast Money the perfect Bitcoin counter-indicator? For this trader it works

24 Oct, 2018
by Will Heasman
Analysis
CNBC's Fast Money the perfect Bitcoin counter-indicator? For this trader it works

Forget Bollinger bands and moving averages, CNBC’s Fast Money is the real indicator of price action, or should that be counter indicator…

A few months ago it was reported that CNBC had become a little bit of a meme within the crypto space for their empirical knack of indicating the exact opposite of what was about to occur within the market; creating the perfect counter-trend… 

Contrarian trading is nothing new, however, typically, indications come from attentive analysis of charts and confirmation of a bearish pattern; CNBC has just streamlined the process, how considerate.

It all started with crypto investor and analyst, Jacob Canfield, who first noticed this contra-trend back in august of this year:

To establish his thesis, Canfield systematically collated every bullish and bearish tweet from the twitter account of CNBC’s Fast Money and put it in a neat little chart (see above). Canfield asserts that using CNBC as a counter-indicator gave him an (almost unbelievable) 95% accuracy for Bitcoin (BTC) trades.

As a result, one trader took it upon themselves to put the theory to the test. With one hundred dollars on the line and some pretty sturdy evidence behind them, these trades can (theoretically) only have one outcome. In order to keep their head above water, the trader keeps a keen eye on every single tweet emanating from the one and only account they follow: CNBC’s Fast Money.

As of writing @indicatorCNBC is at 11 out of 13 winning trades, with a counter-trend efficiency of 84.6%. Their gains currently amount to $ 166.56, a fair profit of $66.56.

So, does this phenomenon come from a mistrust of mainstream media? Is it a meme that became a self-fulfilling prophecy? Or is there something more sinister at play?

Some believe CNBC purposely give counter information in order to gain liquidity for their short positions, however other than anecdotal conjecture this is completely unverified.

Chepicap spoke to counter trader @indicatorCNBC (close to 5000 followers on Twitter now )to get their take on the situation:

Q: How has your counter-trading been going so far?

A: Good! I started around a month ago and despite some issues with Risk Management and Stop Losses that made my account tremble, I’m nearing +50% gains, which is pretty amazing considering I just counter-trade what a Twitter accounts posts.

 Q: How long do you plan on carrying on for?

A: Until the fun is over! I started this as a small joke but people are actually enjoying it a lot. I started with a 100$, so getting to 1000$ would be huge. If I start being wrong, however, I’m ready to ride it to 0. I consider this money to be lost so if we die it will be following our strategy until the end.

Q: Do you believe this is a genuine phenomenon or a purely coincidental?

A: I think it can’t be coincidental at this point. @ILOVECRYPT0 had a chart that showed ~95% accuracy since January. And the whole point of my account is that, besides the joke, it actually is working.

Q: Why do you think CNBC has become a counter-indicator?

A: It makes sense if you think about it. CNBC is consumed exclusively by retail traders. No single informed, professional, consistently profitable trader is following their calls. For the financial markets to work someone must lose, and it makes sense that these will be the people who have no experience or knowledge whatsoever. Therefore, it makes sense to take the other side of their trade, and counter-trade CNBC.

Q: (tongue firmly in cheek) Do you think this has the potential to become an official strategy in TA?

A: I think it shouldn’t. It’s good as a joke, and maybe to gamble some small money with it, but newcomers should be warned this is not the way to go to become a successful trader. This “strategy” lacks all of the things that will make you profitable on the long-term, so make sure you understand Trading thoroughly before throwing money at it just because “the CNBC Indicator works”.

Q: In your opinion, is there any weight to the theory that CNBC is purposely misleading people in order to gain on their own market positions?

 A: There has been a lot of talk about it recently. I think the accuracy is incredible, but talking about them organizing it is very serious accusations that would involve several felonies. There’s no evidence on it, so all I can say is let’s forget about that and enjoy the strategy while it lasts!

So there we have it… An interesting tactic, but perhaps not the best long-term strategy.

Alas, it doesn’t matter much now anyway, the intern who runs CNBC fast money’s Twitter has either quit or been fired … probably the latter.

Keep doing you, CNBC's Fast Money...

Read more: CNBC remains a counter indicator to BTC price following fake news

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Read more about: Bitcoin (BTC)

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