Quote from: spazcoin on May 23, 2013, 09:20:36 AM

If you made an automated trade every time the EMA 10 and EMA 21 lines crossed during the current flat period, you would very likely lose money due to the high 0.25-0.6% MtGox fees. So what's the best strategy to mitigate this effect of a very flat market?
1) Turn bot on/off when the market is flat, but you'd miss the beginning of the next volatile spike due to some new report.
2) Instead of trading exactly when the 10/21 lines cross, build some hysteresis in, for instance the two averages must be at least 0.6% apart - but you'd lag getting into or out of any large price swings, decreasing profitability.
3) GoomBoo said he's only trading daily. Perhaps at that timescale there are fewer false-positive triggers?

I feel that the current flat market is very different than the high volatility over the previous months.

Thank you for the questions, I'm glad you've learned from the thread. Here's my thoughts on your questions:

- If you are being chopped up (trading too much / too many false signals), I suggest moving to a higher timeframe. As you mentioned, I am trading daily for this reason. The large spread (difference between bid and ask) and large commission (MtGox fee) reward strategies which don't engage in too much trading. The actions of trading (crossing the bid-ask spread and paying commissions) really add up at the end of the day.

- I can't speak about the trading bot you mentioned (I wasn't involved in its creation or maintenance), but if the 10/21 is too active, I suggest lengthening the period of moving averages used (provided you have backtested the combination and found it to be within your risk tolerance).

- Waiting until some threshold is reached is a popular method of improving moving average crossover systems. There are hundreds of variants of the original strategy and I definitely encourage you to test these concepts.