Quote from: nii236 on July 21, 2013, 10:05:31 AM

If BTC goes down to 0 USD shouldn't the bot automatically keep buying BTC and keep my total balance the same?
If BTC goes up to 1 000 000 USD shouldn't the bot automatically keep selling BTC and keep my total balance the same?

If the above is true, why does my total balance drop by 20% just because the starting and ending prices of my simulation are different?

You are still 50% exposed to BTC price, so if BTC goes down your total worth goes down as well, it just doesn't go down as much as if you were exposed 100%. If BTC price goes up your total worth will also go up (but also not as much as if you were 100% in BTC). All the bot can do is keep your exposure to the risky asset at 50% all the time.

Its important to understand that and not use this bot with wrong expectations! This is a concave strategy and as such it will underperform in strong trends but it will outperform in ranging markets, so I an use it until the next bubble begins (which will come I am 100% convinced).

Also when using it you are helping reduce volatility because you are providing a (small) resistance against every pump and dump that they have to overcome (and pay for) and so for every dollar or BTC that is allocated to such a balancing strategy it will become a little bit more expensive for the pumpers and dumpers to move the market because: (1) You are making it a little bit more expensive for them to initiate a huge move instead of helping them and (2) if it moves you are taking a little bit of their profits away (you are front-running them with your rebalancing orders), reducing their profits instead of losing money to them.