Quote from: Newton on July 15, 2011, 10:54:11 PM

Proof?

How is 2.5% per _day_ not significant? This would make you $80,000 on a $10 investment in one year.

I call bullshit. Anyone can make a trading bot. Making a bot that profits 2.5% per day will not happen.

Quote from: Newton on July 15, 2011, 11:33:28 PM

Quote from: apetersson on July 15, 2011, 11:08:27 PM

i think the point is
he cannot scale the volume up since it would distort the market and thus the bot would stop working..

It isn't about volume, a 2.5% per day increase simply isn't possible. You can't do it with pennies either.

Its like saying you built an electric car. Cool, I'm following you. But then when you say it has 1000km range everyone stops listening (or you should). An electric car is has a hard limit by the joules per gram in your battery. A trading bot is limited by the stochastic process.

Initially, I was not inclined to defend myself against your first response, because it was naive and a knee jerk response to the post.

Your second post on the other hand is slightly more interesting due to the introduction of the fact that the market is intrinsically unpredictable.

You are correct... the market is by it's very nature unpredictable and there are many external and internal pressures that affect the price and movement of the btc->usd market.

Unlike an analyst who tries to PREDICT what the market will do by looking at past performance, external factors, and various indicators and comparing that to other, similiar products, a trading bot is REACTIVE.

In the simplified examples I gave of how a trading bot works, do you see at any point where it says "buys shares based on prediction that it will raise above X value"? The answer is no. What I said it that based on signals of HOW THE MARKET IS BEHAVING, it reacts and performs an action being one of 3 base reactions: buy, sell or hold. There is a little complexity in how it performs the buy and sell actions ( being unit buy, unit multibuy, max buy, unit sell, unit multisell, or hard stop )

In testing, and in the couple of days I performed live trades, it averaged 2.5% increase from the daily starting value. Some days it dropped , some days it did better.

The real issue is not in weither it can sustain a 2.5% growth, the real issue is can the MARKET scale to allow it to do so.

Quote from: apetersson on July 15, 2011, 11:08:27 PM

i think the point is
he cannot scale the volume up since it would distort the market and thus the bot would stop working..

apetersson and rizzn have both hit the nail on the head. A trading bot , with a little luck , could hold 2.5% gain on 200$ ( as tested ) every day without any issue... the market can absorb the < 5btc trades that the bot executes ( and in some cases < .2btc ) without being affected.

My bot "hard bought" and "hard sold" ( being buy's set at 100$usd and sells at 0.01usd to ensue that they executed completely since MTGox fills orders by consuming outstanding orders in value order... ie my 100$buy would first buy every btc it could get its paws on at 14.0001, then 14.0005, etc. , and sales working in the inverse fashion )

If you wanted to use a trading bot with an account funded with 10000$ , RIGHT NOW if I sold 260 btc ( not even 3500$ worth ) , according to the depth charts it would move the price down $0.05usd... thats the problem... you can not move any sort of volume needed to scale the bot to make the return on that 2.5% growth worth it, or sustain it.

Am I saying my bot would continue to make 2.5% a day? No... I said that it MADE 2.5% a day average based of a tiny trading account and a very short period of time... if algorithmic trading did not make money, HFT would not exist... do they make 2.5% a day? of course not... do they have weeks where they DO make 2.5% a day? Yes.

If I thought it could hold 2.5% a day, and the market could BEAR the growth involved there, I wouldn't be posting here... I would be laughing as I watch the zeros get added to my account.