Can you explain why you'd want to create this artificial price stability in the first place?
To ease the adoption of BitCoin as a currency.
Shouldn't you want free market as a libertarian?
I'm not a libertarian. I still do want a free market, however I also want a market that's not prone to total catastrophic implosion, just a little bit more.
People already vote with their dollars now so if bitcoin fails, it fails.
If the success or failure of BitCoin don't matter to you, why are you in this thread, let alone on this forum?
What makes you think people will put up the money necessary to implement your scheme?
I assume people on this forum are (as a whole) more interested in BitCoin's success than not.
What assurance would they have that the money they put up would not be swallowed?
Their faith in the actual value of BitCoin, and their willingness to lose a few cents if they're wrong.
What happens if someone wants a refund on their investment?
They stop and remove any bids they placed at the recommendation of the bot.
What's in it for them in the first place, if they put money up towards this?
Long-term stability.
Also, couldn't someone easily create schemes to drain money from this system since they'd know how it works?
Yes, if they had enough BitCoins to sell through the entire market and reach that very low price, and were willing to sell all their BitCoins at said very low price.
And why would outsiders want to participate in such a system?
Because they would like to see BitCoin succeed in the long term.
Are you anti-speculation?
I have nothing against speculation in a commodity that has a proven history of stable of value - but speculation in the BitCoin market contributes to it's failure at this point, largely because the market is dominated by speculators.
Is that why you want to create fake price stability?
I want to create real stability - this is a stepping stone towards that endpoint. By getting the BitCoin community as a whole to stake the value of BitCoin, it becomes actually valuable.
To overcome the price swings that contribute to peoples' reticence to doing commerce in BTC?
This is, again, a means to an end. Price stability results in merchant adoption results in increased actual value results in increased stability, rinse, repeat.