Bitcoin Forum

The best way to protect yourself against a sudden increase is to have the liquid USD laying around to buy the coins for less (obviously) off an exchange before you complete the sale.  I try to do this as much as possible. This requires a certain amount of playroom in your bank account, however.

I have been playing around with some price equations that tack on something when the price is volatile.  Rapid price fluctuations confuse both the buyer and the seller.  The goal is to come up with a price formula that knows the market is swinging and essentially smooths that over while keeping the seller OK.'

Here are some examples.  Anyone else done this and care to share?

These equations try to sense two metrics for high volatility.  They do this by comparing high and low and also comparing that metric in the bitstamp and chinese markets.  If Bitstamps volatility is low but chinas is high, that still amounts to overall instability....etc.

tack on a flat volatility charge

bitstampusd*1.119+ 14*(1/USD_30d)*abs(bitstampusd_high - bitstampusd_low) +abs( btcncny_high - btcncny_low)*1/CNY_7d)


use a variable volatility sensitive premium
bitstampusd*
              ( 1.068 +
                        max( 1/10*(1/USD_30d)*abs(bitstampusd_high - bitstampusd_low) +abs( btcncny_high - btcncny_low)*1/CNY_7d) , .03))

I have made many of these.  Havent found the perfect one yet and unfortunately I have had trouble getting localbitcoins to accept the 2nd type though I think it is basically better...I don't like localbitcoins like quadratic terms.