I understand and I'll back off - I hope I didn't ruffle any feathers, I just know how people think. They don't do their research: greed takes over and they act first and learn their lessons later. Just like in other parts of the Bitcoin world - it makes me sick seeing people lose tens of thousands of dollars from their Bitcoin Wallets because they didn't appreciate security sufficiently. In addition there are those people that buy FPGA and even Video Card based systems for big money on eBay without spending 15 minutes researching what type of returns they'll get and how long the payoff will be (or whether it actually make more compared with power costs).

I did what others would do which was to read the basics on the first page and go to the last page and see the charts, get excited and be ready to trade. I can guarantee you there are numerous people that are trading it right now without doing analysis and without REALLY understanding what they are trading and what the risks are. That's why I asked the questions - they are tough questions, but in reality, I believe they are THE questions everyone should be asking. They need to say "that's awesome, but look at how 80% of the profit is lost to commissions - what type of risk am I looking at?" and need to understand the disclaimers that you accurately show. They need to appreciate it all before allowing themselves to trade a single Bitcoin.

Look - I'm certainly no big time trader, but I AM experienced. In 2008, I programmed my own systems to store, analyze and trade the Forex market. I had some very creative and very impressive (if I say so myself) pieces of technology, but it didn't matter. I didn't appreciate what and how I was trading and my system backfired and I lost massive amounts of money. I was very fortunate as I was able to fully recover and it didn't cost me my house, my family nor my future - many others are NOT so lucky and lose everything. That may seem like an exaggeration, but greed is a powerful emotion and the idea of having 500% returns in a short period of time is tough to pass up.

As I said, I'll back off now. Please be careful, cautious and don't let greed take over!

Ah, Excellent! Thanks for getting back to me. Maybe if you can just add a reasonable bid-ask loss, we'll be set then.

Certainly, there's no doubt that Moving Averages work and can definitely proven in the Forex arena. My concern, however, is the high costs involved. Look at your most recent results:

Gross Revenue: 2,437%
Net Revenue: 484% (minus bid/ask)
Commission Loss: 1,953%

What that means to me (correct me if I'm wrong) is that if instead of 2,437% you "only" earned 1800% you would've been looking at:

Gross Revenue: 1,800%
Commission Loss: 1,953%
Net Revenue: -153%

Meaning that you're done: 0 BTC - game over.

This also concerns me because the data involves a period where Bitcoin was gaining public knowledge and gaining rapid value increase and big swings likely resulting in larger gains. Now that Bitcoin is (hopefully) heading towards a more stable price, I'm wondering (out loud) if that means that larger net losses are likely once its tougher to get larger swings.

Again: thinking out loud, please correct me

But reading the reviews from the link above seems to indicate that the returns are not "real", but instead are manipulated after the fact.

I can't speak for Currensee nor for Goomboo, but I would doubt there are ANY legitimate companies out there where you can give them money and not get ripped off. This is true from the false claims (gotta love that ad I see for some guy claiming 99% "Profitable" returns) all the way up to major Mutual Fund providers that can't even keep up with the major indexes. Companies that do make legitimate profit will continue to increase/structure fees so that you get less and less. I believe that this is one reason why Goomboo started the thread, showing tests that you can run yourself and design your own system.

PS - Anyone have any comments on my questions above? I'm very eager to hear responses.

First off, thank you so much to Goomboo for providing this strategy - I'm sure it is appreciated by all!

I am a first time poster (just got off "newbie" status), but found your post and was very excited by the chart and it got me started to create my own data gatherer from MtGox with the intention of eventually creating an automated bot.

However, as I got further into thinking about it, important questions got raised. Could you (and others reading this) please address my thoughts?

I'd like this to be a PRACTICAL analysis as opposed to theory because if real people are putting real money into this system, they need to be prepared for actual statistical results. Users who starting using your system prior to the big bubble certainly did well, but now the question is how will this perform ongoing and for people just now starting.

#1 - Your latest graph (page 43) shows results the 0.6% Commission and admits that there is no slippage from bid-ask spread. I do not believe this is realistic. If you're going to have a trading system, unless there is a clear value that you can place a Limit order for, it'll be a Market order and therefore will incur a Bid/Ask Loss.

I've only been storing one minute data for a day now, but so far after 1,191 points that looks to be 0.28% loss.

#2 - You assume 0.6% Commission, but doesn't MtGox take Commission from both Buys and Sells? For instance, lets say you buy 1 bTC on Day 1 and sell it 12 hours later. Wouldn't they tack on 0.6% on the buy and 0.6% on the sell? My tests buying and then immediately selling 0.01 and 0.1 BTC seems to confirm that. My typical loss was over 1.2%.

I believe, therefore, you need to assume a 1.2% Commission

#3 - I understand that you can "short" using 3rd party companies, but unless there is a way to do it directly in MtGox (or whatever your model is based on) I don't think you should include shorting profit. That's not much of a concern up until recently with the big bubble, but going forward shorting profits might be higher than long profits.

#4 - That's neat that you calculated it for the 0.25% Fee schedule, but lets face it - that's not realistic. 500,000 BTC per month - that's $54 million! Not only is that an absurd amount of money, but I doubt you could trade anywhere close to that without huge slippage.

So, if I'm correct, then that means you're really looking at a 1.5% commission rate or so. Could you re-calculate it for that commission rate? Unfortunately, I'd bet that'll make the numbers pretty weak, especially starting in May where things have calmed down. If you were to average one trade per day, 30 trades per month, that'd mean you'd need a 45% gross return every month just to break even! That's a minimum of 548% return required per year.

PLEASE tell me I'm wrong (and most importantly why) as I'd love to start making some good green, but unfortunately I think this is the way it works.

I have lots of strategies in Forex where it'd gross me a 10,000% profit per year, but when you include commissions and bid/ask loss it winds up being a 50,000% LOSS. Once BTC gets to the point to where it can be traded efficently, the big gaps in the exchanges (ie: the $8 difference between MtGox and BitStamp and the $10-$11 difference between MtGox and BTCe) will be eliminated and systematic traders will come out of the woodwork to capitalize on these trends which will eliminate the profitability of them.

PS - Could you show some monthly status from 2011? That might give us a good idea of what it looked like before the big bubble.

Thanks!

Comments?

Hi, could you whitelist my account? I have a 625 word response/question relating to the topic "Goomboo's Journal" that I'm very eager to post.

I currently own 5 Bitcoins and follow allow the news/activity related to Bitcoin and would like to be able post and respond to posts to satisfy my curiosity and interests. I've developed a system for storing one minute BTC bid/ask/volume data so I think I'm pretty serious at BTC and BTC Trading.

Thank you so much!

Hi guys, I'll be honest - I'm looking to get approved so I can make a posting on Goomboo's 44 page thread on his trading system. I believe I have some very important questions that needs to be answered and am absolutely DYING to get it posted so I can find out the answers. I have the comments all ready to go but just need to be green lighted.

That being said, one question I still don't have the answer on is... how the heck do you get money taken OUT of MtGox? So, someone could buy some BTC from Coinbase right now for $98.86 and have them in their account immediately (presuming they are fully approved). They send them to MtGox and sell them for $106.10. That leaves a gross profit of $7.24. Subtracting out the 1% fee from Coinbase leaves a theoretical profit of $6.26 per BTC meaning you could make $313 per day.

So, how the heck do you get money back out of MtGox? Do you have to wait for them to issue a check or something like that? Still, you'd think that if you had enough $ in your account, you could do this for awhile.

What's the catch?