(snips sprinkled)
1) chained order is a little bit of an additional concept (...)
2) example of incremental / step setting in the $8k price territory using a ball park of $500 buy/sell increments. (...)
(And so on. A beautiful, detailed explanation in language dry enough to taste delicious given its origin.)
So you
can write in an orderly manner when you give up your urban stream of consciousness style. Next piña is on me.
If we drink too many piñas, we are going to have to change the game to shooting the bottles out of the sky, whether empty or full, so hopefully our island does not include noise complainers.. your island, or mine?
You remove the "other side" order at the point you just filled, otherwise they will cancel out for sure.
I don't think that "remove" is the correct word choice. I find that when I am playing this whole system and it is going smoothly, then I am never really removing anything, but I am just adding. Once a buy order executes, then I add a sell order, and once a sell order executes, then I add a buy order.
On that same point, I tend to let the price come to me, and rarely do I tweak to reset the order and to expedite the process. Sometimes, I will change a whole bunch of orders at once which is a kind of removal and replace, but that is not part of the regular practice when the practice is "flowing" then I am only adding orders, not removing orders.
(...)
I am not sure if your example helps.... O.k. we are going with a $500 increment, but if my order to sell at $8,500 executes, then I am not removing anything because I just add a buy order at $8k (because my previous sell had executed at $8k, and I could not do anything until either the next $8.5k sell order executed or the next $7.5 buy order executed. If the price had gone down rather than up, then my $7.5k order would have filled and I would have set a sell order at $8k rather than the buy order that I ended up setting because of the $8.5k sell order that ended up executing first.
Probably, we are saying the same thing, just phrasing it differently.
Yes, I think I got your system right, but I pictured it as a double (buy/sell) ladder of orders already set up in advance. You watch them fill and remove debris/fix things. Like your buy at $8k is already there (it became relevant after selling at $8.5k).
I have a difficult time imagining a double order book because the $8k order was the last price point to have sold (in this example on the way up), and the $8k would be fruitless to be on the books because it is at the same price that we took our last action (in this example selling on the way up)... therefore, the $8k order is not even authorized to be placed until either the $8500 sell order fills or the $7500 buy order fills.
3) The whole system is not a wash because you are able to either buy more BTC with the same amount of money or accumulate more money by the size of your orders. If you keep the exact BTC amounts, then you accumulate dollars; if you keep the same dollar amounts then you accumulate BTC (or you can do some combination of the two). Recently, I have been working on accumulating more
BTC with my orders.
On the other hand, I kind of considered this in the background but honestly wasn't sure - I didn't run the numbers to check, so I kept my mouth shut with jojo69, who used the word "mostly" just a couple of positions out of place.
OK, so for the most part, they still cancel out, you are just harvesting (mostly, ed.) at reversals.
If it runs straight up 4 sells, then straight down 4 buys you (mostly) only have one "win"
Well yes - mostly. The effect of trades in middle points starts small and builds up, as JayJuanGee explained
At the risk of repetitiveness or boredom (some of my specialties), let me provide three examples to attempt to elaborate on the profitability points:
Example 1: involves .1 BTC traded in $500 increments (about 7% increments) with .2% fees (of course if there are no fees, then you can trade tighter parameters and still make a profit).
As you see below the profits on a trade that goes both up and down is about $50 minus the assumed .2% fees (on each end of the trade), so around $47 for both sides (or about $23.50 for each side of the trade)
At $6k, costs $600 for .1 BTC, fees $1.20
At $6.5k, costs $650 for .1 BTC, fees $1.30
At $7k, costs $700 for .1 BTC, fees $1.40
At $7.5k, costs $750 for .1 BTC, fees $1.50
At $8k, costs $800 for .1 BTC, fees $1.60
At $8.5k, costs $850 for .1 BTC, fees $1.70
At $9k, costs $900 for .1 BTC, fees $1.80
Example 2: involves changing one of the variables to have .1 BTC traded in $1,000 increments (about 14% increments) with .2% fees.
As you see below the profits on a trade that goes both up and down is about $100 minus the fees, so around $97 for both sides (or about $48.50 for each side of the trade)
At $6k, costs $600 for .1 BTC, fees $1.20
At $7k, costs $700 for .1 BTC, fees $1.40
At $8k, costs $800 for .1 BTC, fees $1.60
At $9k, costs $900 for .1 BTC, fees $1.80
At $10k, costs $1,000 for .1 BTC, fees $2.00
Example 3: involves changing another one of the variables to have .2 BTC traded in $1,000 increments (about 14% increments) with .2% fees.
As you see below the profits on a trade that goes both up and down is about $200 minus the fees, so around $194 for both sides (or about $82 for each side of the trade)
At $6k, costs $1,200 for .2 BTC, fees $2.40
At $7k, costs $1,400 for .2 BTC, fees $2.80
At $8k, costs $1,600 for .2 BTC, fees $3.20
At $9k, costs $1,800 for .2 BTC, fees $3.60
At $10k, costs $2,000 for .2 BTC, fees $4.00
So yeah, of course, increasing trade increments and amounts increases profits while running the risk that the orders will not fill as often or running the risk that you run out of fiat or run out of BTC when the price runs too irrationally in one direction or another beyond expectations. You can set your trade increments as low as .4% apart from one another and break even on the trade because you are covering the fees for both sides of the trade (of course if there are no fees, then you can trade tighter increments and still make a profit), but I would recommend a minimum of 1.5% increments to make the whole experience worth your time and because bitcoin remains volatile, you are still going to get plenty of practice (perhaps too much during more busy times)..by just letting the BTC price come to you rather than forcing anything or even betting in either direction.
Again, I personally tend to NOT get caught up in the profitability of each specific trade (so long as the trade is profitable) because I find much more value in stacking up orders on both ends, and later building up a position to such a state of stacked up buy/sell orders that you will be able to just sit back and not worry because you won't have to actively manage the trades once you have built up great enough amounts on both ends.. in other words, amounts can get bigger, Bigger and BIGGER with the passage of time... which means the trades will become more and More and MORE profitable, without necessarily gambling on either price direction (yet kind of assuming that in the long run BTC prices are going up).
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