1) Neither Jbreher nor I were referring to chained orders because we manually set our orders after they fill. We were talking more about incremental order setting or step setting.
True dat.
2) ...
Yes. Buy low, sell high. At all times. Incrementally.
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).
Yes.
4) The larger your amounts that you are trading, the more that you can notice that you are making money, [see 4b below]. Of course, there is no free lunch because there is risk on both ends. The larger your amounts that you are trading the more likely you could end up running out of money or btc when the price over shoots
Yeppers.
4b) and the larger your increments, the more that you make money too.
No. In general, cutting your interval in half (with a corresponding BTC per interval cut in half) will result in better performance. This is because the volatility will result in additional trades that swing the smaller interval, but don't reach the larger interval. At the limit where volatility is small enough to result in zero additional trades for the smaller interval, the smaller and the larger interval will perform identically. The tradeoff for the smaller interval size is trade fees (none for maker on GDAX), and the amount of time required to manage the system.
5) I tend to recommend to folks to begin by setting your price increments really tight
Or really loose so you don't succumb to panic in the face of the occasional bout of ludicrous volatility. And there will be occasional panic when your are getting accustomed to the system. Your choice.
6) ...
7) Even Jbreher and i have had little skirmishes about the "right" practice
Meh. From what I can gather, we are using systems that are essentially identical, though we have chosen different values for the parameters. (Incidentally, 'skirmishes'? Far be it from me to tell you how to run your biz.)
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
at a higher USD price, and once a sell order executes, then I add a buy order
at a lower USD price.
Yes. With the underlined amplification above. Indeed, this is the reason for the aforementioned two-price-interval gap between your standing buys and your standing sells.
On that same point, I tend to let the price come to me,
Yes. Note that on GDAX, trades are free to the maker.
You really win on each one,
You win on each buy&sell pair (or sell&buy pair - however you want to think about it)
and the bigger your amounts the bigger your wins.
Well, the larger each win. But you'll have less wins than if you are using a smaller increment. Indeed, the larger increment can do no better in any case than the smaller interval. See 4b above.
However, I frequently describe this whole process as stacking and a kind of insurance that really takes a lot of stress out of downside volatility ...
it does not do service to the whole system if you increase the amounts too much in the beginning and you end up running out of money because you over did the situation
Yes and yes.
Poll
