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.
Fair enough. I am calculating all the matters including time and fees like you mentioned, and sure you are correct that the more that you get your back and forth orders to fill, then the more money you make; however, if the price goes running extensively in one direction without reversal (which does seem to happen frequently with bitcoin), then you will tend to make more money in those kinds of runs by having BIGGER increments between your orders.
Our discussion (and disagreement) back and forth on interval size has kind of demonstrated that there can be some individual variation that might not be known or understood exactly until practicing for a while and trying to figure out individual comfort level. Probably, most people would like to make as much money as they can, but without really knowing the direction of the market, the interval sizes can cause considerable outcome variation that can also be tweaked to individual views of future BTC price volatility performance and also toyed around with a bit on the margins to play around with risk tolerance and gambling tendencies of individuals - even though I think that both you (jbreher) and I tend to be a bit more robotic and systematic with our approach, and find some advantage in sticking with a system that seems to be working for each of us.
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.
Generally, I agree with you that loose could work, too, but let me clarify a little bit more about what I am getting at.
When I suggest a style, I am attempting to share a style that had already worked for me, and therefore, I think that in the beginning, I am trying to get the person to practice a lot and to use small increments and also small amounts... and the more and more the orders fill, the more practice that the newbie gets in order to begin to tweak and to move the increments out further and further and to increase the amounts.
I know that previously, I had accused you of employing newbie techniques with my accusation that more experienced traders should be attempting to employ broader and larger increments. So, yeah, I was forced to walk that statement back a little bit, and I do currently acknowledge that on a personal preference level you could work yourself from looser to tighter rather than my suggestion to work from tighter to looser.
In the end, individuals can hopefully get used to the whole matter and attempt to find a system that suits their preferences in terms of how much time they are spending on setting and resetting orders in comparison with how much benefit is coming from that activity in terms of either profits or providing volatility insurance.
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.)
I think that you are just saying this because Valentines Day has gotten to you.
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.
I repeat myself too that if there is a large run on the price in one direction, then you are likely in a better position to profit more from larger increments, but I agree that smaller increments would perform better when there is a lot of back and forth in the price.. so in that regard, if you believe that we are about ready to break in one direction or another, then it may do you better to set your increments larger.. but you could end up being wrong, and then if we are caught in a zone unexpectedly, which also happens, you may have done better with smaller increments.
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