I've been trying Butterbot, and although it's an interesting concept, the truth is that you are clearly loosing money.
I tried a great amount of different settings (from the ones suggested by the creators to others) and in every case, you cannot find any settings that simply beat leaving the BTCs alone and capitalizing. You are always loosing money. If the creators of ButterBot put an option to see the profit in BTC instead of USD you could see that the number of BTCs using this algorithm - in every case - it's reducing.
Put the monthly amount you pay for the software on top of that and you are clearly loosing quite a big sum of money by using it.
I actually agree with you but I also disagree with you.
I was discussing this very point with my family last night. If you think about the market in terms of a purely vertical increase. Then the market probably moves into the positive 3 or 4 times what it does when using an ema bot.
For example, if you counted each price rise over a single day and added them all up commulatively you'd see it probably moved 200 dollars in equivalent value even if the price only increased $20 on that day. (as well as decreasing in value by a similar figure)
An ema bot might require a sacrifice of 30% on an upward trend to be sacrificed in order to detect a trend. The same is true on the down turn. Lets say a (plucked out of thin air) figure of 60% potential profit is lost by waiting until a trend actually exists. About 30% is your only real profit.
So even if the market only went up 20$ but vertically stacked clocked in at 200$ vertical cummulative climb at the days end. From the start of the day till the end, your ema bot might have actually made you:
60% or 120$ is lost in detecting a trend. While 80$ might be potential profit.
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The only difference with buy and hold strategies is that you have to assume the value will only go up. It may go down and you go bust. (While using a bot protects you from down turns, holding does not, unless you exit the market manually)
Even if the commulative dollar amount for the total rise in a 24 hour period is 200$, in a buy and hold strategy it might only net you 20$ at the end of the day. It is technically static and doesn't take any opportunities of market corrections and repeated rises in those 24 hours that eventually end in a 20$ gain at the end of the day.So when someone argues that a straight forward buy and hold strategy is best, they are basically trying to debate that the bot will mess up enough [in detecting trends] that overall the (bot + trend) strategy will make enough bad calls that it does worse than a simple buy and hold.
It's like saying:
"So what if your bot made 80$ today V.S. my buy and hold strategy and profit of 20$? Your bot will eventually make enough "bad calls" that your 80$ will actually turn out to be 10$." (which is true, as most bots lose just as much as they gain. Pablo mentioned that 70% will be losing trades while 30% will be gaining with this ema bot.)
The only perfect bot is the one that makes the right decision every time and has "zero loss" for trend detection. (it doesn't exist)
A perfect bot, would earn 200$ on a single day on a 20$ average rise. Not even human traders are that good. No where even close or that lucky.
Think about how long it takes butter (or how many dollars each way) it loses as it waits to make sure a trend is building.
Butter loses quite a bit getting you out of a crash dive as the ema signals take some time after the drop. Quite a bit is lost getting you into an upward trend as well.
But a buy and hold strategy only nets you the
average rise of that day.
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It should be a toss up as to whom will do better.
If the market went from 100$ to 400$ over a week, then the buy and hold speculator will only ever make (at best) 300$ with a simple buy and hold.
If the bot user using ema has extremely efficient settings, then they might make well over 300$. Or if they have inappropriate settings they might make a hell of lot less than 300$. The bot user also has to contend with the notion that not all upward trends will be clear enough when using an ema system. So often you won't even make the 300$.
If anyone tallies up all the commulative price rises over the last month you'd probably find it has gone up more than 10,000$ vertically. Though most of our bots are at best doing a fraction of 300$ in profits.
We should all share our settings and work out what is the most efficient path (not the settings themselves) to figuring out what settings are optimum in different scenarios.
We need to pry open EMA for example and really understand deep down what makes it tick. Why certain setting in one particular week give spectacular returns and why it doesn't work as well in another week with a different scenario. At the moment we are all mostly using the "Jack of all Trades" strategy. Which is finding one setting that does "okay" in most scenarios.
I think it would be "profitable" to find settings that detect down trends quickly and adjust our settings as necessary throughout the day. Like changing settings based on the market conditions. (I can hear Pablo just telling us not to do that, that a jack of all trades is best)
