Topic: [CLOSED] MtGox Volatility Trading Bot [GMVT-BOT] - page 4. (Read 11113 times)

This bot is very simple by design. There's nothing to tune except for the EUR amount of one order and desired profit. Downside of this is that it is not earning a lot. There are different trading strategies, that can yield more but are much more risky and you can lose money. This bot will "never make a loss" in BTC by design. The only possibility he could behave unexpectedly is when he gets wrong information from MtGox about his active orders which is not very likely and there are checks implemented like for example if there's too few active orders (less than 250, which can actually happen when there'll be crazy levels of volatility), bot will stop operation and I will have to inspect and restart it. Also he can place maximum of 1 order per 10 seconds and maximum of 30 orders per hour. I'm sure bot will never lose money and I can cover this possibility in contract. Also I don't expect that bot will ever work with more than 300 BTC amount under one account on one market, so the risk of loss for me is very low.

It will just place buy orders from money he got at selling when price went up. Currently bot is always keeping 300 active orders covering the whole range from 3 to 10 EUR/BTC, when some order is matched, he either places buy order or sell order depending on available balance.

The code itself is very simple. Bot is just inserting orders when he finds out that the gap between maximum EUR and minimum BTC order is bigger than it should be. He's always buying low and selling high, he cannot make any loss by design. There are no complicated calculations for orders placing. I can put into contract, that I will personally cover any losses that will be caused by unexpected bot behaviour. Of course there is a chance that MtGox itself will close down and block the funds, that case I cannot cover.
I will run the bot for a couple of weeks more to see how it performs. Then I plan to issue shares for just 100 BTC for starters, then maybe expand to other markets (USD, GBP) or maybe to other exchanges. Depends on decision of shareholders, if it will come to that.

What would the algo do if the price went straight up?

interesting, I am looking to invest in a bot, I have extensive financial experience and wouldn't mind both investing and helping you out in a project like this.

People claiming "never makes a loss" make me very nervous.....

Just saying.

I like the idea, I've thought about making something like that myself before, but never got the time for it.
For when the range have to be moved down I thought about only using a part of the total money for each range.
That way you won't lose money when the range goes down, but you can use less money to trade.

Original post:
Since there's too many mining and pirate related securities I'm curious if there would be a demand for something like this.
I'm considering creating a security for my MtGox volatility trading bot I created recently. Bot is very secure, never makes a loss, makes money on volatility. The bigger the market volatility, the bigger the returns. But according to my calculations ROI is pretty low. On a high volatile market (like the one this week and last week), it would yield up to 0.6-0.8% per week (I already substracted 10% management fees from that), but usually less than 0.5%. Profits should improve if there's bigger trade volume, currently bot pays 0.6% fee per trade as the trade volume is less than 100 BTC. For trade volume > 100 BTC, MtGox charges only 0.55% etc.
Bot is working on EUR/BTC market and has orders in the range between 3 EUR/BTC to 10 EUR/BTC (current price is around 7 EUR/BTC). If the price is swinging in this range bot is making money. If the price will go upwards of 10 EUR/BTC that shouldn't be a problem because all the profit is always on the BTC side (bot is always buying first if there's available EUR balance) and each order is valued at the EUR price, so I can move the range upwards without losing money. If price will go downwards of 3 EUR/BTC there will be a decision to make if to move the range downwards and lose some profit or close down the operation and return the money.
MtGox account will of course be protected by 2-factor authentication and withdrawals through API will be blocked.
I will setup this as a company with voting rights. I plan to issue 1000 2000 shares at 0.1 BTC, total 100 200 BTC, for starters.
Any questions, ideas?



Bots funds:

Bot	Approximate value of funds	Current Trade Fee
-----------------------	---------------------------------	-----------------------
MtGox USD	150 BTC	0.53%
MtGox EUR	50 BTC	0.55%
BitcoinCentral EUR	70 BTC	0%

Bots performance:

Week	Start Date	End Date	Profit (BTC)	Management Fee (10%)	Dividend per share	ROI per week
---------	------------	------------	----------------	---------------------	---------------------	-----------------
1	13.7.2012	19.7.2012	0.201616	0.020162	0.000726	0.73%
2	20.7.2012	26.7.2012	0.173569	0.060423	0.000625	0.62%
3	27.7.2012	2.8.2012	0.029527	0.002953	0.000106	0.11%
4	3.8.2012	9.8.2012	0.076204	0.007620	0.000274	0.27%
5	10.8.2012	16.8.2012	0.231258	0.023126	0.000139	0.14%	<= added bot working on MtGox USD market
6	17.8.2012	23.8.2012	13.974017	1.397402	0.006288	6.29%	<= market crash and very high volatility
7	24.8.2012	30.8.2012	1.523698	0.152370	0.000686	0.69%
8	1.9.2012	6.9.2012	0.779619	0.077962	0.000351	0.35%
9	7.9.2012	13.9.2012	0.892514	0.089251	0.000298	0.30%	<= added bot working on Bitcoin-Central
10	14.9.2012	20.9.2012	0.605584	0.060558	0.000202	0.20%
10	21.9.2012	27.9.2012	0.40708	0.040708	0.000136	0.14%

Note that some weeks were very volatile. I expect the average dividend to be below 0.5 % per week (maybe below 0.3% unless there'll be higher trade volumes).


Contract:
GMVT Trading Bot asset (GMVT-BOT) was created with the intent to give investors the opportunity to participate in operation of a trading bot. GMVT Trading Bot is operating on bitcoin exchanges (currently at MtGox only but may expand to other in the future). Each share in this asset represent share in the ownership of funds the bot is operating with and share on the revenue. 10% of the profits bot makes will go to the asset operator who will cover all operating costs (electricity, management etc.). Operator will also cover any loss that may result from unexpected bot behaviour. On the other hand, operator is not responsible for funds that may be lost due to particular BTC exchange default and funds blockage.
The operator reserves the rights, regardless of the amount of shares owned, to raise a motion, and close down the operation. At least 60% of the shareholders will need to agree for a motion to be valid. In the event of liquidation, all available funds the bot is operating with will be converted to BTC and will be distributed to shareholders.
Dividends will be paid at least once per month.