I was experimenting in Binance Spot.I don't believe it out-performs the market, but it can survive when market crashes since the bot is not greedy.
The bot opens up to 20 positions in parallel each starts with 2$ and always limit order with 0.5% profit. Some positions close itself in few seconds some remain for a day.
If there is -5% loss on a position, I added up the amount of the position and re-order limit order with 0.5% gain. Let's say for 2$ position if there is 5% loss, I add 2$ more, than 4$ ... The position size grows as 2 => 4 => 8 => 16 ... with updated limit order for each. I observe that eventually position close it self with profit.
This is called "picking up pennies in front of a steamroller". You will make your $1 for many, many days, then the day comes where you continue doubling down and you lose a substantial amount of capital in the process.
Very similar to systematically trading options, i.e. selling covered calls, ...
Source (FWIW, but it really isn't needed for this case): I worked at the most prestigious hedge fund/market maker in the US running their strategies on the servers colocated in all the major exchanges, so I know a couple things about arbitrage strategies. If a similar approach were to even remotely work, I would have most certainly seen it.
No need to reply (to me at least): I won't be convinced by any further argument that your trading system circumvents this basic paradox :-)
My reply will not meant to convince you because I agree with you :-)
> "The day comes where you continue doubling down and you lose a substantial amount of capital in the process."
- I believe that continue doubling is one of the most fatal stratetegy. Sadly, I made this mistake multiple times, which caused me a extensive loss. The only solution I come up is, while continuing doubling, cut loss if there is a certain amount loss reached (like 10$ or 1% of the capital). That was the actualy reason I implemented the bot where it automatically closes the position for me;
since in a loss , "fear" does not let me realize what's happening and instead of a cut loss I adding more into a losing trade.
The bot opens up to 20 positions in parallel each starts with 2$ and always limit order with 0.5% profit. Some positions close itself in few seconds some remain for a day.
If there is -5% loss on a position, I added up the amount of the position and re-order limit order with 0.5% gain. Let's say for 2$ position if there is 5% loss, I add 2$ more, than 4$ ... The position size grows as 2 => 4 => 8 => 16 ... with updated limit order for each. I observe that eventually position close it self with profit.