Public Service Message
If you walk away from a bot for 24 hours trading on 1h candles and something goes terribly wrong... it has a "flash trade" seizure and trades
...once every tick for a small loss, at the end of the day you could lose upwards of 12%.
These things happen for a multitude of reasons in and out of your control:
DO NOT THINK YOU ARE IMMUNE
(1 - (margin+fees))^(ticks_since_you_checked_bot)
0.995^24 = 0.886653511
88% of your bank remaining
if you walk away from a bot for 24 hours trading on 1m candles, and it has a seizure, you can quickly lose everything:
in two hours:
0.995^(2*60) = 0.547986285
in 24 hours:
0.995^(24*60) = 0.000733223
ZERO ZILCH NADA
I watched it happen live on the charts one time. Its even faster when a well financed predatory algo senses the first "BUY/SELL/BUY" seizure of the same amount on 1m candles: Then its on; absolute destruction doesn't take 24 hours:
January 30th 2014 @ 1AM Hong Kong
$800,000 to ZERO in 2 hours.
Algo trading cloud bots on crypto exchanges has many dependencies, the least of which is your private script that nobody besides yourself has proofread. Never neglect the presence of predatory bots looking to force your thresholds to seizure; especially during a 12h consolidation.
As a rule of thumb 1m bots should be live monitored, NEVER slept in.
As a second rule of thumb always check in on your bot no less often than
check_bot_after_x_ticks = 2*(max drawdown you're willing to accept from flash trade risk)
Running a 1h bot and willing to accept no more than 5% drawdown from flash trade risk?
Show up every 10 hours to check on it.
Running a 1m bot and willing to accept up to 20% drawdown?
Show up every 40 minutes to check on it.
Like the fine resolution of 1m candles but are now scared of flash trade risk?
Use mechanical timers to limit maximum trading frequency.
Professional hedge fund managers pay entry level quants to monitor HFT algos whenever they are live;
eyes on screen