# Velocity Threshold Analysis

## Current Configuration
- VELOCITY_THRESHOLD_PCT = 0.008 (0.8% per 4-second interval)
- CHECK_INTERVAL = 4 seconds

## Timeframe Analysis

### Per 4 seconds (current):
- 0.8% price movement triggers HIGH VELOCITY alert

### Per minute equivalent:
- 0.8% per 4 seconds = 12% per minute
- This is extremely volatile - typical crypto doesn't move 12% in a minute

### Per hour equivalent:
- 0.8% per 4 seconds = 720% per hour
- This is impossible for normal market conditions

## Analysis

### Current Problem:
The 0.8% threshold is **too sensitive** for normal crypto markets:
- ETH typically moves 0.5-2% per HOUR, not per 4 seconds
- Getting -20% alerts indicates calculation was broken, but 0.8% may still be too low

### Suggested Adjustments:

#### Conservative (Recommended):
```python
VELOCITY_THRESHOLD_PCT = 0.002  # 0.2% per 4 seconds = 3% per minute
```

#### More Conservative:
```python
VELOCITY_THRESHOLD_PCT = 0.001  # 0.1% per 4 seconds = 1.5% per minute
```

#### Very Conservative:
```python
VELOCITY_THRESHOLD_PCT = 0.0005  # 0.05% per 4 seconds = 0.75% per minute
```

## Recommendation

**Start with 0.002 (0.2%)** because:
- 3% per minute is still very volatile but possible during market stress
- Will catch real flash crashes and pumps
- Won't trigger on normal volatility
- Can be adjusted based on real-world testing

## Context for Different Market Conditions:

### Normal Market (90% of time):
- ETH moves <0.05% per 4 seconds
- Should not trigger velocity alerts

### High Volatility (9% of time):
- ETH moves 0.1-0.3% per 4 seconds  
- May trigger occasional alerts

### Extreme Market Stress (1% of time):
- ETH moves >0.5% per 4 seconds
- Should trigger emergency protection
- This is when we want the override

The velocity protection should only trigger during genuine market emergencies, not normal volatility.