14 ms·
Visualising High Frequency Trading in Bitcoin (2014)
- GordonS 9y agoWow, this is the most in-depth analysis of dodgy Bitcoin trading I've ever seen. Is this kind of thing still possible, or do exchanges prevent it these days?
- Zarath 9y agoOrder book spoofing still happens all the time. "Related to fleeting orders (inevitable order cancellations), laying involves adding volume at various price levels with the sole intention to influence other market participants into believing (observing) an order book imbalance or strong buying/selling pressure." As a trader, this is something you should be learning to spot.
- OscarCunningham 9y agoRight, if people are expecting spoofing then it should lose money. People won't change their prices in response to it, but they will accept your overly generous offers.
- goldenkey 9y agoYou dolt. The orders get canceled before anyone could have a chance to eat through the order book and match them.
- Zarath 9y agoNot everyone does and there can be multiple layers of reverse psychology even if there is. Is this wall fake? If so, are they trying to fake that there is sell support? Or do they know people will think that and there really is sell support?
- gnaritas 9y agoIn the real world, that's illegal. In the bitcoin world, it will be eventually but until then, looking at the order book is a waste of time, it's all fake.
- Zarath 9y agoI kind of like it. Random walk price movements must be incredibly boring to trade against. The more manipulation, the more interesting IMO.
- Grangar 9y agoVery relevant article: https://hackernoon.com/meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4 https://hackernoon.com/meet-spoofy-how-a-single-entity-domin...
- runeks 9y ago> Is this kind of thing still possible, or do exchanges prevent it these days? Why would exchanges want to prevent this? As far as I can see, it’s speculators battling against speculators. Why not just let the best speculator win? It’s not like it affects my ability to sell or buy bitcoins on Bitstamp — and I hope we can agree that there is no “right” price of a bitcoin — so what’s the incentive to stop it, other than to assist particular speculators (with particular strategies) in making profits?
- nerdponx 9y agoBecause it makes Bitcoin unusable for actual economic transactions.
- blunte 9y agoNot really. On most exchanges, the transactions never hit the blockchain - it's all internal accounting within the exchange. All this speculatory activity creates liquidity, at least on the exchanges where the speculation is taking place. That's generally good for outsiders who need to exchange bitcoin for something else (on said exchange). Except for a few flash-crash scenarios (or failures of the exchange), this shouldn't have much impact on price volatility on day/week scales that average people care about.
- paulpauper 9y agoI think it's possible for exchanges to exacerbate volatility. If all the trading were consolidated to a single exchange (like the NYSE or NASDAQ in America), it would mean that there would be more liquidity to the downside and price resistance to the upside, but instead everything is split up between 5 major exchanges. So if someone places a large order on one exchange, the others will mirror it, so effective liquidity is cut by 80%. This works to the upside too. A way to fix this would be to split the transactions evenly among all majors exchanges, executing all the orders at once instead of only at a single exchange, but most large traders probably don't do this.
- ryanmerket 9y ago
- paulpauper 9y agoit can be prevented by not showing the order book size
- jnordwick 9y agoThen people would just shred their orders and separate them by one satoshi to make the market appear deep.
- jg2009 9y agoAmazing...
- brooklyntribe 9y agoPlan B? Just buy what you can afford each week. And don't think about it. Come back in a year. Retire to Goa. AKA A beach. :-)
- paulpauper 9y agoparadoxially, if you buy a little each week , you want the price to oscillate rather than go strait up
- jstanley 9y agoDon't you want it to stay low for ages and then shoot up all at once? How does oscillation help?
- brndnmtthws 9y ago'oscillation' isn't the word I'd use, but I assume the parent is referring to dollar cost averaging: https://www.bogleheads.org/wiki/Dollar_cost_averaging https://www.bogleheads.org/wiki/Dollar_cost_averaging
- fragsworth 9y agoYou are right, and they probably mean the reverse causation. If it is volatile, you want to "dollar cost average", so you aren't significantly impacted by the price of a single purchase.
- bradleyjg 9y agoThis asset class is different. Prices only ever go up.
- qntty 9y agoIt's hard to tell what's satire and what's serious when people are talking about bitcoin
- deleted 9y ago
- bmilleare 9y agoI submitted this post back in 2015 and it's no less impressive now - I'd love to see some updated analysis now that automated trading is even more prevalent in btc.
- jnordwick 9y agoThis is really old, from around the end of 2014 it appears. Also there is no HFT in cryptos: there is no colocation and not a single exchange can support either the market data dissemination or order processing capabilities right now. Every crypto exchange is horribly slow and appears to be terribly written.
- gnaritas 9y agoThat doesn't mean there's no HFT; automated trading as fast as the exchanges allow is HFT.
- jnordwick 9y agoNot by any definition I've seen. There's always the notion that hft techniques have always existed and there is some validity to that but usually when referred to in a modern context it relies on qualities that make speed of light (hence colocation) a limiting factor.
- gnaritas 9y agoOn a modern exchange it does mean that because that's what it takes to trades as fast as possible, on a low tech bitcoin exchange where such speeds are not possible, it takes much less; it's HFT none the less. It's still computer programs trading the same algorithms offering up liquidity to flip a quick profit as fast as the tech allows.
- jnordwick 9y agoI work in HFT and i probably couldn't run most of my stats on these exchanges. There are some that can be but their performance limits what can be run. The ones that could be run are often the same that were run on the exchange floor but you wouldn't call those 20 years ago HFT.
- gnaritas 9y ago