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Coinbase does a number of things that seem strange from a market perspective. There doesn't appear to be an auction to open/close or restart. Instead they see
by chollida1 9y ago
Coinbase does a number of things that seem strange from a market perspective. There doesn't appear to be an auction to open/close or restart.
Instead they seem to lock their markets and allow post only orders.
The other things this screams is that
1) stop loss orders are useless in volatile markets. I've harped on this alot from the US Cash Equities side but it appears to be equally valid. YOu'll only end up getting filled at te worst possible price and miss the inevitable market rebound.
2) Coming from 1) Don't use leverage, you'll get your face ripped off one of these days due to volatility and you'll be asked to submit more margin just when you can least afford to and possibly be liquidated at the bottom.
- ISL 9y agoIn a recent thread, stop-loss limit orders were mentioned, which would appear to address the bad-fill concern, to an extent.
- chollida1 9y agoas far as I'm away they don't have them yet.
- makomk 9y agoThey're hidden under the "advanced" button when placing a stop-loss order. GDAX (the exchange side of Coinbase) actually have quite a plethora of order types... though they don't seem to let you change the time in force for the resulting limit order when the stop-loss triggers, for whatever reason.
- dahdum 9y agoThey lock, other than scaling issues, because of liquidity. Bitcoin cash opened with a thin market and ran up to $9,500 in 4 minutes before they halted the market. Was still trading at ~$3k elsewhere at the time. An open/close or restart isn't needed because all assets are being heavily traded elsewhere. If they switch to post only the arb bots will fill their book over time. Leverage will rip your face off.
- makomk 9y agoThe Bitcoin Cash fiasco is a good demonstration why their approach to opening markets doesn't work - if the correct market price at open is different from the initial price people start placing orders around, no-one can place orders on one side of the book for anywhere near market price, which means there isn't enough liquidity at open, which causes chaos. Apparently they've given up on opening the BCH-EUR and BCH-BTC markets altogether until January after this looked like it was going to happen again with those.
- semi-extrinsic 9y agoAt least in ordinary stock exchanges with HFT, stop loss orders are perfect devices for the HFTers when the price is approaching some psychological limit (say $100), they can push the price down momentarily and buy from all the average Joes whose stop loss orders just triggered, wait for the inevitable bounce and sell at a nice profit.
- chollida1 9y agoThat isn't at all how HFT's operate. We wouldn't generally touch an order type like stop loss, heck we wouldn't generally use stop loss limit order either:)
- semi-extrinsic 9y agoI didn't mean HFTers hold stop loss orders. I mean they look for others who hold stop loss orders to try and arb them.