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I don't get the point of this article. The bot he says is buying 95 BCH at 8500. I don't see how this is profitable as the the price quickly falls and the bot

I don't get the point of this article. The bot he says is buying 95 BCH at 8500. I don't see how this is profitable as the the price quickly falls and the bot lost a lot of money. This is just a bunch of bots trying to catch trends. You can see this on the stock market as well. See stocks like LFIN or LTEA.

no_protocol 9y ago
> the price quickly falls and the bot lost a lot of money If the trader already holds 1,000 BCH and is able to spend $800,000 to raise the price he can get rid of it at by $1000, he didn't lose money. Doesn't necessarily mean it was a bot, though.
gchokov 9y ago
You are getting it wrong. The bot is not buying, but placing an order / intention to buy. This pumps the price. Just before the order is filled-in, the trade order is canceled, but the price is already pumped.
- ycombobreaker 9y ago
  First, the last traded price doesn't change by bids or asks, only trades. So you can spoof with passive orders, but that only affects the "midpoint" and never the "last" price. The article discusses painting the tape which means trades. Second, outside of a "last look" type of market, no market participant can identify the time "just before [their own] order is filled". Can you identify any Bitcoin market where last look is in effect? It would be plausible (it is common in spot FX markets) but clear evidence would be available.
- bufferoverflow 9y ago
  That's not how it works. Placing an order does not change the price, it only adds it to the book of orders. If the order executes (a buy and a sell orders are matched), then that's the current price. That's where author's theory makes little sense. It's quite expensive to sell to yourself. Even if you're a high-volume trader on GDAX, you pay 0.1% on each executed trade. So you make 400 trades, you lose half of your money to the fees.
  - foepys 9y ago
    It makes a lot of sense because the buyer and the seller are the same person or group. Even if you lose 0.1% on that transaction, you can easily get that back if you can manipulate the price high enough. We are not talking about people that have 100 BCH but rather 100.000 or more.
    - bufferoverflow 9y ago
      You can't if there's no actual support for that high price from the community. And that's what the whole article is about. Without the support, the price just crashes to the natural levels, as soon as people see some idiots trading at much higher prices than everywhere else. Which is exactly what happened. Two independent bots that got caught in each other's lies and spiked the price makes at least some sense. One bot trading with itself makes no economic sense.
      - foepys 9y ago
        It does make a lot of sense. Especially in markets without any "natural value" like cryptocurrencies. So much sense that there is even a word for it: Wash trading https://en.wikipedia.org/wiki/Wash_trading https://en.wikipedia.org/wiki/Wash_trading
        ycombobreaker 9y ago
        Wash trading is any trading with no change in beneficial ownership. The type of price "manipulations" being discussed are potentially the result of wash trading, but fundamentally the goal is momentum ignition, so the igniter can coax other participants to bid large size at a high price (or buy at even higher prices), and sell to them. You don't have to buy from yourself to show the world that you are buying new highs. Momentum ignition and wash trading may overlap in a single circumstance, but they are distinct concepts.
      - dustingetz 9y ago
        i don't think there is a natural crypto price which is what is being exploited here
fiter 9y ago
The bot is buying it from itself. From the article: > Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and/or selling it among themselves so as to create the appearance of substantial trading activity in the security.

no_protocol 9y ago

> the price quickly falls and the bot lost a lot of money If the trader already holds 1,000 BCH and is able to spend $800,000 to raise the price he can get rid of it at by $1000, he didn't lose money. Doesn't necessarily mean it was a bot, though.

gchokov 9y ago

You are getting it wrong. The bot is not buying, but placing an order / intention to buy. This pumps the price. Just before the order is filled-in, the trade order is canceled, but the price is already pumped.

ycombobreaker 9y ago
First, the last traded price doesn't change by bids or asks, only trades. So you can spoof with passive orders, but that only affects the "midpoint" and never the "last" price. The article discusses painting the tape which means trades. Second, outside of a "last look" type of market, no market participant can identify the time "just before [their own] order is filled". Can you identify any Bitcoin market where last look is in effect? It would be plausible (it is common in spot FX markets) but clear evidence would be available.
bufferoverflow 9y ago
That's not how it works. Placing an order does not change the price, it only adds it to the book of orders. If the order executes (a buy and a sell orders are matched), then that's the current price. That's where author's theory makes little sense. It's quite expensive to sell to yourself. Even if you're a high-volume trader on GDAX, you pay 0.1% on each executed trade. So you make 400 trades, you lose half of your money to the fees.
- foepys 9y ago
  It makes a lot of sense because the buyer and the seller are the same person or group. Even if you lose 0.1% on that transaction, you can easily get that back if you can manipulate the price high enough. We are not talking about people that have 100 BCH but rather 100.000 or more.
  - bufferoverflow 9y ago
    You can't if there's no actual support for that high price from the community. And that's what the whole article is about. Without the support, the price just crashes to the natural levels, as soon as people see some idiots trading at much higher prices than everywhere else. Which is exactly what happened. Two independent bots that got caught in each other's lies and spiked the price makes at least some sense. One bot trading with itself makes no economic sense.
    - foepys 9y ago
      It does make a lot of sense. Especially in markets without any "natural value" like cryptocurrencies. So much sense that there is even a word for it: Wash trading https://en.wikipedia.org/wiki/Wash_trading https://en.wikipedia.org/wiki/Wash_trading
      - ycombobreaker 9y ago
        Wash trading is any trading with no change in beneficial ownership. The type of price "manipulations" being discussed are potentially the result of wash trading, but fundamentally the goal is momentum ignition, so the igniter can coax other participants to bid large size at a high price (or buy at even higher prices), and sell to them. You don't have to buy from yourself to show the world that you are buying new highs. Momentum ignition and wash trading may overlap in a single circumstance, but they are distinct concepts.
    - dustingetz 9y ago
      i don't think there is a natural crypto price which is what is being exploited here

fiter 9y ago

The bot is buying it from itself. From the article: > Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and/or selling it among themselves so as to create the appearance of substantial trading activity in the security.