Topic: Can someone explain the price difference between Tradehill and MtGox? (Read 2442 times)

Right. Notice that by the time the value transferred, it was too late for arbitrage.

There are at least two people running arbitrage 'bots. They maintain balances in both USD and BTC on both Tradehill and MtGox. So when a price difference bigger than the commissions involved appears, the 'bots pounce on it immediately. Unless the arbitrageurs run out of USD or BTC on one exchange or the other, the exchanges don't stay out of sync for long. Arbitrage opportunities last about an hour.

(Could be worse. Arbitrage opportunities between exchange-traded funds and the underlying stocks last milliseconds.)

yes, pretty slow.  I'm just sitting and waiting - watching the exchange rates etc (auto-updates on my trading calculator anyway).  I could close out some of my position, but being patient.

Not sure I see exactly what you are saying.  I think the dropouts are sometimes just a fat-finger and/or failure to look at the depth charts, and some people have admitted/whined about having done so.

Currently I believe that there are people who want out so badly and quickly that they are willing to take a monetary hit and are letting a build-up happen, then sweeping it up.

I played again after I wrote the above with the following results:

===
Date Completed   Filled Order   Price   Commission
Nov. 21, 2011, 3:27 p.m.   Obtain: 225.90 USD Gave: 100.00 BTC   2.259 USD   1.3554 USD Commission
Nov. 21, 2011, 5:28 a.m.   Obtain: 100.00 BTC Gave: 207.80 USD   2.078 USD   1.2468 USD Commission
===

Not that it is an especially 'tough' way to make a buck, but it's just not that satisfying somehow.  And there is a limit to the revenue.

They are not always drop outs, sometimes there are just stupid prices paid.  My best price "this" month is $10/coin.  I missed on the $15.

OP:  I'll try.  This is all my personal opinion of course.

For historic and operational reasons, there is not a 100% overlap of users on Mt. Gox and Tradehill.  In other words, not everyone uses both services.  Some people probably cannot since one exchange or the other will not deal with them or give them satisfaction.  I think that Mt. Gox made some reference to not dealing with someone who almost certainly had a block of (purportedly) stolen coins on Tradehill.

So we see vastly different depths on the books of the exchanges from time to time.  At least a couple of people are doing arbitrage, but the only way to do that realistically is to fund both Mt. Gox and Tradehill accounts with quite a bit of fiat then balance out as time and opportunity allows.  At times the people doing this simply run out of funds and we see a gap open up.

I personally don't feel comfortable putting significant capital on the books of either exchange just to make a few nickels.  It is a combination of mis-trust, and a feeling that the exchanges are operating under the tender mercies of the larger financial and regulatory agencies which could shut them down at any moment.  Also, the depth on Tradehill in particular tends to be so lite that it's hardly a path to unlimited riches, and one decent sized player could monopolize what game there is.

---

A different game is to simply use the drop-outs on Tradhill to make a few bucks.  These drop-outs popped back up this weekend.  It's like someone throwing $20.00 bills in front of your feet and running off.  I finally couldn't stand it any more and picked one up earlier today (breaking my own rule of never selling a BTC.)  Worked, but it's hardly worth the effort and here again, I don't think that more than a few people can play.

So for $100 to $400 or so, BitInstant charges 0.89%. Tradehill has a commission of 0.6%, and let's just use the same 0.6% fee on MtGox. So, to make money out of this arbitrage situation, you'll need MtGox BTC prices to be at least 2.12% higher than the current TH price, and you can still end up with a >2 hour delay for getting your BTC out of TH and into MG.

This is what I was referring too.... Bitcoin deposits into MtGox were down during the uptrend and the trend reversed when they started to clear and people had bitcoin available to sell.

Agree, there are different sets of traders.  Some trade exclusively on Gox, others pick and choose.  One of the differences/difficulties is the time for transfers, so having the right funds in the right place at the right time takes some effort, as well as tracking and bothering with the different exchanges.  It's a shame Aqoin dropped off, because it was a nice addition to the set of places to make a few dollars (or euros).

I've been trading my average price down for a couple of months and it's going nicely, some as speculative, some as simple arbitrage.

Exactly, arbitrage opportunities do exist in this world.  However, price desparities are usually as a result of trading expenses or liquidation issues.

I haven't investigated Tradehill yet purely b/c I I've been burned by other exchanges that were fraudulent...

I'm keeping to mtgox

I'm glad you've had success.  What are the fees for bitinstant?  (another site I haven't used yet).

How much volume did you need to cover the transaction fees? 

All of this research is what has stopped for for right now.  But that's just me...

The time required to send funds between the two exchanges really is an issue but it certainly does not stop anyone here from profiting nicely from arbitrage.  All you need to do is keep some BTC and dollars in both exchanges?  Whenever there's a significant price gap you can buy on one exchange and sell on the other simultaneously.  You then equalise your holdings at both exchanges and, when they have gone through, you'll be in a position to strike again.

Write a bot for greater speed.

I believe the main reason the price difference lasts for so long is because the sum total holdings of all arbitrageurs is insufficient to counter the massive buy and sell orders we've been seeing recently.

The same thing.

There's a discrepancy because it's two different sets of traders. Because people like you are aware of the difference in price, and want to profit from that difference, you'll try, and doing so draws the prices together like a magnet. Let's say you do buy on Mt. Gox for $0.20 cheaper and xfer to TH to sell. First, you'd need enough volume to make the fees from BitInstant and TH justifiable. You also risk the TH price dropping while your BTCs are in transit. You sell your coins, which pulls the price closer to the Mt. Gox price if you aren't able to find buyers for all your BTCs.

My first transfer took 20 confirmations to arrive - I'm still waiting for the second (in the next block).

edit - second arrived in the next confirmation. I'm now $15 dollars richer - 2 pints of Guinness here in Shanghai.

I did the deposit via Bitinstant as well, and also transferred my BTC from my mining pool. Both of those were done last night and the BTC still hasn't shown up at MtGox almost 10 hours later. What gives? Usually it only takes an hour or less. Anyone else having problems depositing BTC at MtGox right now?

Maybe - but if I'm choosing to either buy on mt.gox or buy on tradehill then the choice is clear. It's a bigger gamble to buy on mt.gox at 2.40 than tradehill at 2.17. And 2.17 is still a decent price for bitcoin. I'd be quite happy to keep onto these bitcoins for a while if the price suddenly drops below this level (I only bought 120btc).
Since people are buying on mtgox at 2.40 why don;t they use the same money they have and buy on tradehill at the much cheaper price?

And the slide begins...

Whoops. Rally ended with a dead cross.

There is only about 200 btc of demand left above $2.35. You better get them moved quickly.
I don't think this rally is going to last much longer.

That's exactly what I'm doing - I bought them at $2.17 and intend to sell them at $2.35 at worst. Even if they drop to $2.17 in the hour it takes them to arrive, I still haven't lost anything.

Send the bitcoins back to MtGox to repeat the trade and you'll have your answer.