Topic: Exchanges' market prices synchronization (Read 73 times)

Arbitrage traders. Period. Exchanges do not care about prices of coins on their exchange. Is bitcoin worth $20,000 or $40,000? They don't care. They earn fees regardless of prices. Arbitrage traders ensure price synchronization. That is, traders who have opened accounts on several exchanges and have funds on each of them, and as soon as there are slight deviations, they buy on one exchange X and immediately sell on exchange Y bringing prices closer.
so how come the prices are so close? because their orders are triggered automatically by very simple algorithms and API communication, it's so simple that the competition is huge so they compete with each other for cents and miliseconds, sometimes even paying extra for their business just to reach high VIP levels on the exchanges to be able to apply for commission discounts to beat the competition.

For example your (or not) "Best Change buy/sell crypto", what do you think people have as a reference when setting their asks and bids? They go open internet, click of certain exchange website, check prices (add small margin!) for certain pair and set. This is an example of primitive synchronization mechanism.

I am not saying that synchronization implies 1:1 mirroring, of course there is a room for local speculation like Bittrex had. Is there any other exchange that allowed to trade XRP 0.59-0.69? I did not see. Majority had Asks and Bids "nose to nose" close to each other. Having said that, there is a sort of fetching-synchronization not a mirroring (as you correctly noted)

Not something to ponder much because the tolerance is still large which is the reason for arbitration. If there was no difference to enable arbitration, then I would have thought much about the synchronization algorithm.

Does anyone know how crypto exchanges manage to synchronize market prices across all of them? There are thousands different crypto exchanges out there located in different parts of the world.
For such market synchronization there should have been applied some sort of shared data pool where all exchanges connect to, lets say websockets and listen to other exchange's sudden significant market movement. Does anyone have ideas about this fact?
Let me write down my assumptions and lets discuss.

1) There Should be a shared communication mechanism between all exchanges, otherwise its not possible to keep prices all in between tolerance level due to the fact that people could trade across "outstanding" exchanges.

2) Bots control price fluctuation. It is not a secret that there are bots placing their order just 0.00000001+- than you, I see them particularly on Bittrex "blocking" demand or ask by placing quite big amounts (right now for example you cannot sell xrp for 0.645$ because everytime your order will be out by bot with 50K xrp who places "in front") within the certain range. If not such bot, then the price would fluctuate within the greater numbers, since other orders are way less than the blocking one, and to accumulate the certain amount, the "buyer" let it be exchange itself or human, would need to buy at greater prices.

3) Biggest traders are exchanges themselves? In order to correspond to the market prices (synchronized market across all exchanges) some exchange would be forced to start either buying or selling a certain asset. That is why a drastic volume change won't be seen at the time price surges or plumets. Because the exchange itself start panicly (or not) buying/selling according to synchronization algorithm.

4) I do think that the Price Synchronization Algorithm is only an edge of an iceberg, because to actually move the price, you need either ton of money or ton of crypto. Additionally, to move it to certain point, the probability and statistics need to be done not to lose the game on behalf of exchanges. The winner in this game is who will take out the money first, either exchange, trader, investor or regular hodler. To start the actions and to win on behalf of an entity that is playing against the regular traders and hodlers, I would do statisctical analysis and news manupulation to either set the expectations for traders/hodlers (to take the money earlier than them) and see what are their expectations based on speculations on twitter X, tradingsview etc. where people usually say "moon moon baloon" etc. to see what they think and outsmart them (as a contrary player to traders/hodlers).

5) I personally was lucky to gain a bit xrp due to the bittrex closure event, I say lucky because the trading was straight forward, price was fluctuating 0.591-0.689 for 2 weeks. Some days I stopped myself to see whats going to happen, because I know anytime this funny bazar ends up and we either plumet or surge. So, what I wanted to say is I see safe trading only in such calm periods when price only fluctuates, when no exchanges "explode" and signal to others do so, and trader can speculate on such "flat" price waves.

What are your comments on my thoughts?