Imagine you have 10 btc and/or 1000 usd, and current orderbook is the following:
Volume@Bids
1@100
2@99
3@98
Volume@Asks
1@101
2@102
3@103
First you buy 6 btc for 614 usd causing 1 minute lag and preventing others from making orders, then you sell 6 btc for 592 usd, thus you loose 22 usd + fees.
Or you can do the other way around, then you will loose bitcoins + fees.
That's roughly what happened. I am not sure it is a good trading strategy.
Update: so, yes, I like the explanations that it is either a software glitch of a trading bot, or an attempt to win some bet
Topic: I don't understand why someone would buy and sell at the same time (Read 2054 times)
May 06, 2013, 01:46:02 PM
Could be bot gone wild, could also be someone that doesn't have the funds to buy anymore, thus they sell a ton, and immediately buy a bunch more in an attempt to eat through the 125 wall. They kept trying to do this and appear to have failed miserably and people just started throwing asks up to 125 and made the wall even more massive, lol.
But even if they get though 125, they have lost a ton of money on the trading fees. How can they actually make a profit on selling at 124, buying back at 119 and then doing that repeatedly?
A $5 spread is going to make money, not lose money. That's 4% profit, even if the trading fees are at their highest they are only .6% one per trade means 1.2% in trading fees so the trader is making 3.8% profit.
I misspoke. They were buying at 124 and selling at $119. That's why I think they lost a ton of money.
May 06, 2013, 01:40:04 PM
Could be bot gone wild, could also be someone that doesn't have the funds to buy anymore, thus they sell a ton, and immediately buy a bunch more in an attempt to eat through the 125 wall. They kept trying to do this and appear to have failed miserably and people just started throwing asks up to 125 and made the wall even more massive, lol.
But even if they get though 125, they have lost a ton of money on the trading fees. How can they actually make a profit on selling at 124, buying back at 119 and then doing that repeatedly?
A $5 spread is going to make money, not lose money. That's 4% profit, even if the trading fees are at their highest they are only .6% one per trade means 1.2% in trading fees so the trader is making 3.8% profit.
May 06, 2013, 12:53:43 PM
You have a better explanation for an incentive to sell low and buy high multiple times?
Why would anyone do it that rapidly, creating a huge spread? It makes no sense at all.
My assumption is that this has to do with either IGmarkets or plus500 who offer spread betting. They can wipe out their customers easily this way, collecting money on that end, while just spending a bit on MTGox.
Another option is just a bot going nuts.
Wow - that would actually make a lot of sense. Someone who hedged against the price reaching $116 would have every incentive to buy a ton of Bitcoin and sell at a loss to drive the price to $116 and pick up his winnings.
Wow, it makes no sense. As a customer, it would be too obvious to see the manipulation. And while it might maybe make sense one time, three times in a short amount of time is stupid. Even if you had 3 separate bets going, you'd only need one of those blips to win all three games.
May 06, 2013, 12:43:08 PM
Why would you think it's the same person buying and selling?
This.
There is a variable called time that would tip you off.
May 06, 2013, 12:13:12 PM
Why would you think it's the same person buying and selling?
This.
May 06, 2013, 12:09:53 PM
You have a better explanation for an incentive to sell low and buy high multiple times?
Why would anyone do it that rapidly, creating a huge spread? It makes no sense at all.
My assumption is that this has to do with either IGmarkets or plus500 who offer spread betting. They can wipe out their customers easily this way, collecting money on that end, while just spending a bit on MTGox.
Another option is just a bot going nuts.
Wow - that would actually make a lot of sense. Someone who hedged against the price reaching $116 would have every incentive to buy a ton of Bitcoin and sell at a loss to drive the price to $116 and pick up his winnings.
May 06, 2013, 12:00:21 PM
You have a better explanation for an incentive to sell low and buy high multiple times?
Why would anyone do it that rapidly, creating a huge spread? It makes no sense at all.
My assumption is that this has to do with either IGmarkets or plus500 who offer spread betting. They can wipe out their customers easily this way, collecting money on that end, while just spending a bit on MTGox.
Another option is just a bot going nuts.
May 06, 2013, 11:57:44 AM
What was the volume on those buys?
If a sell clears the bids downward a good way and the asks don't follow, anyone buying would create such a spike.
If a sell clears the bids downward a good way and the asks don't follow, anyone buying would create such a spike.
May 06, 2013, 11:54:29 AM
You have a better explanation for an incentive to sell low and buy high multiple times?
No-one does have a better explanation. But that does not make your hypothesis valid. We don't know what is going on. Someone unloaded over 4000 Bitcoin at 116 when the market price was 119. Someone then bid the market price up to 124 for about 30 seconds, clearing all asks below that point.
No single player can justify the losses in those exercises by getting lower mtgox fees.
At least you have a theory though. I'm baffled.
May 06, 2013, 11:42:29 AM
You have a better explanation for an incentive to sell low and buy high multiple times?
May 06, 2013, 11:25:45 AM
"to get the discount from mtgox"
sounds like the best answer to me by far.
sounds like the best answer to me by far.
Can't tell if serious.
May 06, 2013, 10:50:46 AM
"to get the discount from mtgox"
sounds like the best answer to me by far.
sounds like the best answer to me by far.
May 06, 2013, 10:38:49 AM
Wouldn't that be more expensive?
I don't know. If price is fixed, you pay only predictible fees (and get discount from mtgox). If price is moving and the lag is ~1 minute, then it depends on other players' behavior. Obviously speculators that stabilize the price win (and thus the manipulator looses).
Perhaps the manipulator wants the price to move to trick those trying to snipe the bottom? I dunno.
May 06, 2013, 10:36:59 AM
Wouldn't that be more expensive?
I don't know. If price is fixed, you pay only predictible fees (and get discount from mtgox). If price is moving and the lag is ~1 minute, then it depends on other players' behavior. Obviously speculators that stabilize the price win (and thus the manipulator looses).
May 06, 2013, 10:26:57 AM
Possibly the only purpose was to create the illusion of volume. Over prolonged periods, volume may be interpreted as consolidation, encouraging buyers. Short bursts of volume as panic, encouraging selling. A burst might also be intended to trigger bots, some of which trade based on volume activity in addition to price.
Isn't it easier to generate volume without moving the price? Just 2 big orders (buy and sell at the same price) could do it.
May 06, 2013, 10:21:00 AM
Reminds me of PirateAt40 lol....such a fail trader...
May 06, 2013, 10:16:54 AM
Possibly the only purpose was to create the illusion of volume. Over prolonged periods, volume may be interpreted as consolidation, encouraging buyers. Short bursts of volume as panic, encouraging selling. A burst might also be intended to trigger bots, some of which trade based on volume activity in addition to price.
Ah - so they have deep pockets then as it looks like over $1 million has been spent.
Could be bot gone wild, could also be someone that doesn't have the funds to buy anymore, thus they sell a ton, and immediately buy a bunch more in an attempt to eat through the 125 wall. They kept trying to do this and appear to have failed miserably and people just started throwing asks up to 125 and made the wall even more massive, lol.
But even if they get though 125, they have lost a ton of money on the trading fees. How can they actually make a profit on selling at 124, buying back at 119 and then doing that repeatedly?
Their hope is that they have so much money, and so many BTC, that when the price rises up to 130-140-150, the trading fees they incurred would mean nothing compared to the profit they now have.
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