Bitcoin Forum

I'm sharing this because of others copy me they make money but they also stabilize the markets and make the tendency to crash go away.

I have accounts on each the minor bitcoin exchanges. Plus an account on MtGox.

I keep $1000-2000 on deposit in each of the minor exchanges. The volume is so light just buying $300 worth can sometimes change the prices 5%.

I buy from wherever Bitcoins are lowest price, and in a small enough volume not to move the price. I only do this when mtgox is within 20% of the daily lowest price.

So if Bitcoins trade 92 on mtgox on another exchange they are 80-85 in small lots. If you buy $5000 worth the price will go to the same at mtgox. So I buy tiny lots and buy with patience, always buying close or below the daily trading low.

When Europe "wakes" during their daytime I have accumulated Bitcoin overnight. I sell as soon as the daily bull run hits mtgox, no greed here.

When there is a technical problem on mtgox blocking trades, the secondary markets are hammered and fall drastically. At these times I buy with 100% of my money. Its easy and quick to transfer a bitcoin to a secondary exchange during a panic, and it pushes the price "too low" since its hard to transfer cash to a secondary market so it can't handle the volumes. I have parked cash on secondary exchanges.

Don't buy on mtgox, sell there! Buy where bitcoins are cheaper with patience and foresight to park cash there and wait for the daily low.

This trading strategy works best with $3000-5000 not more. If you have more you can't keep it in play since volumes are too thin.

Its no secret there are "Russian" professionals with lots of cash running DDoS against the exchanges to panic the market so they can buy. They then sell during the run-ups and repeat.  They are making millions as smaller amateur but greedy investors sell in panics.

I don't doubt that the OP is doing well with his plan right now.

I just felt it necessary to warn people that as unstable as bitcoin is it's very unlikely you'll be able to make steady profits in the long run doing things like this. I've seen far to many people get into bitcoin (especially recently) and make some quick money on things like this and feel confident that their strategy is very sound..... only to run into them a few weeks down the road and hear that they've stopped doing it or that they lost most their money.

Everyone loves to share their stories when things are going well, which is why you'll always see posts like this popping up. Few people like to talk about how they lost money though, which is why you'll rarely see those posts.


The OP of this post seems to be under the assumption that he can always accuretly guess when he will be buying at the daily low or near the daily low. With bitcoin that's just impossible to know. Also any time where you throw 100% of your investment into something like he mentions above, all it takes is to be wrong ONE time. That's it, just one mistake and it's over. That my be great in the short run when things are going well for you, but in the long run you're bound to not only make one mistake but make hundreds and thousands of mistakes.

After day trading stocks and options for years, I'd just like to tell any newcomers to "trading" that things work until they don't. If you find something that is working for you, use it and enjoy it while it lasts, but know that it won't last. Everyone goes after easy money until it is no longer worth it or it doesn't work anymore.

Truer words have never been spoken!  OP's approach is a good one and well thought out, but you can always get caught buying at the top of a big fall, or having a few "bad days" run together into a bad month... Don't gamble with more than you can afford to lose.  And yes, it's gambling, even if you're having a good winning streak.

Very true.

It would be interesting if we someone could document and follow a large group of bitcoin day traders. It would be a interesting video to watch and very educational for everyone out there who thinks day trading in bitcoins is their way to quick riches and fortunes.

...until they have.

Anyways, his post is inspirational, but I think moving the USD around is difficult, and watching the markets, it seems like the secondary markets are almost always lower. But, if he's found opportunity, more power to him. Sounds like his main focus is timing the market based on EU waking hours. Interesting.

The strategy works in theory.   Or did until the markets all aligned themselves so the margins are getting pretty thin.

Unfortunately, there is VERY significant deposit risk.   If one (or more) of these smaller exchanges goes belly up, goodbye profits.

In fact, what a great scam.   Create another exchange, wait for day traders, and then vanish.

I like the idea.

In fact, I did pretty well on bitcoin-24 experimenting with roughly the same idea, although I hadn't thought it out as well as you have.  In just a few trades I managed to go from 10 BTC to 11.5 BTC.  It was so promising that I moved some more bitcoins over, just before the exchange went offline.  I hope I don't lose it all.

I especially like the idea that we can help reduce the volatility.  Obviously, it takes significant resources to be true market makers, but if we can get enough of us doing approximately the same thing, we should be able to make some difference.

Perhaps we should start our own thread, similar to MtGoxUSD wall movement tracker thread to discuss our activity.  Instead of just being observers, we would actually be moving the price.  If the thread got popular, perhaps we could significantly reduce the volatility.

I have a few questions.  Which exchanges do you use?  Have you found an easy way to track them all at once?  Do you have any trading platform, or is it all manual trades?

it's too risky,holding any coins for a long time is risky for me  ;D

That's called arbitrage, and can be done by EA. Huh.

I am from russia and i am sorry for my people running ddos attacks.  :'(

Don't be sorry. There is absolutely no evidence or proof that DDOS "attacks" are coming from Russia. Just a con-venient theory. Maybe the network needs to mature a lot?

Which minor exchanges are you using?

What OP is doing is not arbitrage.  This is from Wikipedia:

"Arbitrage is not simply the act of buying a product in one market and selling it in another for a higher price at some later time. The transactions must occur simultaneously to avoid exposure to market risk, or the risk that prices may change on one market before both transactions are complete. In practical terms, this is generally possible only with securities and financial products that can be traded electronically, and even then, when each leg of the trade is executed the prices in the market may have moved. Missing one of the legs of the trade (and subsequently having to trade it soon after at a lower price) is called 'execution risk' or more specifically 'leg risk'."

OP is not executing simultaneous trades on two or more markets.  In fact, because of the challenge of moving fiat, if I understand correctly, he always buys and sells on the same exchange, just at different times of day.  He just happens to use this same strategy on multiple exchanges.

Who is EA?

I have to thank the OP for sharing his strategy.

But since i thought of doing the same. What i really have benefited from this post are the constructive criticisms given by the other members.

I will sure be much more careful now.

I was attempting a similar procedure, but the exchange rate fees would have erased any gains I would have made.  I calculated that the best I could do would be 2% a month, and without too much to invest, I gave up.

Aribitrage is a decent strategy, but be careful. I was making ~10 BTC per trade doing this for several weeks in a row, but then the Bitfloor hack happened and I lost the equivalent of ~50 BTC (not in the hack, but in a poorly-timed trade). There are more players in this game than you can imagine.

Nice post and thanks for sharing your trading methodology. I'm just looking to get on the band-wagon now so it's useful to see how other people track the rates and decide when to buy and sell. I hadn't thought about the different markets, so that's interesting too.

When you sell, they credit your bank account immediately?

Many thanks

CA

This. The network needs to be able to resist such attacks, so in some way they're helping it. It's the same with all P2P networks (Gnutella, BitTorrent, eDonkey). There are huge attacks everyday but the end users don't even notice them.

There's certainly risk involved but what the OP is doing is similar to my intentions and is a lot like what I did with penny stocks/pink sheets for about a year.
It was my first time investing and in half a year, I doubled my tax return, took it out, and paid off some serious bills.

I was looking to get back in but none of the micro-pharmaceuticals were catching my eye like they had before.
Then I read about bitcoin, the decentralized structuring, the mining options, etc.
And it seems like the next great experiment that I'll either rock or bomb.

I've always felt that the volatility of bitcoin (or any stock) is exactly what you're hoping for, if you want a daytrading strategy.
Can't make 10%+ in a day on a stable currency or stock without insider knowledge.
I would never DDoS a system, I don't even have the capabilities.
But I'll certainly take advantage of the effects it creates.

Hope everything's still running smoothly for you, OP!
This post got me excited, I'm still learning about the various exchanges and getting some avenues for changing bitcoin into USD right now.

Nice description of a basic arbitrage between exchanges. Do you hold any for the longer term as well?