Bitcoin Forum

On bitcoin exchanges, such as Mt. Gox and Bitstamp, there are multiple bots that buy and sell bitcoins at the same time cluttering the markets and the rate of bitcoin. The purpose of these bots is to gain profit, so traders will get more more tempated to start to use some kind of homespun trading bot. What will we see in six months? War of bots, that rally the rate of bitcoin and make markets completely volatile? That defintely isn´t good for the arising bitcoin ecosystem. So if the bitcoin exchanges want to be trustful, the bots should be banned, or should they?  ???

For the exchanges to be trusted, they should be able to withstand any such bots.   This is normal in the real world, impossible to be banned.

Far from normal. Easy to ban, just limit orders in API.

Bots are good for exchanges and good for traders - they are more likely to lose money to real traders because they just follow extremely simple rules and cannot cope with things they haven't been designed to deal with, whereas real traders have a much greater range of experiences to drawn upon.

They provide liquidity as well and actually decreasing the volatility of markets by narrowing the spread (in the case of market makers).

In short, don't fear them - they are dumb and the vast majority of bots actually lose money for their owners, meaning they're great for real traders.

You shall learn that there trading bots everywhere, buying and selling oil, metals or currencies. Unfortunately, there is just no way to ban them. Often, you can't even tell they're bots.

http://www.youtube.com/watch?v=aq1Ln1UCoEU

TS, what you are thinking is not possible or true.

As a trade bot developer myself i can tell you that every user MUST be unique in its trading moments. If not, the trade bot will not get approval from the exchange. The same could be said about the trade signals, with the software you are allowed to send only 1 trade signal per X time. So with these limits the exchange makes sure that not all the trade bots could give the same signal at the same time.

Something funny 2 know....
If you want to debunk a trade-bot seller then you should ask him or her about the used trading technology. They should mention how they keep users unique, if they do not or if they do not disclose how then it is a scam for 99,9% sure.

I must admit I do not understand your response at all. What do you mean by "unique user in its trading moment" and what is this "trade signal"?

If every bot do the same exact trade at the same exact time then the server will get overwhelmed.

Hmmh..my shortest request intervals are like 15s. Bost most bots check every 10mins, or so. So it's quite unlikely, that they all trade at the same time...

Do you mean multiple bots from the same IP?

If several bots request the same data from the same IP, it's more likely, that they get banned. That's why I use a single ChartProvider instance delivering data for all bots. So I request the btc/usd rate only once and let all bots use this info.

OK, that is a good design. Bots don't get banned because they are the same but simply because multiple requests from a given IP may be seen as DOS attack.

So it does not matter if bots are different or the same but how much resource strain they put on the trade server in terms of number of concurrent requests.

HFT programs help maintain liquidity in the exchanges. You stripped them away, you get more unstable prices.

The only thing I understood in your post was that bots = profit, profit = bad.

This is false.

This is the result of the Obama generation education.

Obama is a communist so at least he is consistent in one area  :-\

Bots are essential in providing liquidity and hence stability to the market.

I definitely don't think that trading bots should be banned. IMO, if Bitcoin is going to prove to be a longstanding, viable, economy, then it's going to have to withstand things like trading bots and not really be horribly effected by them.

Full Disclosure: I'm developing a trading bot.

Trading bots are awesome.

They can't help an idiot get rich because they're only a tool, and only as efficient as the trader that's using them.

Please ban trading bots, a lot of bot flooded bitfunder and they keep puting 0.0000001 BTC higher then your selling price or 0.000001 BTC lower then your buying price....

Just dont care about these bot orders, they keep puting 0.0000001 BTC higher then your selling price but the selling amount is insignificant

"and what is this "trade signal"?"

Well it could be almost anything depending on the bot.
For exampe the "price" could be the signal.
Price = X --> Buy "set ammount"
Price = Y --> Sell "set ammount"

You can't really ban some of them cause they look real

Anyone who is serious about trading securities or bitcoins themselves should be able to spot stupid traps like that and understand how to not fall victim to them.

Look at the order book.

Remember: There is always someone content at selling at a lower price than you

No!

To be honest, I never knew there was a trading bot til now.  ::)

Easy way to limit them would be to charge a fee for placing limit orders

Well the problem is because their selling amount is significant

yep, exactly. the complete NYSE is full of bots...  ::)

Yes, ban those trading bot please..

Very few people understand how HFT works.

Your typical exchange or ECN has 300 order types (NYSE, NASDAQ, etc)...
And there are only 2-3 Special Orders that matter to HFT...
The ones that put you straight to the front on the line.

If you pay the exchange large fees...
You get access to these Special Orders.

Therefore, HFT is just a massive scam by Wall Street to swindle the Middle Class.

http://www.risk.net/risk-magazine/feature/2261626/exchange-order-types-prompt-fears-of-hft-conspiracy

 

there are many more ways of dealing with bots
+ set minimum allowed amount of single order equal to 10 or 100 usd (to get rid of all that 0.000001 junk and chump change "orders"). such a waste of resources (all those unnecessary connections to servers)
+ set limit 1 order per account per 10 minutes
etc

Is there a way to get more insight into this without having to pay for the content? Edit: or giving away massive amount of personal info?

Bot only exchange, human only exchange.

P.S. Any exchange that at any point has more lag than NYSE et al, is a disgrace.

You probably have to be an "institution" that does business on the Exchange Level...
Such as an Exchange Member, bank, Broker-Dealer, Hedge Fund, etc...

Nowadays even shares, forex etc are all using trading bots, how do you ban it?  It will only get more and more popular.

No, because they provide liquidity as well as exacerbating bubbles and busts.

As long as you aren't speculating, the extra liquidity is good for us using it as a temporary exchange medium..

Ban please, they are really annoying.....

I don't think it's possible to get rid of bots entirely.

I think trade bots as well as API functionality should be removed. Whats wrong with just logging into a website to do your trading? It would give the markets a whole lot more stability when they aren't being manipulated by programmers.

Not really. In fact some bots keep the market stable. Without bots 100% human, is 100% emotion. Then the swings are even worse! Do you trust placing a stop loss order at an exchange, they could easily "stop loss fish" your order.

Bots, generally will not be profitable for their owners, but that is not a reason to ban them from being able to be used.

Bots are very similar to high frequency traders on the stock market, except they don't have the same advantages. High frequency trading does provide liquidity to the stock market.

I often feel that I would love to ban bots, or rather trade on an exchange which doesn't enable them through their API, but at the same time I feel guilty for wanting that because I don't want to be a luddite.

Traders bot or no bot

a bot is just a tool

good tool which work 24/7 :)

I really don't like the idea of banning things outright.  I think the community needs to discuss and workout some from of regulations for proper use of a bot.  I doubt all who use a bot use it to disrupt the market.  I thnk that gives some form of standard that people can identify as proper use of a bot.

Obviously exchanges would have a good bit to add in this discussion if their was ever any real attempt to regulate the usage of bots.

Another regulation? Really?

Bitcoin was invented because we have too much regulation, not too little. If someone writes a bot, let him do so. I see no reason why this should be regulated/banned at all.

It shouldn't be. Bots can liberate our time to do other things.

I think it shouldn't banned hard to banned
buy and sell stock, gold, oil. people often use bot

but there are way to decrease bot usage :
- CAPTCHA every trading action
- no shared API
- trading limit

but remember, bot just a software. sometimes it can do something wrong

Bots usually play a conservative logical strategy that can be worked around or even used to your advantage if you figure out exactly what that strategy is by feeling one out. I think you'd have more to fear from the sort of conspiratorial manipulation of price perpetrated by well-funded small groups (sometimes even individuals) across all the major exchanges. They're responsible for the instability in most markets. The unreasonable highs and lows and constant swinging value of popular coins is mostly a product of their efforts.

The break out in btc prices from $100 to $1000 is attributed to bots. Bitcoin has not gone back to $100 since then.
So maybe, those 2 bots have benefited the bitcoin community after all. :)

This is correct, however it is very possible to profit over other's fear and greed.

trading 101

Speculator and trading bot are needed for a healthy system.

True.... Speculators, bots, anybody else is welcome.. As long as they don't affect market integrity.

I think we should leave this to demand n supply. There is no reason to block bot as much as it is to block HFT.

I think all financial industry is now very much automated with up to 90% of trades in forex and share market conducted using bots or EAs. You can't ban that. But of course each exchange can implement its own rules regarding using certain bots.

hope it will be banned, i don't like bots.

There are two bots that have been acting all day long in a very suspicious way. Or may be just one... buying and selling without any sense.

I suspect that the owners of those 2 bots are btc-e and their purpose is to money laundering. Every buy/sell order has their own fee...

In result BTC-e is having tons of free fees as a result  of this bot/s.

I can only speculate on this information and there is really no evidence for this except we could access the BTC-e logs and examinate them.

The majority of bots that's being used in bitcoin trading, use kindergarten level trading algorithms.
The only people that would benefit from a ban is their owners...

I know their annoying but I think they have the ability to play a positive roll and don't think they should be banned because people misuse them.  There are times when I find I'm dealing with a bot that I'm able to make it do what I want it to do rather then vice versa but it just takes time to figure out what it is programmed to do and work around it obviously there are limitations to what I can do financially but generally speaking I tend to see bots as a nuisance more then anything else.

Some people find them annoying and the main reason for that is because they do get misused but I don't see why they should be banned just because a small minority misuse them, it's seems they can and do play a positive roll and maybe taking that away could leave us with negative effects.

I don't understand how anyone would even know that someone is using a bot on an exchange, other then the exchange operator. I would also think that human traders would have an advantage over bots as they could potentially spot how they react to certain conditions and would know what they would do in the future if they have enough influence on the market.

I mean bots are doing what people do but its just allows the trader to be afk, so i dont really see a problem with it.

    Find a slow market, with a wide buy to sell ratio.  Try to set a buy or sell order for 1 sat higher or lower then the highest.  If with in 30 seconds your no longer the highest, try it again.  see if you get beat out again.  wait 20-30 mins and try again.    If you get out bid again, then it most likely a bot.  People don't have the patience to watch a market that's not doing anything.  Bot's don't care.     

What's wrong with them? Are you a ludite or what? They just do what humans would do, but they are much more productive. Volatility decreases when volume increases. Compare a penny stock's volatility with the SP500's.

There's too many benefits from bots to consider banning them. The exchanges win from higher trading volumes, the traders win efficiency and everyone else enjoys greater liquidity.

There's nothing bad about them, they just make life easier for those using them, for those that create them and for everyone else that is trading. Banning them has no sense.

can't agree, bots is very useful for daytrade and arb, due to no one can string at the market 24h.

If they were banned I am sure the price is gonna fall down to the floor.

And volatility would also increase a lot, as there would be less market orders, and therefore you would move the market by selling or buying smaller amounts of BTC than now.

Like already said, there is just one kind of bots which is useless : Those which make order without any objective to be filled.

Bittrex tried to do things against them, but they are still present.

Otherwise, i'm agree, bots are necessary for markets and exchanges, and a bot will be never stronger than a human brain. His unique advantage is to be operational 24/7, instead of human brain which need sleeping :)

Totally agree with the poster before me.

The whole argument is pointless. You can't separate a bot from any other software that is using the API. In fact, even disabling the API, a software can use the same interface of the user (what is behind the html ui, so to speak) to still place and cancel orders. Not to mention that automated or assisted trading is useful. Or do you want the arbitragers and the market makers to work by sending carrier pigeons? Finally, there is the thing that those that bash 'bots' and the like are always the ones that know nothing about them.