Thanks Tulkas! Seems like your service is growing nicely! 30+ active loans and over 1000btc lent so far. Very promising.

Wishlist for the future when the business is more established: A graphical representation of my invested funds and returns... and also showing any defaulted payments so I can get an easy overview of how my investments are going and my ROI.

<- High enough presence for you? I'm currently invested in 2 listings and would also like to see what creating a loan looks like.


I also have a feature request, can you add an automatic withdrawal to your pre-set address?

In light of recent news... Good call You must be happy!

I'll be a little nervous when forex traders get their hands on bitcoin. From what we've seen it isn't hard to manipulate the price by using walls and holding sufficient bitcoin to artificially induce panic cycles. I'm pretty sure this is what pirate did until people caught wind of what he was up to. These individuals then priced him out of the market forcing him to default on his obligations.

An individual forex trader can shift millions in a day, the current market cap can't handle that without a wild ride. If the market cap grew to 1bn+, the affect of a million $ trade would be much smaller. In the longer term it'll help bitcoin, right now, I don't think we're ready.

Hi Charlie, I'm trying to understand your first point more clearly, in one paragraph you post about the more able members helping the weaker members, but following that you are stating a clear desire to push the price up to sell for more for personal profit. (almost sounds like a pump-and-dump):




I'm with MarkM on this one. I think you need to clearly understand that different individuals perceive value differently. I highly value a bitcoin over a USD as the value of any usd for the near future will drop due to inflation (quantitative easing). As you've already experienced Charlie, the value of bitcoin over since its inception has only gone up... to your benefit!

Also, on your view that the future is illegal. I disagree. The reason? Its technologically useful. And $110+ million of market capitalisation backs up a perception that it is something with real world value.




To give my view a bit more depth, I'll use the analogy above. The US, after creating cryptography saw a huge threat in homeland security if it was used outside of its country by an enemy. They subsequently realised after the technology went mainstream that they could not stop growing consumer demand. If bitcoin is deemed illegal in the US, demand will drop but ultimately it will continue from the rest of the world.

When global adoption reaches a critical mass, if the US isn't in, then it will be at a disadvantage.

Thats very true, the buy side will always be cheapest at MtGox. The sell side at the less liquid broker so you will always be transferring Fiat. Bitcoin can be automatically balanced by your bot if it tracks your bitcoin trading activity. The Fiat balance always requires manual rebalancing through your bank, if you have a buffer amount then its manageable to always have your bot running even if the fiat will take 2-3 days to arrive.

This would make storing a wallet in a lockbox / hiding place very easy. Anyone know if its possible?

I'm just testing the waters for now... although 10btc is a fair chunk for a test lol. I wouldn't mind an otc rating (not within btcjam) after though as mine is 0 right now and I dont really do much trading. Is that possible!?!?

... 10btc lent to boonies4u through BTCJam

There are ways around this, my method was to keep a btc 'float' amount which is always fixed. However much btc I would buy on one broker, I would sell on the other, keeping this float level the same. Profits were taken out of the fiat.

A crude analogy is a corner shop owner keeping a fixed amount of change in his till every night and taking out his profits. This will lower risk slightly.

Be careful not to mix up arbitrage trading with trading market movements... with arbitrage you are hoping for good market movement regardless of direction as this equals profit. If you are trading market movements or investing, then you will be betting for a the price to go up or down in the same direction your bet is.

I'm hoping to gain a better understanding of how moving averages are calculated. On bitcoincharts.com, you can choose to display a moving average in a 1 minute interval, 5 minute interval, 10 minute, 30 minute, 1 hour etc...

My question is, how is a moving average calculated at these intervals? Are all the previous trades grouped in 5 minute blocks and the moving average is taken on that???

Its not lag of an exchange which makes the prices follow MtGox. Its the people placing orders on the other exchanges not knowing that the price has suddenly changed on MtGox (for better or worse). Most of these people won't care as they are not traders but just want to acquire bitcoin at a price which seems reasonable to them.

I don't actively look for volatility as its something out of my control. I just wait for times of volatility (which often means high volume) as arbitrage opportunities become more frequent. When this happens, I make more of an effort to monitor the bots and each of their trades.

Thanks BitcoinRate

Mine is done in PHP, purely because thats what I'm most experienced in.

No, different languages do not make a difference, in fact PHP is notorious for being one of the slowest languages out there.

My trading engine, calculates if a trade is profitable takes less than 0.00003 seconds. Placing the trade on the other hand using the http calls can take upto and over 1 second which in comparison is an eternity. Execution depends upon the broker's matching engine (some of which are slow).

I was hoping to rewrite my bot in Python someday as I've been teaching myself. I quite like the language!

For those that would like to try their hand at arbitrage trading, I'd encourage you to give it a go. Opportunities are reasonably good still and I regularly see trading opportunities lasting for minutes at a time. Make sure you have some fiat and bitcoin on both brokers to start with and wait for some volatility! Using the websites to place orders are good enough.

I have a few reasons, the main one being that I can't trust most of the brokers besides MtGox for the amounts I want to trade. They are by far the most professional.

Its difficult and expensive it is to operate a good bitcoin brokerage. Profit is hard to come by unless you have massive trading volume and unless you have a large trading volume, your prices will never lead meaning fewer customers. Its a double edged sword which is very unfortunate.

This is compounded by the fact that serious IT security is very expensive and only affordable by the largest brokers. I won't even get started on that topic...

Yes thats right, profitability on overall trading volume is a few % at best. In the real markets, Prop trading houses who are the biggest players in high frequency trading / automated trading / arbitrage trading etc... regard 1% profit on trades as a huge figure.

Fiat was moved through my personal bank accounts. The fee structure at each broker differs a lot. Some want a percentage, some have a fixed fee for any balance and some are free. This has to be taken into account in the bot's trade execution calculations are performed so that it will never execute an unprofitable trade.

Careful calculations in excel showed me if it was viable to arbitrage the various brokers and the optimum transfer amounts (taken into account risk). e.g. if a broker wanted to charge a $10 fixed fee, then transferring $5000 at a time resulted in a cost of 0.2% of my trading profits; transferring $1000 at a time would equate to a 1% cost of trading profits.

Transfer times are a pain, fiat transfers are sporadic at best with certain brokers taking days to even initiate a transfer. I kept an amount of fiat as reserve in my bank account and would use that as a buffer. Keeping the bot trading depended on keeping the fiat amounts up. Volatility is a good signal of when I would have to step in.

At different points in time I ran the bot(s) on 4 different exchanges, MtGox, Intersango, CryptoXChange and the ill fated WorldBitcoinExchange  . Trading was done in a number of different currencies.

As I said in my OP, risk came to be one of my biggest threats to profitability. One way I lowered my risk was by increasing the number of exchanges I traded on. I placed a personal limit with each broker of how much I would trust them with and due diligence was always a part of my risk management. Getting in touch with the people running the brokers and asking questions / gauging responses on a number of occasions helped.

Balancing the amount of bitcoin is straightforward as all API's support automatic withdrawals and deposits. Limiting the amount of fiat risk I'm exposed to is more tricky.

Disclaimer: None of the bots are currently active.

Yes thats right phungus, the buy side most frequently happens at MtGox and the sell side elsewhere. The difference after fees is your profit and is virtually guaranteed if you can place your orders quick enough. In essence, this is what arbitrage trading is all about.

The broker with the highest volume will almost always attract the best prices (which can be measured by a small spread). MtGox consistently has a higher trading volume then any other broker so leads any price movement. The other exchanges almost always catch up to the price movements that happen on MtGox. This fact alone is enough to profitably trade on the smaller brokers.

One of the first lessons in economics 101 is the theory of supply and demand. Have a read if you are interested in a solid understanding of the basics.

Hi all,

I've been lurking for a while now so I would like to share something constructive into my dealings with bitcoin.

I've worked in the world of finance for a number of years and have taken an interest in automated trading systems. In the Bitcoin world there is huge opportunity as the markets are not very efficient. Over the last year, I have developed and successfully run a number of automated trading bots on various brokers.

Here is a screenshot of one of my arbitrage bots:



Certain details have been obscured

There are plenty of trading opportunities within Bitcoin, whatever your investment style. One thing I would recommend, is managing your risk from a broker perspective. In the banking industry, we call this counterparty risk. The biggest threat to your profitability is your broker being hacked / shutting down / running off with your money. As we all unfortunately know, this happens frequently in the Bitcoin world.

In the style of reddit's AMA where visitors can post questions. Go ahead and ask me anything and I will do my best to answer.

This thread was inspired by Goomboo and the sharing of his trading activities.