Informed vs uninformed traders on bitcoin exchanges

[monsterer]

Hi guys,

Traditional finance literature identifies two main types of traders on the markets (stock, or monetary etc):

Informed - who know (or think they know) the true value of a stock and place buy/sell orders accordingly
Uninformed - who place almost random order around their estimate of the true value.

Informed traders are often said to have inside knowledge about a stock.

On the bitcoin exchanges, is it possible to have an 'informed' trader, or are they all classified as uninformed?

Cheers, Paul.

[Jaw3bmasters]

I'm completely uninformed but somehow manages to make informed trades.

[Luno]

If you run or work for a bitcoin retail exchange service, you might have a hunch about public demand for coins before the market does.

As the protocol is open, everybody can watch and estimate if there is a total change in inflow / outflow to Mt.Gox (hunch there are often a number of large wallets from different countries working together on buy sell walls.)

Bitcoin is the most transparent trading medium. imagine you knew the trading balances and money flow of the big financial institutions in the real world.

[Lethn]

You forgot about bot traders.

[Luno]

Am I wrong? I don't think bot's have an Agenda, like "pump n dump" but you could program a bot to drive the market one way or the other and make money off of it.

[Yuhfhrh]

Mtgox could do informed trades. For instance, if someone has initiated a deposit of $2 million USD it would probably be a good bet for MtGox to buy a few BTC themselves before it clears.