High Frequency Trading on the Coinbase Exchange

[ChrisPop]

Check out Andrew Barisser`s experience with his trading bot in the "shark infested waters" of Coinbase's new exchange.

Andrew Barisser is a software and cryptocurrency engineer at Assembly. Previously he was a grad student in biophysics at UCSB, where he says a "gnawing fascination" with bitcoin led him to software. In this article, he shares lessons learned from creating his own bitcoin trading bot in the "shark infested waters" of Coinbase's new exchange.

source: http://www.coindesk.com/high-frequency-trading-on-the-coinbase-exchange/

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[Amph]

he should have moved from there because of the fee that now is at 1%, too high if you ask me, it was good until april, then they changed it, maybe because their volume fell

would be interesting to know what kind of volume he is moving with his bot, because he was talking about a decent profit, not a good ones

...another thing occured to me now, could be better for him to sell his bot? yeah he was talking about not revealing his strategy, but sooner or later someone will discover it anyway

[ChrisPop]

he should have moved from there because of the fee that now is at 1%, too high if you ask me, it was good until april, then they changed it, maybe because their volume fell

would be interesting to know what kind of volume he is moving with his bot, because he was talking about a decent profit, not a good ones

...another thing occured to me now, could be better for him to sell his bot? yeah he was talking about not revealing his strategy, but sooner or later someone will discover it anyway

I agree with you,Amph.The 1% fee is way to high for a "famous" exchange. Regarding the bot vending issue..Hmm.. Maybe he thinks he invested too much time and maybe money to create the trading bot and he only wants to sell it at a very high price that won`t be accessible to the common trader.(maybe he is too stubborn to sell it at a lower price).

But it`s just a theory,he may wait for the perfect moment to sell it. Who knows??... 

[jyakulis]

meh I hate high frequency trading. It usually entails leveraged trading. Or trading thin air.

[Buttknuckle]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

[alani123]

This is a self-post on coindesk... Coinbase is known for not doing good fact checking despite the fact that they're the biggest cryptocurrency related news platform. And now they let someone post about something that it so hard to verify in his own? But wait, he didn't even post in there.

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

[oblivi]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

[pat1900]

he should have moved from there because of the fee that now is at 1%, too high if you ask me

Where did you see that number?

Taker   0.25%
Maker   0.0%

Source: https://docs.exchange.coinbase.com/#fees

[Buttknuckle]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

The typical argument is that bots are good, and provide liquidity.  I tend to disagree.  All this money they extract comes from somewhere, it isn't just created out of thin air.  The stock market functioned fine for many years without bots.  I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer.  Some how electricity and the magic of the internet makes it ok.

I am not railing against bots or anything, but I am always skeptical of articles like this that look only at liquidity and not where the money is extracted from.  I bet its just like the stock market where it is essentially an extra trading fee for us to pay.

[Cruxer]

meh I hate high frequency trading. It usually entails leveraged trading. Or trading thin air.

Yeah agree, thats pretty sad that its actually happening : /

[Buttknuckle]

he should have moved from there because of the fee that now is at 1%, too high if you ask me

Where did you see that number?

Taker   0.25%
Maker   0.0%

Source: https://docs.exchange.coinbase.com/#fees

I think this is a misinterpretation.  It is 1% to FUND your account from a bank transfer, but I think its easy to confuse that with trading fees.

[rich93]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

The typical argument is that bots are good, and provide liquidity.  I tend to disagree.  All this money they extract comes from somewhere, it isn't just created out of thin air.  The stock market functioned fine for many years without bots.  I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer.  Some how electricity and the magic of the internet makes it ok.

.....

The bots trading the stock market sometimes get out of control. There was a micro crash years ago when all the prices plunged to the ground, then returned to normal in less than a second. They said it was due to the bots but nobody understood how or why they had done it. I don't like the thought that bots might start doing the same micro crashes in bitcoin markets.

[Kyraishi]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

The typical argument is that bots are good, and provide liquidity.  I tend to disagree.  All this money they extract comes from somewhere, it isn't just created out of thin air.  The stock market functioned fine for many years without bots.  I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer.  Some how electricity and the magic of the internet makes it ok.

.....

The bots trading the stock market sometimes get out of control. There was a micro crash years ago when all the prices plunged to the ground, then returned to normal in less than a second. They said it was due to the bots but nobody understood how or why they had done it. I don't like the thought that bots might start doing the same micro crashes in bitcoin markets.

That's the first time I heard of that.
Do you have a link to any articles regarding the crash?

[Kakmakr]

I will not be able to sleep, if I had to put the future of my money, into the hands of a electronic bot. These bots work on milliseconds, and if your strategy is countered, you could loose everything.
I do see the need for them, and the stability and/or liquidity it can bring to the markets.

[NorrisK]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

The typical argument is that bots are good, and provide liquidity.  I tend to disagree.  All this money they extract comes from somewhere, it isn't just created out of thin air.  The stock market functioned fine for many years without bots.  I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer.  Some how electricity and the magic of the internet makes it ok.

.....

The bots trading the stock market sometimes get out of control. There was a micro crash years ago when all the prices plunged to the ground, then returned to normal in less than a second. They said it was due to the bots but nobody understood how or why they had done it. I don't like the thought that bots might start doing the same micro crashes in bitcoin markets.

Maybe those microcrashes are already constantly happening? The bots may just stop trading if price drops too fast to prevent expensive mistakes?

[Amph]

he should have moved from there because of the fee that now is at 1%, too high if you ask me

Where did you see that number?

Taker   0.25%
Maker   0.0%

Source: https://docs.exchange.coinbase.com/#fees

i was talking about funding it of course not about the trading fee, he need to fund it constantly, because of the risk that are involved in leaving your money on exchange

and everytime he lose 1%, maybe not a big deal, but there are better deal with other exchange

[ebliever]

Really interesting article.  I wonder what % of trade volume is from the bots.  I read before that up to 80% of stock market volume is bots, but who knows for sure?  In any case it makes me want to learn more about programming.

The stockmarket has been a botfest and increasing everyear.
In the Bitcoin exchanges there are bots too. In Poloniex you can see it easily , how everytime you put an order, new orders come up for +1 satoshi.

The typical argument is that bots are good, and provide liquidity.  I tend to disagree.  All this money they extract comes from somewhere, it isn't just created out of thin air.  The stock market functioned fine for many years without bots.  I don't know what the typical scheme is for bitcoin markets, but in the stock exchanges it basically boils down to front running, and would be clearly illegal if it was not done with a computer.  Some how electricity and the magic of the internet makes it ok.

.....

The bots trading the stock market sometimes get out of control. There was a micro crash years ago when all the prices plunged to the ground, then returned to normal in less than a second. They said it was due to the bots but nobody understood how or why they had done it. I don't like the thought that bots might start doing the same micro crashes in bitcoin markets.

That's the first time I heard of that.
Do you have a link to any articles regarding the crash?

I recall something on this too. It was in the news recently, authorities were blaming it on some British day trader ostensibly using illegal practices. Here are a few links:

http://www.forbes.com/fdc/welcome_mjx.shtml
http://www.newyorker.com/news/john-cassidy/the-day-trader-and-the-flash-crash-unanswered-questions
http://www.nytimes.com/2015/04/22/business/dealbook/trader-in-britain-arrested-on-charges-of-manipulation-that-led-to-2010-flash-crash.html?_r=0