POLL: make dak liqidity (dark pool) separate from public orders at Mt.Gox

[Macho]

Hi guys, I do not know if you noticed but quite recently there was/is an invisible "dark pool" order in the $20 range that prevented regular orders as listed in the public depth table to proceed as listed and sucked up around 1,000BTC into a black hole. I made trading decisions based on the public depth table and this kind of behavior (that I wasn't even aware of until now) has thrown a wrench into it.

I believe that invisible orders available only for the big players (more than $10,000 needed to place one) gives some people unfair advantage and misleads regular traders that causes them to make bad decisions based on intentionally incomplete information. I think that truly free market needs transparency and as accurate information as possible for the traders so they can make good market decisions - this behavior of the "dark pool" seem to go against that so I started this poll to see whether others agree that this in not an ideal situation and should be remedied by Mt.Gox if their user base thinks it should be remedied.

My proposed solution is to allow invisible orders only inside the dark pool as it is commonly understood and practiced and keep them separate from the public market - not to let them "spill over" to the public market and distort publicly available trading information and mislead traders as it is now. If you think better solution exists please leave a comment

Thanks a lot ...

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[AtomicTrader]

Ya, I agree. It's bad enough that these guys with thousands of BTC are able to control trading with their 5000+BTC bid and asks. I noticed the market moves in the opposite direction of these large orders and almost comes to a stand still when they are on both side and have a narrow range.

[FreeMoney]

Were the other threads about this not good enough?

People place large orders visibly and are accused of rigging the market, people place them invisibly and are accused of rigging the market. The market is what people are willing to pay, that's it. Letting people control what information they reveal is perfectly reasonable. Anyone anywhere any time can make trades without you even knowing about them. There is no good reason for MtGox to give up customers who want that. And even if he stops it, it doesn't help you. They just do it elsewhere or set up an automated service to add to their bid as needed.

[Macho]

Were the other threads about this not good enough?

People place large orders visibly and are accused of rigging the market, people place them invisibly and are accused of rigging the market.

Nobody is accusing anyone of rigging the market and nobody is talking about large visible orders, please do not conflate the issues. This is about preferential treatment of large traders ... if you allow invisible orders, well fine but then allow it for everybody regardless whether they deposit $10,000 or $100 ... what's the logic or justification to give some people advantage depending on how much they pay? Will more paying traders get faster access than all the others next to facilitate HFT for them? This isn't right ... everybody should be equal, if you allow advantages being given for money then you end up with market where the big guys just more often than not screw over the little guy. And the "little guy" is our target group because it includes merchants which are vital to Bitcoin success, stability and growth - why give them any more reasons to avoid Bitcoin economy?

The market is what people are willing to pay, that's it. Letting people control what information they reveal is perfectly reasonable. Anyone anywhere any time can make trades without you even knowing about them. There is no good reason for MtGox to give up customers who want that. And even if he stops it, it doesn't help you. They just do it elsewhere or set up an automated service to add to their bid as needed.

That they just do it elsewhere or in other way is very weak argument - do you go rock climbing without a rope because you could die in a car wreak or in some other way anyway? No, that it could be done elsewhere is no excuse to let it happen here at Mt.Gox where most people trade, if somebody else makes such a market ... well, I'll just make sure I avoid it But considering Mt.Gox has pretty much a monopoly right now it is sensible to contact them about it and let them know that its user base does not appreciate preferential treatment of large traders over small ones and that if they do want to keep good reputation they should remedy it.

It think that is very sensible approach ... and it seems so far that people do support it. Heck, almost half of people weren't even aware this was possible ... just as I wasn't until yesterday.

[AbeSkray]

Were the other threads about this not good enough?

Here's one of them, it has a poll and everything. Specifically, I'd recommend reading nanotube's post regarding iceberg style orders. The poll option to keep the dark pool but replace dark + normal orders with iceberg orders received the most votes. Of course, Mt Gox is not a democracy, but MagicalTux was obviously interested in what people thought about dark pools. I remember reading that MagicalTux was planning to implement iceberg style orders, but I can't remember in which thread(s) I might have read that.

Also, if you're going to start a new discussion about this, please don't make up your own terminology. Currently there are three types of orders on Mt Gox:

• Normal
• Dark
• Dark + Normal

[Macho]

Here's one of them, it has a poll and everything. Specifically, I'd recommend reading nanotube's post regarding iceberg style orders. The poll option to keep the dark pool but replace dark + normal orders with iceberg orders received the most votes. Of course, Mt Gox is not a democracy, but MagicalTux was obviously interested in what people thought about dark pools. I remember reading that MagicalTux was planning to implement iceberg style orders, but I can't remember in which thread(s) I might have read that.

Also, if you're going to start a new discussion about this, please don't make up your own terminology. Currently there are three types of orders on Mt Gox:

• Normal
• Dark
• Dark + Normal

Thanks, that's very informative post there, the iceberg option indeed looks like the best one ... it is essentially the same as if someone set up a bot to place orders automatically for him and if someone is buying in bulk he can get past that order so no unfair advantage there. So is this going to be implemented? It would be good idea to disable dark+normal until it is ... it's really annoying, I can't trust the market data now.

So please MagicalTux if you're reading this could you respond regarding what's the plan? Thank you ...

[AbeSkray]

Thanks, that's very informative post there, the iceberg option indeed looks like the best one ...

Glad I could help! I find the search function on simple machines forums to be clunky and ineffective. Whenever someone mentions a discussion thread I don't know about, I think there's like a 5% chance I'll find the information they're talking about if they don't provide a link.

Fortunately, I had made a post in that thread, so it was really easy for me to trace back through my history and find it.

[AbeSkray]

I remember reading that MagicalTux was planning to implement iceberg style orders, but I can't remember in which thread(s) I might have read that.

I think this is the post I was talking about. Unfortunately, it's not directly from MagicalTux:

I am against dark pools. If we are to have a true an open exchange all price data should be immediately available to all market participants. No backroom deals!

+1,

magicaltux?

just talked to magicaltux on irc.

He said implementation of iceberg orders (as discussed here: http://forum.bitcoin.org/index.php?topic=5564.0;all) is in progress.

There also seems to be a mention of iceberg orders coming to Mt Gox on This Week in Bitcoin (look under 23 May) -- which is really just a reference to the bitcoinmoney blog:

An update is targeted for being rolled out at the beginning of June.
Among the changes that have been discussed in the #bitcoin-otc channel:

• Various fixes for bugs seen in current release
• Trading of BTC/EUR
• Trading of BTC/JPY
• Minimum order of 0.1 BTC  (may already be in production)
• Full decimal trading
• Iceberg Orders (and removal of Dark+Normal)

So two indirect sources, but nothing straight from MagicalTux regarding iceberg orders coming to Mt Gox. Seems like hanging out on IRC is the best way to get info on upcoming Mt Gox developments!