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Author Topic: How will high-speed trading impact Bitcoin volatility?  (Read 470 times)
HabBear
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January 16, 2017, 11:39:29 PM
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https://finance.yahoo.com/news/high-speed-traders-taking-over-160001336.html

Just came across this article about a Chinese firm specializing in high-speed trading of Bitcoin. I'm not too surprised that it's happening, but I wonder how it may impact the price for the rest of us if this becomes more widespread. High-speed trading in the traditional financial markets ensures (notoriously) that everyone else gets an inflated buy price or a deflated sell price, since the high-speed traders can beat regular traders to the market, intercept the short-term demand and then serve as an intermediary selling or buying from those trying to do so via regular channels.

Anyone have specific, qualified thoughts on this?

One thing is for certain, Zhou Shuoji knows little about the bitcoin community, paraphrased as calling most of bitcoin supporters as "fanatics".

Shouji is the owner of Fintech Blockchain Group, the focus of the article.

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Rockie1234
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January 28, 2017, 03:15:48 PM
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I think it definitely is a problem. This kind of trading makes it harder for your "Average Joe" to go on the markets and make profit trading. As to the volatility of Bitcoin, I think these people will have more influence over the price, but it also depends on if this is matched by the demand for Bitcoin. I don't think Bitcoin will be stable unless one day it gains mainstream adoption by people.
Easy way out: trade altcoins  Smiley
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January 28, 2017, 03:29:41 PM
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That's old news and it's irrelevant now.  Chinese exchanges were allowing 0% fees trading and the volumes were phenomenal; 4 million plus coins per day was the norm.  Fees have been implemented in the last week and volumes on Chinese markets have plummeted to below US market volumes. I think we can call it high-speed disappointment for Zhou Shuoji of Beijing.  He'll have to find something else to point his computers at 24/7  Angry
 

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HabBear
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January 28, 2017, 05:04:06 PM
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Old news indeed! I posted this 10 days ago.

You don't actually address anything related to high-speed trading. Maybe I've misunderstood you.

4 million coins per day is high volume, not high speed. How fast are some of those traders getting in and out of bitcoin? According to the article implies this guy is doing it endlessly day in and out and is in and out of bitcoin (i.e., buy bitcoin, sell bitcoin, buy bitcoin, sell bitcoin) very quickly, within seconds or minutes.

The low fees help support the HFT behavior (because it keeps the activity cheap).

Do you have anything to say about the frequency of the trading from this guy and others in China and how it may impact price volatility for the rest of us regular folks?

That's old news and it's irrelevant now.  Chinese exchanges were allowing 0% fees trading and the volumes were phenomenal; 4 million plus coins per day was the norm.  Fees have been implemented in the last week and volumes on Chinese markets have plummeted to below US market volumes. I think we can call it high-speed disappointment for Zhou Shuoji of Beijing.  He'll have to find something else to point his computers at 24/7  Angry
 

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January 28, 2017, 06:24:28 PM
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Old news indeed! I posted this 10 days ago.

You don't actually address anything related to high-speed trading. Maybe I've misunderstood you.

4 million coins per day is high volume, not high speed. How fast are some of those traders getting in and out of bitcoin? According to the article implies this guy is doing it endlessly day in and out and is in and out of bitcoin (i.e., buy bitcoin, sell bitcoin, buy bitcoin, sell bitcoin) very quickly, within seconds or minutes.

The low fees help support the HFT behavior (because it keeps the activity cheap).

Do you have anything to say about the frequency of the trading from this guy and others in China and how it may impact price volatility for the rest of us regular folks?

That's old news and it's irrelevant now.  Chinese exchanges were allowing 0% fees trading and the volumes were phenomenal; 4 million plus coins per day was the norm.  Fees have been implemented in the last week and volumes on Chinese markets have plummeted to below US market volumes. I think we can call it high-speed disappointment for Zhou Shuoji of Beijing.  He'll have to find something else to point his computers at 24/7  Angry
 

 It's not really old news, it's quite recent.  I was playing on the high-speed aspect while being facetious.   
 I did mention speed: 4 million coins per day.   Now it's 20 thousand coins per day (US levels).  So it was 46 coins per second and now it's 0.23 coins per second.  The transaction fees have stifled the benefits of high-speed trading and the volatility at the same time.  I'll work on my clarity of thought and take more time while composing posts so as not to be so confusing in the future.
 I believe with the institution of a fee structure on the Chinese exchanges, volatility has been muted.


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January 28, 2017, 06:25:53 PM
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I think it definitely is a problem. This kind of trading makes it harder for your "Average Joe" to go on the markets and make profit trading. As to the volatility of Bitcoin, I think these people will have more influence over the price, but it also depends on if this is matched by the demand for Bitcoin. I don't think Bitcoin will be stable unless one day it gains mainstream adoption by people.
Easy way out: trade altcoins  Smiley
Altcoin trading is worse. Arbitrage bots try to squeeze out potential profits all the time and manipulation is rampant as the lower volume of the markets makes it much more effective.














 

 

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