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Author Topic: The question everybody is asking but nobody has shared the solution to yet  (Read 3868 times)
sturle
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August 20, 2013, 05:30:43 PM
 #61

No, you are absolutely incorrect about your bot assumptions, as with every statement you have made on this thread. First, when arb opportunities exist they will be taken advantage of at any spread because arb opportunities are technically defined as "riskless."  Second, i'm sure there are multiple bots trading, all with different algos, so to assume where their trigger points are is impossible and idiotic. 
So how do you explain the identical trades in opposite direction on MtGox and Bitstamp at exactly 8% price difference for days?
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If you had even a fraction of knowledge regarding financial markets or arbitrage, you would understand that arb opportunities rarely exist for more than a few seconds, much less days or months.  When there are arb opportunities available for months that means there is a structural problem with the trade. 
Does writing two arbitrage bots operating in several currencies count as a fraction of knowledge? Wink  Their problem is that they keep running out of fiat on one side, which takes time to move.  Time means the market isn't entirely liquid.  This won't change until all exchanges work as banks as well, with the possibility to borrow fiat and BTC.  There is a fine balance to maximize the profit without running out of funds.  (Which they do all the time – moving funds fast enough is impossible when it has to happen through banks and the markets are open 24/7.)  Arbitrage opportunities can exist in other markets as well, for a relatively long time, when the market isn't entirely liquid.  E.g between stocks in the same company on different exchanges operating in different currencies when currency rates fluctuate.

Sjå https://bitmynt.no for veksling av bitcoin mot norske kroner.  Trygt, billig, raskt og enkelt sidan 2010.
I buy with EUR and other currencies at a fair market price when you want to sell.  See http://bitmynt.no/eurprice.pl
Warning: "Bitcoin" XT, Classic, Unlimited and the likes are scams. Don't use them, and don't listen to their shills.
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August 20, 2013, 05:59:30 PM
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No, you are absolutely incorrect about your bot assumptions, as with every statement you have made on this thread. First, when arb opportunities exist they will be taken advantage of at any spread because arb opportunities are technically defined as "riskless."  Second, i'm sure there are multiple bots trading, all with different algos, so to assume where their trigger points are is impossible and idiotic.  
So how do you explain the identical trades in opposite direction on MtGox and Bitstamp at exactly 8% price difference for days?
Quote
If you had even a fraction of knowledge regarding financial markets or arbitrage, you would understand that arb opportunities rarely exist for more than a few seconds, much less days or months.  When there are arb opportunities available for months that means there is a structural problem with the trade.  
Does writing two arbitrage bots operating in several currencies count as a fraction of knowledge? Wink  Their problem is that they keep running out of fiat on one side, which takes time to move.  Time means the market isn't entirely liquid.  This won't change until all exchanges work as banks as well, with the possibility to borrow fiat and BTC.  There is a fine balance to maximize the profit without running out of funds.  (Which they do all the time – moving funds fast enough is impossible when it has to happen through banks and the markets are open 24/7.)  Arbitrage opportunities can exist in other markets as well, for a relatively long time, when the market isn't entirely liquid.  E.g between stocks in the same company on different exchanges operating in different currencies when currency rates fluctuate.

Nope.  Those arb opportunities, in traditional markets, only occur for a fraction of a second.  There are no long arb opportunities unless there is something broken with the market or with liquidity.  In the case of Gox you are looking at both.  As for your example of currency rate fluctuation, arb opportunity is taken advantage of near instantly.  Just because your arb bots are running out of cash due to your low cash flow, doesn't mean that there isn't someone with millions of dollars of liquidity who could take advantage of the arb opportunity before depleting funds.  Unless there was no way they could effectively move out their holdings, which I discuss in this thread: https://bitcointalk.org/index.php?topic=277455.msg2972810#msg2972810.  The reality is that Gox can't support large outflows of cash, this is proven by the existing spread.  No large player can take advantage of the arb opportunity, otherwise the spread would be 0%.  Therefore, this arb opportunity will exist and spread larger and larger as users on Gox realize that they can't actually cash out large sums.  
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August 20, 2013, 06:14:37 PM
 #63


When bitstamp overtake as market leader the spread is reduced, look @ a small scale example of vircurex - you cant withdraw USD from here yet price matches bitstamp
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August 20, 2013, 07:09:21 PM
 #64

Is it possible to withdraw JPY from Gox to a local Japanese bank account which is not in my name? I have a cousin with a Japanese bank account but I have a feeling the name thing may be an issue.
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August 20, 2013, 07:10:28 PM
 #65

Nope.  Wrong again and again.  Those arb opportunities, in traditional markets, only occur for a fraction of a second.  There are no long arb opportunities unless there is something broken with the market or with liquidity.
Bitcoin exchanges are not traditional markets.  Traditional markets for currency exchange is banks, and only open during the banks opening hours.  There are plenty long arbitrage possibilities in Bitcoin.  Between exchanges, and even local to multi-currency exchanges.  You do not have to go far from the banks to find arbitrage opportunities which are more risky to exploit.  E.g. my stock example.

I would like to point to this here as well.  Do you really believe Bitcoin exchanges are even remotely close to banks in terms of liquidity?

In the case of Gox you are looking at both.
This is funny, because here you claim it is about lack of trust, not low liquidity.  You even moved the Coinlab rectangle two weeks to the right because the facts didn't fit your theory.

As for your example of currency rate fluctuation, arb opportunity is taken advantage of near instantly.  Just because your arb bots are running out of cash due to your low cash flow, doesn't mean that there isn't someone with millions of dollars of liquidity who could take advantage of the arb opportunity before depleting funds.
Now, here you have a point.  Due to one of the easiest arbitrage exchanges for buying right now are operating in obvious violation of the law, I don't want to risk much money there.  Neither does anyone else, which you can easily see from the depth of their order book.  Keeping millions of dollars there (unless you mean Zimbabwe dollars) is completely out of the question.  And they don't allow me credit, like the markets you are comparing with do.  This of course limits my own arbitrage possibilities.

Unless there was no way they could effectively move out their holdings, which I discuss in this thread: https://bitcointalk.org/index.php?topic=277455.msg2972810#msg2972810.  The reality is that Gox can't support large outflows of cash, this is proven by the existing spread.
Eh?  No.  You are ignoring a large number of facts here.  How much experience do you have with real life arbitrage trading?  Any at all?  Read a little about it on the internet, perhaps?  Not quite understanding all the basics?

No large player can take advantage of the arb opportunity, otherwise the spread would be 0%.  Therefore, this arb opportunity will exist and spread larger and larger as users on Gox realize that they can't actually cash out large sums. 
Taking out a 0.1% arbitrage possibility in the Bitcoin markets will make you lose money.  Come back when you can explain why.  People have no problems cashing out six figures of USD or EUR from MtGox, and JPY withdrawal has never been limited.  I guess most of them will be careful of placing a six digit amount of USD on an exchange operating on borrowed time to take out a limited amount of arbitrage.

Sjå https://bitmynt.no for veksling av bitcoin mot norske kroner.  Trygt, billig, raskt og enkelt sidan 2010.
I buy with EUR and other currencies at a fair market price when you want to sell.  See http://bitmynt.no/eurprice.pl
Warning: "Bitcoin" XT, Classic, Unlimited and the likes are scams. Don't use them, and don't listen to their shills.
sturle
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August 20, 2013, 07:11:28 PM
 #66

Is it possible to withdraw JPY from Gox to a local Japanese bank account which is not in my name? I have a cousin with a Japanese bank account but I have a feeling the name thing may be an issue.
No, the account has to be in your own name.  Your cousin could open a MtGox account, and you can transfer BTC to him for him to sell and withdraw.

Sjå https://bitmynt.no for veksling av bitcoin mot norske kroner.  Trygt, billig, raskt og enkelt sidan 2010.
I buy with EUR and other currencies at a fair market price when you want to sell.  See http://bitmynt.no/eurprice.pl
Warning: "Bitcoin" XT, Classic, Unlimited and the likes are scams. Don't use them, and don't listen to their shills.
sturle
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August 20, 2013, 07:14:54 PM
 #67

When bitstamp overtake as market leader the spread is reduced, look @ a small scale example of vircurex - you cant withdraw USD from here yet price matches bitstamp
Most EUR exchanges, e.g. bitcoin.de and Bitcurex, are somewhere between MtGox and Bitstamp now.  Back up after being on Bitstamp level for a while.  Could be due to the difficulties many have when trying to deposit money at Bitstamp after the flagging of their account.

Sjå https://bitmynt.no for veksling av bitcoin mot norske kroner.  Trygt, billig, raskt og enkelt sidan 2010.
I buy with EUR and other currencies at a fair market price when you want to sell.  See http://bitmynt.no/eurprice.pl
Warning: "Bitcoin" XT, Classic, Unlimited and the likes are scams. Don't use them, and don't listen to their shills.
prophetx
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August 20, 2013, 10:42:04 PM
 #68

i have a theory that this actually stabilizing the market until the next run up, sounds perverse ... just when you thought you were out...


https://www.youtube.com/watch?v=242H7F8DKHA


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