High Frequency Trading - BTC/LTC?

[DrBitcoin]

Ok, so my title is slightly misleading. But I'm wondering if anyone has thought about a way to quickly trade BTC --> LTC and LTC --> BTC in order to capitalize on the small ups and downs that they vary throughout the day.

One thing we know right now is that Litecoin and Bitcoin track each other. That said, it isn't a 1:1 ratio. Sometimes BTC gains value over LTC, and sometimes LTC gains value over BTC. It isn't much, but it seems predictable enough. There aren't these enormous ups and downs, like the difference between BTC and DGC.

Would it be possible to program a trading bot or use an API through Crypsty to shift money back and forth between BTC and LTC?

For example, you load 1BTC (let's say 38.5 LTC) into the system and wait. It watches Cryptsy, and when that 1 BTC is worth 38.7 LTC, it makes the trade. It waits, and when that 38.7 LTC is worth 1.05 BTC it trades. Then when that 1.05 BTC is worth 38.9 LTC, it trades. And so on...if it was high frequency, it could capitalize on small ups.

A) would this work?
B) does it make any sense?

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[arallmuus]

Thats what we call day trade or speed trade , you can do that but you will be stuck when theres big drop .

[kizzoboy]

I'm familiar with high frequency trading and I'm not sure if this is possible.  The confirmation process for both bitcoin and litecoin are way too lengthy for high frequency to happen.  The Wall Street firms that use HFT can trade thousands of shares in tiny fractions of a second.  Even the confirmation time to complete a bitcoin/litecoin purchase or sell order on the exchanges takes way too long for high frequency trading to be useful.

You might want to look into something like bitcoin builder here: https://bitcoinbuilder.com/

Your idea of HFT, if you wanted it to be even close to the speed of the Wall Street HFT systems might require the establishment of a futures trading market for virtual currency.  Given that the exchanges can barely function reliability with modest trading traffic, they most definitely could not accommodate a HFT system.

[franky1]

yep, lots of people are doing it. so much so that by the time your bot has noticed a promised gap in the spread, 500 other people have already hit it.

if you really want some simple tradin advice:
1: buy low
2: sell high
3: never sell at a loss

follow those rules and you'll always profit. the only limit on that is the waiting time of the profits.

as for:

The confirmation process for both bitcoin and litecoin are way too lengthy for high frequency to happen.  

once you made your deposit into an exchange, trading within the exchange is near on instantanious. but if you are talking about trading between the price differences of different exchanges. that is called arbitrage, and even with fiat. there is a big delay.

EG swapping dollar from one bank account to another takes 3 days in the US

[TheMage]

This is certainly something that you can do, however in order to be profitable you need to either A perform a LOT of trades or B trade a high volume.


Unfortunately, LTC and BTC prices are tied to one another due to "market forces" (I quote that because I firmly believe someone is intentionally doing this). So until these two separate in values/price trends there is really little value in performing this type of trade. You need more volatility in the market to capitalize on something like this. But for now when BTC drops, so does LTC, and vice versa.