Trading Based on One Exchange's Prices

[Jetheat]

If I am trading from the order book, on say Bittrex and I am looking at the volume and the support walls etc... , am I looking at only the trades from that particular exchange or am I looking at the trades/walls etc from all the exchanges put together?

If I am only looking at the data from that particular exchange, how can anyone make an informed decision when there are a multitude of other things happening on other exchanges?

Surely, the data must be an aggregate of all the exchanges like that displayed by CMC.

Am I right or wrong?

JH

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[TryNinja]

Every exchange has their own price, volume and order book. The only thing that aggregates data from multiple exchanges are websites like CoinMarketCap to help people have a bigger look at the whole market.

If I am only looking at the data from that particular exchange, how can anyone make an informed decision when there are a multitude of other things happening on other exchanges?

Look at the other ones?

[hosseinimr93]

If I am trading from the order book, on say Bittrex and I am looking at the volume and the support walls etc... , am I looking at only the trades from that particular exchange or am I looking at the trades/walls etc from all the exchanges put together?

As TryNinja said, Bittrex or any other exchanges only show sell and buy orders submitted on it, not other exchanges. It's impossible to have all of orders in different exchanges in a single wall.

If I am only looking at the data from that particular exchange, how can anyone make an informed decision when there are a multitude of other things happening on other exchanges?

Prices on different exchanges are very close to each other.
Bots and arbitrage traders don't allow the price on different exchanges to be much different.
So, if you are trading in an exchange with a sufficient volume, don't worry about other exchanges. Prices are always same.

Surely, the data must be an aggregate of all the exchanges like that displayed by CMC.

Coinmarketcap extract the price from different exchanges and calculates the weighted average price for every coin.

[Jetheat]

 
So, if you are trading in an exchange with a sufficient volume, don't worry about other exchanges. Prices are always same.
 

But if you base your buy decision on a thin sell wall, and yet on another exchange it's a heavy wall, and the market moves according to the aggregate of all orders on all exchanges, how will your analysis hold any value?

JH

[cryptoaddictchie]

But if you base your buy decision on a thin sell wall, and yet on another exchange it's a heavy wall, and the market moves according to the aggregate of all orders on all exchanges, how will your analysis hold any value?

If you will depend on coin tracker, such as CMC, they are depending on the exchange data that they approved but of course its your responsibility to check the volume on each exchange.

A good analysis is based on the average volume that orders that has been taken care of.

I think this is the mistake of CMC which I hope CZ change since they are co owner already of the company.

Thick sell wall=means heavily loaded orders
Thin sell wall= means pretty low orders

If you will trade make sure that you always compare the the price, volume, sometime you can take advantage on small exchange with such cheaper sell order.

[joniboini]

Surely, the data must be an aggregate of all the exchanges like that displayed by CMC.

First of all, it's not the exchange obligation to make sure you're following the trend properly. Most exchanges don't do that and you have to help yourself. Sure, it might help, but they're not obliged to do it.

That being said, price movement on major exchanges most of the time is following the same pattern unless there is a sudden lack of liquidity in one of them.

[Jetheat]

So everyone who shoots a video on youtube showing them taking an open position based on analysis from their exchange's order book, is not really getting the full picture and they should have checked an aggregator like CMC?

Is that correct?

Would it also be correct to say that anyone who basis their decisions of their own exchange's orderbook only is an amateur coz they're not checking the others?


JH

[TryNinja]

So everyone who shoots a video on youtube showing them taking an open position based on analysis from their exchange's order book, is not really getting the full picture and they should have checked an aggregator like CMC?

Is that correct?

Would it also be correct to say that anyone who basis their decisions of their own exchange's orderbook only is an amateur coz they're not checking the others?

Quoting joniboini above:

That being said, price movement on major exchanges most of the time is following the same pattern unless there is a sudden lack of liquidity in one of them.

There are ways of making a decision based solely on the data you take from the exchange you are operating. You do not need to check every market in the world to open a position or make a trade.

[RapTarX]

If there's enough liquidity, there will be no much price variation in different exchange. For instance: if Binance and Bittrex have enough liquidity on coin "X", the price in both exchange won't differ much. But if the liquidity is too low, the difference with other exchange will be very high.

[Jetheat]

There are ways of making a decision based solely on the data you take from the exchange you are operating. You do not need to check every market in the world to open a position or make a trade.

If you trade on a busy liquid exchange and make a decision based on that exchange's orderbook, how do you know that there are no major opposing orders on ALL the other exchanges?
How can you base your decision on your own exchange's data and rely on it heavily while it may be different elsewhere.
That's the part I'm having trouble figuring out.

If there's enough liquidity, there will be no much price variation in different exchange. For instance: if Binance and Bittrex have enough liquidity on coin "X", the price in both exchange won't differ much. But if the liquidity is too low, the difference with other exchange will be very high.

How can you tell the liquidity on each exchange?

Do you just check the 24 hour volume figure?
if that figure shows say 34 BTC or 185 BTC, still, what does that tell me? I cant tell if that's good or bad just yet!

JH


JH

[Bttzed03]

~
Would it also be correct to say that anyone who basis their decisions of their own exchange's orderbook only is an amateur coz they're not checking the others?

How do you define a pro and how do you define an amateur trader?

There are many different types of traders but those who usually look at prices on different exchanges are those who do arbitrage trading**. I wouldn't easily say they are a pro or an amateur based on that. There are also those who simply stick to one or two exchanges with enough volume/liquidity.

**In arbitrage trading, you take advantage of the price difference among exchanges. For example, you buy coin A from exchange X at $6,000 and the next highest buy order there is $6050. You saw in exchange Y that someone is buying coin A at $6100 so you decided to sell there instead of exchange X.

I tried to make it as simple as possible but you have to understand that there are also risks involved here like fund transfers getting stuck for hours and before you know it, someone else filled that $6100 order.

[RapTarX]

How can you tell the liquidity on each exchange?

Do you just check the 24 hour volume figure?
if that figure shows say 34 BTC or 185 BTC, still, what does that tell me? I cant tell if that's good or bad just yet!

Liquidity refers to the buy sell order to be balanced. If a coin has a lot of sell order while there are very low amount of buy order, its liquidity isn't good enough. In that case, price will vary.
On the other hand, if a coin has a lot of buy order, its liquidity is good but still the price will differ from other exchange. Look at current buy & sell order, no need to look at 24 hours volume.

[Jetheat]

How can you tell the liquidity on each exchange?

Do you just check the 24 hour volume figure?
if that figure shows say 34 BTC or 185 BTC, still, what does that tell me? I cant tell if that's good or bad just yet!

Liquidity refers to the buy sell order to be balanced. If a coin has a lot of sell order while there are very low amount of buy order, its liquidity isn't good enough. In that case, price will vary.
On the other hand, if a coin has a lot of buy order, its liquidity is good but still the price will differ from other exchange. Look at current buy & sell order, no need to look at 24 hours volume.

When you say liquidity, do you mean limit orders which are pending on the order book or orders which have already gone through?

JH

[TryNinja]

When you say liquidity, do you mean limit orders which are pending on the order book or orders which have already gone through?

JH

The first one. In simple words, more orders and coins in open positions = more liquidity.

Example:
You have exchange 1 with $10m in orders to buy BTC at $6500.
You have exchange 2 with $50k in orders to buy BTC at $7000.

BTC may be worth $500 more in exchange 2, but you can only sell up to $50k for that price. The liquidity is far lower in there. That's why volume and liquidity (the amount of $ in open orders) is important. Without it, you can only fill orders that may not reflect the overall market at the moment.

Take a look at this articles: https://cointelegraph.com/explained/crypto-exchange-liquidity-and-why-it-matters-explained

[Jetheat]

When you say liquidity, do you mean limit orders which are pending on the order book or orders which have already gone through?

JH

The first one. In simple words, more orders and coins in open positions = more liquidity.

Example:
You have exchange 1 with $10m in orders to buy BTC at $6500.
You have exchange 2 with $50k in orders to buy BTC at $7000.

BTC may be worth $500 more in exchange 2, but you can only sell up to $50k for that price. The liquidity is far lower in there. That's why volume and liquidity (the amount of $ in open orders) is important. Without it, you can only fill orders that may not reflect the overall market at the moment.

Take a look at this articles: https://cointelegraph.com/explained/crypto-exchange-liquidity-and-why-it-matters-explained

Excellent, but how do you gauge volume for a coin?
Do you look at just one place or multiple places?

JH

[Pffrt]

Excellent, but how do you gauge volume for a coin?
Do you look at just one place or multiple places?

I'm confused what you are looking for. If you are taking about the volume of a coin, it depends on all the exchanges. In most cases, low volume of a coin any exchange must not be preferred. You should only trade on exchanges where there's more volume. You can get overall volume information in coinmarketcap, coingecko and some more site. However, in some cases, even with higher volume, some coins should be neglected because volume can be faked or manipulated easily. Look at the volume of last couple of weeks to get the usual volume.

[OcTradism]

Did OP want to get something like that? Personally, I think it is very difficult to earn any profits from moving bitcoin around exchanges and taking advantages of price gaps. Bitcoin transactions need too much time to finish, at least about 30 minutes (if you use high fees and exchanges you use require only 1 confirmation for deposit).
All Market Tickers in One Chart, you should read the topic and get it at https://bitcoin.clarkmoody.com/tickers/

[sujonali1819]

Personally, I think it is very difficult to earn any profits from moving bitcoin around exchanges and taking advantages of price gaps. Bitcoin transactions need too much time to finish, at least about 30 minutes (if you use high fees and exchanges you use require only 1 confirmation for deposit).

Yes, I also think this will very difficult to do basically only for bitcoin. And it also depends on the exchange withdrawal speed. But when you have some funds in differents exchange it can help you to earn some profit. because when you can see bitcoin price is lower in X exchange than Y exchange and you have some money in Y exchange then you can buy the bitcoin at a low price. And there is more chance to increase the price.

[Jetheat]

I'm not interested in Arbitrage on different exchanges but I'm interested in learning everything about Volume.

How can you tell if its organic volume or artificial volume?

JH

[Theb]

But if you base your buy decision on a thin sell wall, and yet on another exchange it's a heavy wall, and the market moves according to the aggregate of all orders on all exchanges, how will your analysis hold any value?

JH

Honestly I wouldn't rely on the bid and ask orders that much as traders could put "dummy orders" just to influence the market in their way. Basically just by relying on bid and ask orders alone you'll just be falling into their traps which would likely lead you into incurring a loss. I would still recommend you into looking at the crypto's technical charts to get the bigger picture outside of the bid and ask of that exchange, this will provide you a much more accurate reading in your analysis. If you are looking at the bid and ask orders then you should check the crypto's 1 minute and 5 minute charts and it's volume to see if there is really a demand going on during that time, if the volume supports the price movement then you should base your decision towards it.