Trading € on MTGox without 2.5% conversion fee?

[anonymous5050]

From the info in this support email, I estimate that I will get hit with a 2.5% trading fee about 97% of the time when I deposit and trade in euros because the USD trade volume was 35x higher than the euro volume (last 24hr).  How can I work around this?  Combined with the trading fee and the transfer fee it seems like a lot. I don't understand why they force all the orders to be in the same pool if they are going to charge this much.  Also, what is the typical fee to use the SEPA deposit option?

anonymous5050, Feb 17 02:12 (JST):

I am confused by this section of the multi currency trading FAQ

Q. Are there any other fees charged when trading in multi-currency?
A. No. However, please be advised that there is a 2.5% premium when a trade
involves orders in different currencies.

Am I to understand that I can make a EUR deposit into a EUR mtgox account,
but I will still probably get hit with a 2.5% currency conversion when I
trade due to all the different currency orders being in the same pool?


Mt.Gox Support, Feb 17 09:54 (JST):

Hello,

Thank you for your inquiry. If your order is met with a EUR sell order, then there should be no premium to this. However, since the USD volume is usually higher than other currencies, trades in USD have more chance to hit another order in USD. Please be noted that other markets such as the EUR and GBP markets are however quite active as well. If you require any further assistance, please feel free to contact us again.

Thanks,

MtGox.com Team

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[rini17]

I have bought several times BTC for Euros and only standard 0.6% fee was applied by MtGox It would be highly unusual if they matched orders from several currencies.

IMHO the 2.5% fee applies only in case you have i.e. no EUR wallet and you send euros to their account, so they have to be converted. Or when you convert it manually. It doesn't happen at trade time.

[phantomcircuit]

It would be highly unusual if they matched orders from several currencies.

That is precisely what they do.

[nmat]

It would be highly unusual if they matched orders from several currencies.

That is precisely what they do.

So they arbitrage between currencies? That's interesting. Intersango also does this?

[rini17]

It would be highly unusual if they matched orders from several currencies.

That is precisely what they do.

Is it really written anywhere on their page or another reliable source? This

However, since the USD volume is usually higher than other currencies, trades in USD have more chance to hit another order in USD.

I have understood like "if you trade in USD you have more chance to execute the order", not that "order with EUR can be matched by order in USD".

[phantomcircuit]

It would be highly unusual if they matched orders from several currencies.

That is precisely what they do.

Is it really written anywhere on their page or another reliable source? This

However, since the USD volume is usually higher than other currencies, trades in USD have more chance to hit another order in USD.

I have understood like "if you trade in USD you have more chance to execute the order", not that "order with EUR can be matched by order in USD".

Well I'd like to think of myself as a reliable source.

https://support.mtgox.com/entries/20800336-multi-currency-trading

Q. Do you keep independent ask/bid tables for different currencies?
A. No, ask/bid tables for different currencies are not independent. All currencies are relative to whichever currency has the highest volume, which is based on said currencies current market price in bitcoin. Every trade is in one pool and in fact, not are not separate currency markets. This allows users the added benefit of trading in "the greater market" -in currencies they understand- while not limiting them to smaller currency markets.

For example, if a buy order for bitcoins is placed in EUR, the order can be executed against another user selling bitcoins in any currency and not necessarily only against another user selling bitcoins in EUR.

[rini17]

Thank you very much. I was somehow unable to find this bit in the FAQ. Indeed, if Gox randomly executes multicurrency trades with 2.5% fee, that's one more reason to stay away from them....

Well I'd like to think of myself as a reliable source.

https://support.mtgox.com/entries/20800336-multi-currency-trading

Q. Do you keep independent ask/bid tables for different currencies?
A. No, ask/bid tables for different currencies are not independent. All currencies are relative to whichever currency has the highest volume, which is based on said currencies current market price in bitcoin. Every trade is in one pool and in fact, not are not separate currency markets. This allows users the added benefit of trading in "the greater market" -in currencies they understand- while not limiting them to smaller currency markets.

For example, if a buy order for bitcoins is placed in EUR, the order can be executed against another user selling bitcoins in any currency and not necessarily only against another user selling bitcoins in EUR.

[anonymous5050]

muyuu: You can trade GBP with direct GBP bank funding in MtGox. Currently Intersango's GBP trade volume usually matches and exceeds MtGox's however the actual bitcoin prices are a lot better on MtGox, especially with discounts applied. How do you deal in dollars? I've been looking into it but haven't found a cost effective way of converting and transferring my currency.

That's the problem, it's not cost effective. I have an account in dollars and another one (abroad) in Euros, however my salary comes to my British account in GBP and that's what I prefer to use. Transfers and currency conversion usually cost a lot more than fees from either MtGox or Intersango and also trounce the spread difference. Beating costs associated to deposits and withdrawals is basically a matter of volume, for trading small amounts making a free UK deposit to my Intersango account can't be beaten. MtGox and its £5/£15 fees would make sense for £10k+ and I'm not trading that much. However, if you don't plan to move funds much you can still justify trading in several currencies and with some arbitrage you'd come at an advantage after a bunch of trades. Again, I'm not speculating that much.

I'm looking into forex trying to find a way to get funds converted and moved into exchanges more effectively, in a few months I will be trading about £5k which is not much, but it's enough to look more into this.

If I'm moving funds from GBP to US$ then I use XE Trade very easy & reliable, no fees if sending to a US bank account & rates are much more competitive than UK high street banks at 1.4% less than the xe.com quoted mid market rates, no fee for transfer to a US bank account using ACH/EFT & Wire - you can fairly simply set up a bank account as a non resident in the US though I've only done this in person there & with a US address too. Otherwise via XE straight to Mt. Gox via Wire then there's a £12.55 fee, cleared there usually by the next day

GBP to Euro bank accounts also work well with them & likewise no fees

Found this info in the Intersango thread.  It seems that for smaller amounts, depositing £ and € onto Intersango for free is the best, as I avoid the 2.5% conversion and the deposit fees at MTgox, and withdrawls are also much cheaper.  The spreads at Intersango are higher, but I find if I put my order just a hair closer than the best one on the orderbook, and wait a few hours for it to be filled, I actually beat the MTgox price and the higher spread benefits me.  This would not work if I tried to do more than a few thousand euros though as it could take days to fill the order.  MTgox is better for large volume.

For large volume deposits there are much better options than otoh's pick of xe.com which charges 1.4%.  The foreign exchange market is the most efficient market in the world so its outrageous to be paying entire percentage points to convert currency.  Oanda.com has money transfers that cost €20 flat.  I wire € to them, and they convert it to USD for about .001% and then send it on to MTgox.  So it costs me a total of €50 (the €30 wire fee to oanda plus their €20 fee), but it gets converted at almost the exact rate that it should be.  So if I am only transferring €1,000 this is very high at 5%, but if I am doing €10,000 it is .5% which beats the hell out of paying gox 2.5% to do it for me.

[Mt.Gox Support]

From the info in this support email, I estimate that I will get hit with a 2.5% trading fee about 97% of the time when I deposit and trade in euros because the USD trade volume was 35x higher than the euro volume (last 24hr).

In practice the seller doesn't pay the additional 2.5% when a trade is carried out between different currencies. Instead, the sell order is posted into other currency markets at the original price +2.5%.

Basically, the buyer sees the sell order as +2.5% of the original sell order, but adjusted to their own currency.

Cheers

[dooglus]

The prices you see in the orderbook already have the 2.5% added on (or subtracted off, depending on the order type).

So the only time you pay the extra 2.5% is when the best real Euro offer is 2.5% worse than the best offer in a different currency.

In other words, if they had separate pools for each currency, you would never get a better deal than you are currently getting, and would usually get a worse deal.

I remember looking at the EUR market on Gox when they first introduced the new currencies, and noticing that there was a 5% spread between best buy and best sell prices, whereas the USD market had the same volumes but with an almost 0% spread.