Dark pools - how do they work?

[genjix]

Hey,

I want to add dark pools to Britcoin. How do the dark pools on MtGox work? They also have 'dark pool with normal' - what's that?

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[TheKoziTwo]

The Mt Gox dark pool allows you to buy or sell large quantities of BTC without moving the market.

You can mark any buy or sell order with a value over $1000 as being in the dark pool.

Orders in the dark pool don't show up on the order book.

There are 2 types of dark pool orders.
Dark pool and Normal - Can be filled either partially from the normal orders or the dark pool.
Dark pool Only - Can be filled only by other dark pool orders or a single normal order that is larger than the dark pool order. This means that if there is a single normal order that would fill the dark pool order both will be filled.

[ByteCoin]

Hey,

I want to add dark pools to Britcoin. How do the dark pools on MtGox work? They also have 'dark pool with normal' - what's that?

Some people don't want their bid/asks to show publicly for various reasons. They could write a bot that polls mtgox to monitor the price and then post their bid/asks accordingly. This polling would be a strain on the mtgox website so mtgox implements dark pools to provide the same functionality in situ.

Whether dark pool users should trust mtgox is an interesting question. I imagine there are arbitrage opportunities for mtgox based on the fact that mtgox can re-order incoming currency transactions and make his own dark pool trades which he says are other people's dark pool trades. This would be hard to detect and very lucrative.

ByteCoin

[sjk]

What you want to implement is called "Dark Liquidity" and the wikipedia article has a very good overview of this concept: http://en.wikipedia.org/wiki/Dark_liquidity
It also explains how a dark pools works as well

[genjix]

What you want to implement is called "Dark Liquidity" and the wikipedia article has a very good overview of this concept: http://en.wikipedia.org/wiki/Dark_liquidity
It also explains how a dark pools works as well

Yeah I read all that but am unsure which method MtGox uses, and what parameters they use.

[BitterTea]

I would implement dark pools as per nanotube's explanation.

[cypherdoc]

Hey,

I want to add dark pools to Britcoin. How do the dark pools on MtGox work? They also have 'dark pool with normal' - what's that?

Some people don't want their bid/asks to show publicly for various reasons. They could write a bot that polls mtgox to monitor the price and then post their bid/asks accordingly. This polling would be a strain on the mtgox website so mtgox implements dark pools to provide the same functionality in situ.

Whether dark pool users should trust mtgox is an interesting question. I imagine there are arbitrage opportunities for mtgox based on the fact that mtgox can re-order incoming currency transactions and make his own dark pool trades which he says are other people's dark pool trades. This would be hard to detect and very lucrative.

ByteCoin

these are very valid points.

[genjix]

Cool. Any more info? I can get my finance friend to read through all of this.

[gareth69]

Hey,

I want to add dark pools to Britcoin. How do the dark pools on MtGox work? They also have 'dark pool with normal' - what's that?

Gen you say you don't offer refunds on partially completed orders Can I amend an order then? So if I put buy 100BCT for 100GBP at 1GBP per BCT, get it half filled, then price moves to say 2GBP per BCT - there is no way that the order is going to be filled.

Are you seriously saying that people will lose 50% of their money, if the order is not filled and the price moves away from the order?

[superduh]

we need more of these. today.

[bitcoinbear]

we need more of these. today.

Why? What is the advantage to dark pools?