Subtle market manipulation

[thezerg]

I know the big walls catch big attention but check out what's going on now.  After every buy (look for non trivial quantity), somebody executes a sell for .01.  This has the effect of dropping the displayed market price back down to what the buyers are asking (about 8.36), not what the sellers are asking.  A 5 minute weighted average would show the price MUCH higher (about 8.49).  You can see it here:
http://www.bitcoincharts.com/markets/mtgoxUSD_trades.html

But if you have clarkmoody running its obvious because all these .01 sells show up red (the only red!)

[Jr00t]

bots

[thezerg]

Of course.  But this bot seems to be deliberately losing a trivial amount of money to keep the ticker as low as possible which is why I'm calling it manipulation.

[Jr00t]

how can you assume they are loosing money?

[thezerg]

what I meant by "losing" money is that the last trade was (say) 8.46 and this bot executes a market order which trades at 8.37.  If it put in a limit at 8.45 it would probably get filled pretty quickly since in this bull market the buyers are moving up to meet the sellers book.  So it is "losing" the 9c spread for the benefit of making the market look at a casual glance like the sellers are moving down to meet the buyer's book.

[Stephen Gornick]

what I meant by "losing" money is that the last trade was (say) 8.46 and this bot executes a market order which trades at 8.37.  If it put in a limit at 8.45 it would probably get filled pretty quickly since in this bull market the buyers are moving up to meet the sellers book.  So it is "losing" the 9c spread for the benefit of making the market look at a casual glance like the sellers are moving down to meet the buyer's book.

Write your own bot to snap those up?  Since trading fees are on a percentage basis, it cost almost nothing.

The market will fix this .. spreads narrow and all is right in this world once again.

[bb113]

I thought everyone daytrading did this. Eventually it cancels out.

[Tril]

I think tiny trades are from bots checking the price in a way that works even when all the price feeds are down.

[thezerg]

what I meant by "losing" money is that the last trade was (say) 8.46 and this bot executes a market order which trades at 8.37.  If it put in a limit at 8.45 it would probably get filled pretty quickly since in this bull market the buyers are moving up to meet the sellers book.  So it is "losing" the 9c spread for the benefit of making the market look at a casual glance like the sellers are moving down to meet the buyer's book.

Write your own bot to snap those up?  Since trading fees are on a percentage basis, it cost almost nothing.

The market will fix this .. spreads narrow and all is right in this world once again.

I thought a bit about doing this... it would take 100 trades to make a BTC (not counting the fees, and if you are lucky the spread will be .10) so not much $ but regardless it would be fun to tweak someone's nose by artificially triggering their bot!  It would be interesting to see if it has volume curbs.

BTW the bot has switched sides.  It is now pushing the price upwards (it is buying .01 whenever someone sells into an existing bid).