The 0.01 bot indicator

[kentrolla]

I'm sure many of you have noticed the bots that trade 0.01btc at a time to make the price stick to the highest bid or lowest ask. I've done a lot of thinking about these bots and I can see 2 opposite goals that they could be trying to achieve.

In this example I'll use a .01 bot that is making the price seem higher by buying at the lowest ask after every sell and places a bid that is $0.00001 cheaper than the lowest ask.

1.) it could be trying to drive the price UP by making people think the price is higher when they don't look at the depth chart.

2.) it could be trying to drive the price DOWN by baiting people into selling that don't look at the depth chart because at mtgox they see "highest bid price" being way higher than it actually is. So they assume that they will be getting that price for all of their coins, but, in reality, they are only getting that price for 0.01btc and then it slips down to whatever the highest "real bid" is.

So far, I have noticed a trend that makes #1 seem more likely.
Most of the time i see the .01 bots doing what i described in the example above I see the price go up eventually. Then after the price goes up the bots switch to doing the opposite of what i described: selling at highest bid price, and leaving an ask for 0.01btc that's $0.00001 more expensive than the highest bid price. when they start doing that the price seems to go down eventually.

So, recently I have been making very good trades based solely on that indicator. 

Ofc, now that I posted that secret on the forums, they can now use reverse psychology on people using that indicator. 

People are probably wondering why I would give away an almost fool-proof indicator. This is because I HATE those bots and they are way too effective. They are very annoying and the only goal behind them is to deceive new traders.  Also, they cause too much stability. I know many of you think stability is a good thing. But, as a day trader, it gets real boring real fast. I want that volatility.

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[kentrolla]

just to kinda show some evidence of this indicator. When i wrote this thread the bots were working for the bears. Just before I wrote this thread the bots were working for the bulls. The price went up from 10.90 to 11.10 before the bots switched to the bear side. Now, the price has gone from 11.10 back down to 10.97.  The bots are still working for the bears, I suspect they will switch to the bull side at around 10.90. Rinse and repeat.

[Cablez]

I've noticed this behavior as well and it truly is annoying for making the price falsely 'sticky'.  I am just not sure who buys or sells without looking at the depth charts, seems kind of foolish.

[OgNasty]

I've actually thrown 0.01 trades out on the exchange in the opposite direction of the larger order I've placed, just to bait people into taking my order by taking advantage of this exact "indicator" in the past.  Manipulation runs deep sometimes.  There are no perfect indicators.  Trade safely friends.

[kentrolla]

I've actually thrown 0.01 trades out on the exchange in the opposite direction of the larger order I've placed, just to bait people into taking my order by taking advantage of this exact "indicator" in the past.  Manipulation runs deep sometimes.  There are no perfect indicators.  Trade safely friends.

yea, that was what my theory number 2 was essentially. Baiting. I'm just wondering if anyone else has noticed the same trends with these trade bots?
I find it fascinating how these .01 bots can manipulate the market so effectively.

[thezerg]

I wrote about this effect a few weeks ago: https://bitcointalk.org/index.php?topic=93738.msg1036114#msg1036114

But is the pennybot reacting to market trends or setting them?

[kentrolla]

I wrote about this effect a few weeks ago: https://bitcointalk.org/index.php?topic=93738.msg1036114#msg1036114

But is the pennybot reacting to market trends or setting them?

i would have to assume the pennybots are setting the trends. because they switch to the bull/bear side before the trend starts to change. It takes a while for them to change the trend, but they definitely have a big influence on the trend. For example, right now the pennybot is on the bear side and they are holding back these bulls pretty effectively. I'm assuming they will switch to bull side around 10.9 and then back to bear at 11.1

It looks like the pennybot stopped trading. Expect a rally imo

[bpd]

Another possibility is that these pennybots are manipulating the price for the purpose of other transactions that are priced based on MtGox last. How does bitpay determine the exchange rate for transactions, for example? Hopefully it's something more intelligent than looking at last trade.

[niko]

It looks like the pennybot stopped trading. Expect a rally imo

Hours have passed, and nothing has happened.

[kentrolla]

It looks like the pennybot stopped trading. Expect a rally imo

Hours have passed, and nothing has happened.

The pennybot is back trading on bear side. In fact, there was a mini rally when it stopped trading.

I'm starting to think the pennybots are just trying to maintain stability. GRR I HATE STABILITY. SO BORING.

[teflone]

This has been brought up before..

One person suggested that it is a bot figuring out the high and low, by making a trade..  since the tickers are unreliable..

Like feeling around in the dark with your API trading bot..


I tend to think its something like this..

[smoothie]

This has been brought up before..

One person suggested that it is a bot figuring out the high and low, by making a trade..  since the tickers are unreliable..

Like feeling around in the dark with your API trading bot..


I tend to think its something like this..

That's fricken hilarious....(holds hand over eyes and clicks randomly on the mtgox site).

[bitcoinBull]

This has been brought up before..

One person suggested that it is a bot figuring out the high and low, by making a trade..  since the tickers are unreliable..

Like feeling around in the dark with your API trading bot..


I tend to think its something like this..

Yup. Most likely its an attempt to probe for iceberg orders.