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Offline mdj

Operation Improving Liquidity
« on: April 06, 2015, 07:07:11 PM »

I want to do my part to help improve liquidity on the internal exchanges. I have been doing what I can from manual trading but am thinking of writing and running a market maker with quite a large spread initially which will gradually tighten.

All of the current featured markets on the internal exchange are AssetX:Bitshares pairs. I know these are important markets but with the recent BTS downtrend/volatility I am quite averse to shorting assets into existence that will be under direct exposure to the BTS price.

Wouldn't it make more sense to start focussing on BitAsset:BitAsset pairs such as:

BitUSD:BitBTC
BitUSD:BitGold
BitCNY:BitGold
BitUSD:BitCNY
etc etc.

Which of these do you think could potentially be the most valuable and traders would want to trade the most? By running market makers on less volatile assets we could easily tighten the spread (of course this would still rely on the supply of BitUSD etc but this does appear to be improving).

Offline monsterer

Re: Operation Improving Liquidity
« Reply #1 on: April 06, 2015, 07:32:11 PM »
bitUSD/bitBTC has got to be a big one in need of liquidity. Did you look at the market maker scripts which already exist? I think xeroc wrote a couple?
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Offline rgcrypto

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Re: Operation Improving Liquidity
« Reply #2 on: April 06, 2015, 07:46:57 PM »
Do you think you would be able to have a profitable bot?

What would we need for our bots to be profitable?

Offline mdj

Re: Operation Improving Liquidity
« Reply #3 on: April 06, 2015, 07:49:46 PM »
bitUSD/bitBTC has got to be a big one in need of liquidity. Did you look at the market maker scripts which already exist? I think xeroc wrote a couple?

Cool I think that'd be a good place to start as it could really help us to reinforce to Bitcoin traders that they can trade with us with zero exchange default risk. I've seen a few - will dig into the ones xeroc wrote, thanks!

Offline mdj

Re: Operation Improving Liquidity
« Reply #4 on: April 06, 2015, 07:55:58 PM »
Do you think you would be able to have a profitable bot?

What would we need for our bots to be profitable?

Bots could easily become profitable as soon as people start filling asks and bids. Having a market maker bot would basically enable you to set your spreads i.e. Buy at feed -x, Sell at feed +x. In the example of BitUSD:BitBTC these spreads would move in relation to the current Bitcoin exchange rate. This would be trivial to implement and in already liquid markets the risk would be relatively low in comparison to BTS markets (as price manipulation would be minimised across external exchanges)

Offline rgcrypto

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Re: Operation Improving Liquidity
« Reply #5 on: April 06, 2015, 08:21:41 PM »
Do you think you would be able to have a profitable bot?

What would we need for our bots to be profitable?

Bots could easily become profitable as soon as people start filling asks and bids. Having a market maker bot would basically enable you to set your spreads i.e. Buy at feed -x, Sell at feed +x. In the example of BitUSD:BitBTC these spreads would move in relation to the current Bitcoin exchange rate. This would be trivial to implement and in already liquid markets the risk would be relatively low in comparison to BTS markets (as price manipulation would be minimised across external exchanges)

If a given market becomes more and more liquid, do the bots keep their profitablity?
(I'm sorry I am pretty new to trading bots)

Offline mdj

Re: Operation Improving Liquidity
« Reply #6 on: April 06, 2015, 08:27:56 PM »
Do you think you would be able to have a profitable bot?

What would we need for our bots to be profitable?

Bots could easily become profitable as soon as people start filling asks and bids. Having a market maker bot would basically enable you to set your spreads i.e. Buy at feed -x, Sell at feed +x. In the example of BitUSD:BitBTC these spreads would move in relation to the current Bitcoin exchange rate. This would be trivial to implement and in already liquid markets the risk would be relatively low in comparison to BTS markets (as price manipulation would be minimised across external exchanges)

If a given market becomes more and more liquid, do the bots keep their profitablity?
(I'm sorry I am pretty new to trading bots)

Yes and no - competition increases and so spreads tighten but volume also increases.
For example, I could write a bot that buys at 1% below actual price and sells at 1% above but somebody else runs one that only looks for 0.5%.
Ultimately, when this starts to happen bots begin to become more intelligent to compete.

Offline sschechter

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Re: Operation Improving Liquidity
« Reply #7 on: April 06, 2015, 08:28:14 PM »
Do you think you would be able to have a profitable bot?

What would we need for our bots to be profitable?

Bots could easily become profitable as soon as people start filling asks and bids. Having a market maker bot would basically enable you to set your spreads i.e. Buy at feed -x, Sell at feed +x. In the example of BitUSD:BitBTC these spreads would move in relation to the current Bitcoin exchange rate. This would be trivial to implement and in already liquid markets the risk would be relatively low in comparison to BTS markets (as price manipulation would be minimised across external exchanges)

If a given market becomes more and more liquid, do the bots keep their profitablity?
(I'm sorry I am pretty new to trading bots)

No they compete for profit, and the HFT bots win  8)
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Offline rgcrypto

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Re: Operation Improving Liquidity
« Reply #8 on: April 06, 2015, 08:32:16 PM »
I get it now. How much funds do you have to put behind this bot? Would it be a "communal bot" where people who have a stake in it get a corresponding share of the profits?

Offline donkeypong

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Re: Operation Improving Liquidity
« Reply #9 on: April 06, 2015, 08:39:26 PM »
Even if it were a break-even bot, then assuming it contributed to solving this issue, it would be worthwhile.

Offline mdj

Re: Operation Improving Liquidity
« Reply #10 on: April 06, 2015, 10:48:16 PM »
I get it now. How much funds do you have to put behind this bot? Would it be a "communal bot" where people who have a stake in it get a corresponding share of the profits?

When I have successfully been running it with a smaller amount of funds then I'll consider opening up a communal pool to further increase volumes & other markets although I believe cryptohedge are actively working on this already.

 

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