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Let’s Fight Back Against the Bitcoin Trading Bots

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I trade on Kraken, and I have noticed that the order book is increasingly controlled, it seems, by the trading bots. I imagine that is the case on most exchanges.  There are a myriad of very small orders relatively close to the strike price, but the first significant order (to buy or sell) is usually a fair distance away.  Then, after you execute a market order, before you have time to refresh the screen the small orders you just took out are replaced with new mini orders.

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Therefore, I know that if I place a market order the bots will make me pay more dearly than real live humans would.  But if I place a limit order, particularly if it’s a relatively large limit order, the bots will fill the book with small orders in front of mine within seconds.  It’s called front-running when the exchanges themselves do this. If it’s not illegal for exchanges to do this, it should be.  But for other traders, I guess these are the rules of a knife fight.

How to defeat these bots?

My strategy is to take a half-taker half-maker approach when I want to fill an order quickly.  In other words, suppose I want to fill an order quickly, buy or sell doesn’t matter, but I don’t want to give too much to the bots.  If I want to buy 100 coins, for example, I will find the limit price that will buy me 40-50 coins. I enter the limit order at that price.  What usually happens (not always, particularly not if a fast market) is the entire order is filled at my limit price within moments, as the bots kick in.

I share this info because I know the bots are eating you alive too.  Maybe together we can take away some of the bots’ unearned profits.

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2 Comments

2 Comments

  1. thoth

    May 18, 2017 at 6:11 am

    I gave up trading the bigger markets due to bots, it’s a nightmare, you always get the raw end of the deal. Though someones bot selling newly mined coins is easy enough to trick the price down to better levels but coins like ETH and so on are impossible.

    • Jim Fredrickson

      May 18, 2017 at 9:50 am

      One solution is for exchanges to allow people to place an order to 5-8 decimal places, but only display the 1st three digits after the decimal. Then it would be nigh impossible to edge out orders by .0000001, as you would not know “exactly” where the orders are. If an exchange does that, I will switch to that exchange.

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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Bitcoin

Trade Recommendation: Ride the Next Rally of Bitcoin

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The profit taking period that saw the Bitcoin market fall from 19,697 to a low of 13,501 in a matter of a few days is almost up. The market appears to have generated a new higher low and will use that level to make its next move up.

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Technical analysis reveals a large reversal pattern in the hourly chart that could signal the end of the correction. In addition, volume has been steadily decreasing. On Coinbase, volume spiked by as much as three times its average value in the hourly chart during the height of selling. In the last seven hours, however, volume has been way below its average indicating that bears have lot ammunition. More importantly, RSI in the hourly chart is far from overbought territory. This gives the market a lot of room to breach resistance at 18,000.

The strategy is to buy the market when it goes above 18,000. With signs of selling exhaustion, bears may not put up much of a fight the next time the pair breaches 18,000 on Coinbase. Also, the market has no stiff resistance above 18,000 so it has a clear path to our target of 22,500.

Hourly Bitcoin Chart on Coinbase

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As of the time of writing, Bitcoin is trading at 17,200.

Summary of Strategy

Buy: breach of 18,000

Support: 17,200, 16,800, and 16,450

Target: $22,500

Stop: Move below 16,450

 

Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Analysis

Technical Analysis: Bitcoin Grinds Higher as Records Tumble in Altcoins

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The historical surge in the segment, which is the second such move this year, continued today, with another round of break-outs in some of the major altcoins and tepid gains for BTC investors. Ethereum, Ripple, Dash, and first and foremost Litecoin was leading the charge, with the recent star LTC topping $300, just after a day of hitting the $200 mark.

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Litecoin defied all odds after reaching extremely overbought readings, and the coin rode the speculative wave, turning exponential, not unlike IOTA and Bitcoin previously. With the coin being stretched in an unprecedented way on all time-frames, investors could even consider selling their core positions at the current levels, as a deep correction is almost granted in the coming period. The first meaningful support level is found at $125, and a re-test of the $100 level is probable during the next major correction.

LTC/USD, 4-Hour Chart Analysis

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Ripple finally ended a long period of relative weakness today, and the only major on a long-term by signal jumped over primary resistance at $0.26 and crossed the $0.30-$0.32 too in the euphoric sentiment. As the coin is not long-term overbought following the 6-month long consolidation, the buy signal in XRP remains intact, with the only major resistance level being found at the all-time high near $0.425.

XRPUSDT/USD, 4-Hour Chart Analysis

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