Is the cryptocurrency exchange being occupied by robots?

Recently, the most influential media in the United States, The Wall Street Journal, has paid special attention to the currency circle. After investigating criminal activities such as money laundering in 46 cryptocurrency exchanges, last week it broke out that automated trading robots were being used to manipulate BTC Price.

What is an automated trading robot? It is actually a trading program, the trader can set the trading strategy in advance, determine when to buy the rules of when to sell, and all subsequent transactions are directly executed by the computer.

Before trading, ordinary investors always refer to several indicators that they often look at, such as K-line trend, trading volume, MACD, moving average, etc. After a pass analysis, they decide which point to buy and sell. In fact, these reference indicators can often be quantified, and the speed of computer access to information, judgment, and operation is higher than that of ordinary investors, and investors can avoid irrational investment decisions due to mood fluctuations, so this mathematical model replaces Man-made subjective judgment robots are often used in various investment markets, and the profit models and capabilities of robots based on different trading strategies are also different.

So why are automated trading robots accused of controlling the price of cryptocurrencies such as Bitcoin?

The use of robots for quantitative trading is nothing new in the investment industry. These robots are not illegal and are not always used by many investors in traditional markets such as stocks and stocks. But the Wall Street Journal pointed out that the key difference with other markets is that the digital money market lacks regulation, and the abuse of robots not only damages the market reputation but also hurts individual investors.

The Wall Street Journal cited the example in the text that a digital currency hedge fund specializes in arbitrage transactions, but after being locked in by the “harassment-type trading robots” in the first half of this year, they suffered losses in the ethereum trading.

The Wall Street Journal further explains the strategy used by this type of robot: “Their strategy is similar to “spoofing”. It is very simple, enter fake orders and then cancel them immediately. ”

For example, if the price of Bitcoin is $6,500 now, the bad robot will hang 100 Bitcoin currency in 6499.1, then cancel it quickly, and then hang 200 bitcoins in 6499.2, then cancel, then again 6499.3 Continue to hang… Repeat this action constantly, letting people think that a big family always wants to buy but can’t buy it, so only a little increase.

This strategy is mainly to trick other investors into accepting false transactions, so that they think that many people in the market want to buy, thus affecting investors’ decisions. But in reality, most retail investors who do not use quantitative trading robots are not aware of them, and those affected by those who use robots are also affected.

Such attempts to influence others’ judgments on prices were banned in the US stock and futures markets in 2010, and the New York Stock Exchange regularly monitors illegal trading practices and abuses and punishes those who violate them.

But in today’s digital currency market, the abuse of robots is rampant, and there have been people accusing this manipulation.

Since the currency circle has entered the bear market, most retail investors are in a state of losing money. Many teams specializing in quantitative trading rely on their own quantitative tools to attract investors who want to make money by trading. Some teams even promise the benefits to users, but like As mentioned above, the quantification of bitcoin trading ultimately depends on the artificially formulated trading strategy. Different strategies in different periods, coupled with the fast pace unique to the currency circle, many quantitative strategies have no use at all. Examples of gold abound.

In addition to the automatic trading robots that serve ordinary investors, there are also special services for the project parties and exchanges, using high-frequency automatic trading to raise the price of the currency, and to increase the trading volume of the exchange by brushing. It is common.

I have to admit that before the effective supervision came, the phenomenon of misusing robots to manipulate the price of coins in the currency circle will continue, and the boundary between “manipulating the price of coins” and “doing quantitative transactions” will become increasingly blurred.

In an interview with the Wall Street Journal, Eilertsen, who created the trading robot “whale tool,” said that nowadays encrypted digital currency trading robots are futile, and it is better to create a better tool for small traders to be effective, “if everyone You can manipulate the market, then there is no such