High-frequency trading and colocation in the crypto market threaten stability or are they a new stage of development?

In today kriptorynka personal brokers to compete even with the fastest competitors-computer methods tied to the stock exchanges, which are willing to live hundreds or thousands of scammers in a split second. At least, the frequency automated trading (High-frequency trading, HFT) has been evaluated kriptosoobschestvom in a bad light, as it is combined with dishonest manipulation including fraud. However, more and more professional firms that are legally traded on HFT financial markets come to kriptorynok. DeCenter figured out how it affects the sphere of trade cryptocurrency.

Why HFT brokers need collocation?

With the advent of the Internet and IT-development started automation of business activities, which also affected the money market. It entered into this era in 1998, when the United States officially allowed to service the electrical trading platforms. With this delay active brokers are increasingly began to replace the numerical program. Payment is simple: in a variant conditional trading method is even more agile and fast, if it is a real employee, and makes it possible to perform a large number of scams in the short period of time. This practice is called frequency trading (HFT).

Initially HFT trading was very interesting because of the small number of firms involved in this activity. But over time, competition in the sector grew HFT, as if asking the most sophisticated strategies and reduce the maximum delay in the implementation of fraud.

Automation was subject to the first-priority arbitration payroll process due to significant difference in the value of the property and Wotan totem on multiple platforms. Gradually, price distortions in the different market areas decreased, and now this strategy has lost its original meaning. HFT on – is still actively used for market-meykinga increased mobility exchanges due to the fact that orders are placed properly within the specified price spread.

To maximize the speed of the service method, their creators initiated the placement of servers, including computers Merchant methods, very close to the Merchant server system, and even better – in a finishing center. Probably had the name colocation (almost-General location), and now almost all fully regulated exchanges formally implement this service – rent a cell next to their own servers and is directly connected to them.

Now the development of the stock market falls on kriptovalyutnye Exchange. according to information by Coindesk, colocation services are provided more closely and Gemini South American kriptobirzhami ErisX, as well as Singapore Huobi. At the same time the South American platform provides it for free, creating a competitive advantage in the newly created service for kriptorynka.

Russian office manager Huobi Andrei Grachev also told Coindesk, that during the first six months after the invention of the branch, which took place in the autumn of 2018, 50 of their customers using collocation probability using DNS-address cloud exchange server. Probably, it allows you to create scam at a rate of 70 to 100 times more likely than regular users. Thus, Wotan from customers makes about 800 000 operations due to the touch.

Incompatible methods HFT

In the economic world, there is no single view of the conventional frequency trading. On the one hand, HFT is adopted as a method to obtain unfair advantage over other investors. Price fluctuations in the money markets are small, and there are a lot of open views. In these criteria the one whose order is in the book before, only gets the upper hand.

However, if on a regulated market, this activity is colorless, it is tested and encourage yourself trading platforms, then uncontrolled kriptorynke it has the ability to perceive patterns are very dishonest. For example, there are options spoofing – probably the manipulation of prices of crypto-ownership and the creation of artificial energy around it. In addition to this, the louse trading used in the Forex market, as soon as Wotan and his accomplice practically carry out trade with itself, it is still creating the illusion of power. Often, due to the lack of robots, a notorious technique pump & dump will be sold.

In comments to DeCenter Manley Grachev has expressed the view that HFT plays a positive role in kriptorynke as it “significantly increases the mobility, size of transactions, reduces the spread and ensures the usual brokers execution of orders in accordance with the best value.”

kriptotreyderov concerns also activated by the fact that the frequency Forex trading has the ability to bring to excessive price fluctuations. If this is likely to be useful for regular markets, it is very harmful to the crypto-volatile property market. Grachev admitted that the frequency brokers have every chance to “strengthen the movement, which pushes the market” “But is not our market attracts brokers and players with double digits when prices change?” -. He said.

Collocation: why it is probably not always perfect

Not all exchanges are willing to provide the service collocation, creating unequal battle with rivals method according to the HFT-trading. One of these platforms was Binance. “I do not think that in the sly intent probably is important for Binance”, – stated the outlook in comments to DeCenter then Leslie, manager of the department of trade in the Forex market Binance. However, he believes that this service interesting exchanges, such as HFT-Merchants that use collocation, promise to increase the size of trades.

Frequency trading is unlikely to increase volatility, he said, because the bots follow in the footsteps of the various strategies. Some conduct trades on the basis of “fair pricing” that smoothes the difference in the value of properties in various kriptobirzhah. The rest of the play the role of makers by placing long orders. According to him, following the theme, HFT gives a positive result, it increases the mobility platform. On the other hand, frequency trading bots have every chance to show a bad result, as their activities affect the finances of other brokers. Wanting to influence the market in the abstract, is able to at least some investor precisely defines adept Binance.

As he wrote earlier DeCenter, in blokcheyne Binance Chain invented a new order matching system, made in the same amount of dispersed kriptobirzhi Binance DEX. She is the most colorless, as though allows you to monitor and prevent dishonest energy within HFT-trading in the Forex market. Leslie saw to it that the main obstacle to the HFT-brokers at the entrance to the new platform or Restored trading system (both versions Binance Chain) considered that require a lot of time and resources to optimize the robots and their trading methods.

HFT, as inevitable in the crypto market

The hostess frequency trade ideas on the Forex market is very interesting. At first glance, its advantages over the “physiological” trade are obvious. By data Financial Times, the share of HFT on market relevant US securities is approaching 60%.

At the same time, the energy HFT grew after the monetary downturn in 2008, but then started to decline. It was promoted regression of media volatility and a decline due to the very high level of competition, say experts interviewed by the FT. Most of the 2010 economic world started talking about banning HFT after the so-called flash crash as soon as the South American market promotions has lost nearly 10% in thirty minutes. According to one of the basic versions – due to the failure of the algorithmic robots. In particular, after this option spoofing, and the like frontranning frequency trading methods prohibited at the legislative level byvalschiny. Wanting a complete ban or any restrictions on the services themselves HFT-brokers, this craft is by no means intelligent.

Frequency trading requires a sufficiently serious investments in trading robots program, creating trading strategies and even capital for operations. Therefore really effective frequency trading is done by professional companies money. It can not be that of HFT-trading on kriptorynke spoke in the same amount and, therefore, as if the institutional players are showing excessive interest in him.

Against the background of conventional money kriptorynok provides the most convenient and interesting place to frequency trading. But here HFT-trading brokers counteracted society. The lack of individual leaders and lack of clarity led to the spread of “not permitted methods” with the support of frequency trading. The emergence of collocation services kriptobirzhe is probably a step to ensure the same criteria for all brokers using frequency methods. At the same time, it probably means the legalization of such a practice.

Cryptocurrency market once again begins to integrate into the larger economy and trade sector is increasingly activated sperm whales, which are ruled by classical monetary system. Frequency Trading – this is one of their ways to influence the market. However, the impact is likely now decreasing due to the introduction of the market environment, and not due to its design, since a growing number of both ordinary users of exchanges, and the whales themselves. At the same time HFT-trading remains inaccessible for small brokers who are watching this injustice. But the possibility of robots do not deserve to be overestimated: wanting to automated trading, deployed more closely for over 20 years, on regular exchanges of all this is happening because there is a strategy to “tame” trade.


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