Author: Hui Xian
Speculative trading is well known as the zero-sum game; a person’s gain is from another’s loss. In the universe of cryptocurrencies, traders constantly engage in speculative trading. However, due to the lack of regulations, traders can manipulate the trading market and cause significant loss to new traders.
To help traders combat the spoofs, bthub and Quantwork offer interactive trading tools such as quantitative analytics and liquidity aggregation engine.
Pump & Dump Executives
The most common type of spoof traders is the pump & dump (P&D) group executives. After amassing a large volume of altcoins, they artificially inflate the virtual assets price by spreading ‘pump’ or ‘buy’ signal in the Telegram groups. They tend to spread false indicators like ‘new partnership announcement’ or even insider news to create a fallacy that the altcoin will become the next Bitcoin.
As the prices of the altcoins become as high as the ‘tall tale’ spin, the P&D executives start to sell the coin off to gain higher profits; this is otherwise known as the dump. During the process of dumping, the overvalued coin begins to lose its value and becomes worthless in a matter of hours. Thus, the slowest players tend to lose out the most in P&D games.
How should traders protect themselves from falling into the trap of P&D?
Quantwork utilises quantitative analysis to design and implement sophisticated financial models that allow traders to determine the trends, price and value of the coin. The QuantWork backtesting engine allows users to apply trading strategies to historical data – collected from top 3 exchanges- and measure the efficiency of the tactic in predicting actual results. The official strategies are free to use and thus newbie-friendly. Quantwork offers the investor a calculated approach towards investment. With the ability to foretell future trends, traders can allocate their investment more efficiently.
“Quantwork allows copy trading and users don’t have to worry about coding at all,” Alan Wu, the senior product manager of Quantwork said.
Another group of traders that can manipulate the market in a colossal manner is called ‘the whale’. Just like the unicorn, the whales have never been seen and apprehended, but they are to blame for the large market swings. In 2013, it was reported that one single entity was responsible for driving the price of Bitcoin from $150 to $1000 in two months. Being the big fish in the water, the actions of the whales send ripples in the cryptocurrency market.
How to avoid falling victim to the whale’s manipulation?
bthub provides liquidity aggregation engine for traders to match and trade at the most optimal price. The engine aggregates the market depth and helps traders to obtain better ask and bid price among the partnered exchanges. Traders will not have to go through the tedious process of cross-checking multiple exchanges for the bid/ask price of the coin as bthub will automatically shortlist the best price for you.
However, the best price feeds are worth nothing if the aggregator could not handle the update frequency. Through the use of smart order routing, the hedging orders are being automatically matched and executed at the targeted price and in milliseconds. With the use of bthub, traders can avoid falling victim to the massive swings in the market by reacting swiftly.
The bthub brand conference is hosted by BitTemple Singapore.
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