Friday, July 7, 2017

Pit boss vs Trading bot

“This week a class-action lawsuit has been filed against the San Francisco-based trading platform Kraken. A group of customers have revealed that their holdings of 3,414 ETH was liquidated during an Ethereum market flash crash.

Traders are encouraged to use advanced order types such as stop-loss to set their own exits,” explains Kraken. “Unfortunately, we cannot compensate traders for the outcome of naturally occurring events in the market, nor losses due to unavoidable DDoS attacks.”

Kraken got sued during the ETH flash crash. They are not refunding as they claim betters should use the smarter trading bot. Henceforth Kraken should require a risk parameter on all trades so the stop loss marker is always  set.

The system hey have has a nearly passive trading bot monitored by the owner who is watching price action.  His trading bot has to monitor statistics, and the pit boss provides them, fairly, and accprding to an operational format the bot can use.  The goal is to map the local risk onto the neutral 'sigma', with a measure of 'skew' thrown in. The bot can set the price and delta price bounds, and watch the dual queuing stacks.

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