Quote from: Vlad2Vlad on June 13, 2014, 04:38:39 AM

Quote from: source99 on June 13, 2014, 04:06:03 AM

What is the story with all of the tiny buy orders at cryptsy?

There are lots of orders for small fractions of a CSC. It's got to be a bot or something but I just don't understand what it could be doing...

Huh

Traders use bots all the time to walk the price down with very small orders. It could be used on the upside as well, of course, so it depends what this particular trader is aiming for.

If the spread is narrow and bid is excessively larger than the ask, the trader is likely trying to hold the price down to make their bid price more attractive. When the spread is very large, people tend to think that the fair price is somewhere in the middle and the bid is not as attractive. The reverse can also be true when they want to make the ask look more attractive. Another popular strategy is to narrow the spread, place an order at the bid, fill the spread in with small orders to narrow the spread, then place alarge order just behind the ask. This baits small orders that come in below the large order behind the ask. The current book looks very much like this actually.

The trader that autofills the book is basically manipulating the perception of a fair price on the book.