High-Speed Traders Are Taking Over Bitcoin
I am one of those traders, and I'll happily share my observations.(Before you ask -- no, there are no any good books and tutorials on HFT trading. You need to grokk it on your own, or receive the knowledge by direct transmission if you are an employee of HFT firm. However, there is "The Problem of HFT" by Haim Bodek, which contains some nice essays from the insider perspective and even some basic examples, though too specific within US equity markets).1) Bitcoin exchanges are the perfect playground to learn the basics of HFT. All trading data is free and public, most traders are not sophisticated enough, you can start as small as you like (being small is an advantage in HFT), lots of low-hanging fruit are to be picked. HFT proliferation and arms race is barely started on most exchanges.2) The algorithms themselves are simpler than most people think. HFT trading is mostly unrelated to arbitrage (inter-exchange arbitrage is much slower, and it is a different discipline).3) The engineering issues are _harder_ than most people think. Even more so with inter-exchange arbitrage.4) Bitcoin markets are small, and HFT potential capacity is quite limited. Most algorithms I came up with work perfectly well on small scale (and running successfully in production), but I am not making any riches out of it yet.