minimum bids

It's very annoying when there's a gap between the buyers and the sellers, and any time you try to close the gap and maybe make a trade, someone keeps outbidding you by exactly 0.0001. Then when you remove your bid, they remove theirs as well.

Obviously it's legitimate to outbid 0.0005 with 0.0006, but not 0.9000 with 0.9001... so I propose a rule that if you're outbidding the current highest buyer or lowest seller, you have to outbid them by at least 1% , unless a lower bid will actually result in a trade.

For example to outbid a buy order of 0.9000 you'd have to bid 0.9090, and to outbid a sell order of 0.1000 you'd have to bid 0.0910. Any bid of less than 1% greater than the buyer/less than the seller could be automatically adjusted.

Annoying, yes, but I couldn't back this suggested rule. I kinda like that iPredict is such a freewheeling trading environment.

Yes bkd, it's a great free-wheeling environment and because I believe that the type of bidder maxb is referring to, stifles such an environment, I supporting his suggestion.

@maxb
OK, you admit it's OK to bid for sub-pennies under some circumstances.

On the higher priced stocks, traders then outbid your 0.9000 bids with 0.9090. What has been solved?

After all if you're willing to buy say 200 stocks @ 0.9000 ($180), what you are asking is will someone else be willing to pay 200 x 0.9090 ($181.80) for preferential execution?

To my mind this seems a small premium to pay. Then we are back to square one.
I can't see any particular malice behind it, unless you want regulation to stop people from putting in higher bids, which is the whole point of a market.

Personally I find it amusing when you look at a stock and not much is happening except a ferocious battle for sub-pennies.

Can we remove a decimal place from the order book? I've thought about making this suggestion for a while now.



Edited 1 time(s). Last edit at 11/04/2010 12:02AM by Artist.

Auction sites like ebay and trademe have a feature similar to what I described, specifically to avoid the kind of silliness where people outbid the highest bidder by 1 cent. Traditional auctions are the same.

The 1% figure was just a suggestion, I'm sure the admins could come up with a suitable formula if they were to implement this.

Artist - yes removing a decimal place sounds like a good idea. This is a small market with only small sums of money changing hands, and buying/selling 1000 stocks for 10 cents seems pretty silly.

The 4th decimal place seems less silly if you think of buying 1,000 stocks for 10cents and making $1,000 back - which is currently the case if you back a real long shot and it comes off.

Increasing the investment needed to back long shots presumably reduces the incentive to back them and thereby reduces trading in those stocks, which would seem to be counter to the general intention.

Overall I'm inclined to agree with TraderV.

1) Would I be allowed to outbid the market maker by pennyfractions? Would the market maker be allowed to outbid me? If market maker bids get blocked, then it's quite possible for iPredict's losses on some contracts to escalate beyond the normal function-of-accuracy-of-admins-guesstimate. (i.e. if market maker is unable to 'flip' its existing position as the market price passes through it, then the MM can wind up with a fairly large unhedged position -- this could be a problem with volatile stocks especially.) (I can provide worked examples to demonstrate that this hypothetical isn't silly.)

2) How would this be coded?

3) There are ways other than sub-penny increments/decrements to make your bids (or asks) attractive: for instance, if you boost the volume of the order enough, then you can make quite a juicy 'target' for other traders to sell/buy to. They'll even trade straight through interposed orders like the ones we're complaining about. Volume speaks, and that's as it should be in a prediction market, where what we're trying to do is elicit the collective opinion of those who are prepared to risk the most.

4) I would find it very frustrating if iPredict refused to place an order because I'd inadvertently put it too close to an existing one (especially at busy times, when lots of orders are being placed, even in the time it takes for me to place mine.)

When I've been trying to close gaps between buyers and sellers, the blocker has matched me by volume as well as price. If I offer to sell 100 at 0.0100, he'll offer to sell 100 at 0.0099. I offer to buy 100 at 0.0100, he'll offer to buy 100 at 0.0101. Then if I withdraw my bid, he'll withdraw his.

It really is infuriating and it kills any chance of a market developing in that stock. I just can't be arsed with silly games over a few cents. intrade seems to do just fine on 3 decimal places, and presumably their market is much bigger than ipredict's.



Edited 1 time(s). Last edit at 11/09/2010 01:31PM by maxb.

I'm not really understanding how that is an issue though.

In your example, lets say the current book tops out with:

Buy 100 @ 0.0001

Sell 100 @ 0.0500

You put in 100 @ 0.0100, and someone else puts in 100 @ 0.0101.

'You' (as the catalyst at least) have closed the spread from 5c (just about) to 4c. Sure, its not you at the top of the book, but the spread is reduced which was your aim when you bid 100 @ 0.0100?

If you want to 'test their mettle', increase your bid (if you think its a bargain at that end, else reduce the sell price). Go to 0.0200 or 0.0300 or whatever.

If they follow, then the spread is still be reduced. If they 'back off' at some point and go away, drop back to the previous bid level, and don't care whether they come back at that point or not.

Does that work?

Alan.

[Edit: Spaces around the @ signs so they don't URLasise(!)]



Edited 1 time(s). Last edit at 11/09/2010 07:35PM by Alan3285.

I'm not sure what I was seeing was a bot trading. The timing wasn't that precise or immediate. Sometimes it would take a minute other times up to half an hour. It felt like people rather than a bot. Interesting concept though - a bot market maker (breaker?) inside a market maker.

I agree with the 1/10th of a cent sentiment - is there anything to be gained by going to 1/100th of a cent?

Quote
andrew93
I agree with the 1/10th of a cent sentiment - is there anything to be gained by going to 1/100th of a cent?

I dunno. The excuse to use words like "centicent" or "microdollar"?

Ha! Or is it a milli-dollar? Splitting hairs for a nano-second I reckon a micro-dollar would a milli-milli-dollar. Can you imagine having it to 6 decimal places???

EDIT: I replied, but was wrong again. Yay for airbrushing!

Microdollar would be $0.000001; millidollar is $0.0010; the most natural name for $0.0001 would have to be either centicent or centipenny. Right now, I find the latter more amusing. But I am a capricious being, full of whim.



Edited 1 time(s). Last edit at 11/10/2010 09:16AM by bkd.

My bad! Well spotted. Centipennies it is.

I shall hereby (try to remember to) refer to 0.0001 as a bdk bkd centipenny.

IPredict that this will eventually be universally shortened to a 'bip'.

Alan.

It would be great to get rid of a decimal point. It needs to go what with all these numbnuts around undercutting bids with centipennies. It's no good particularly in the stocks without the market maker.

Normally I'd ignore the battle for the top of the orders and go ahead and buy or sell -but without the mm the gulf between buy and sell makes this option an ugly one, and of course if you want big orders filled you need to put them in the book.

Getting rid of a decimal point certainly won't solve this but it'll help, it would be a good start.

I can't believe there is any serious suggestion we should get rid of decimal point!

Lets face it, get rid of a decimal point and we automatically loose our centipenny. For goodness sake, we've only just got it.

The consequences of loosing our centipenny are, in my most humble opinion, shocking beyond the point of belief and possibly, even of human tolerance. A disaster of epic proportion and it simple cannot be allowed.

Should iPredict go down this most heinous path, I shall have no option, I repeat, I shall have no option, but to petition Parliament or, in need, Her Majesty Queen Elizabeth II, to have the decision overturned and the status quo to protected in law.

As bad as the problem that we are endeavouring overcome is, it is a problem that is eminently preferable to having to use a ... I can't even bring myself to use the word, a arrrgh, a errrrrrrrh, yuk, millidollar. There, there I've used it now and it felt so bad I must go and have a little lie down.

Quote
ORACLE
words

Agreed.

CENTIPENNY FOREVER!!!

A debate around keeping or losing the centipenny reminds of a funny cartoon I saw. I can't find it at the moment but you had two groups of people protesting holding placards.

One group held placards that said "People Against For"
The other group held placards that said "People For Against"

Personally I am against for (or is it for against?) keeping the centipenny. I find it annoying and petty. I'm not expecting any change, simply expressing my opinion before someone claims a majority of posters in this thread....

Assuming nothing changes, those against the centipenny can simply refuse to lodge bids involving centipennies. I already do this anyway. That way if someone wants to undercut (or overcut?) you by 1 centipenny, then you can undercut them by 9 centipennies, resulting in a changed bid of 1 millidollar.





Edited 1 time(s). Last edit at 11/11/2010 09:01PM by andrew93.

I completely agree with Andrew - the CentiPenny (Bip) should stay. It would be ridiculous to give up such a hard won gain, and would be a betrayal of all those who fought long and hard for this country and all it stands for.

I am with all loyal Kiwis, right behind the Bip.

Alan.

Okay, I'm sorry, but you're all being ridiculous. There is no way "centi-penny" is the correct term here. In the SI system (yes, I know, RAS syndrome) prefixes typically only modify base units. The base unit in this case is obviously the dollar, not the penny.

The correct term, of course, would be hecto-micro dollar.

See the heretic!!

Traitor to the CentiPenny!

I propose that we turn over all executive powers to me, for the duration of this crisis, so that we can deal with the menacing threat to the CentiPenny, and to the Kiwi Way Of Life, and to stop the abuse of those less fortunate than ourselves.

Bip Bip Bip!

I think Alan you misunderstood my position - I am 'against for' retaining the centipenny. I would prefer to see the minimum bid set at one microdollar.

Yes - Me too. The CentiPenny reigns supreme.

We should crush the heretic micropennyists lest our beloved CentiPenny becomes nothing more than ten micropennies.

Bip Bip Bip.

HecMD forever!!! Until, sensibly, we do away with it.



Edited 1 time(s). Last edit at 11/14/2010 07:25AM by ORACLE.