Buyer Beware. Proposal for a non high-frequency manipulatable exchange.

[shainasaz]

I placed several buy orders on MtGox last night which were clearly above market, inside plenty of bid orders as shown on MtGoxLive. I was amazed that I didn't get filled, and instead it moves the market to my offer. It is as if someone is seeing the order flow before orders are processed, and cancelling their orders on the order book before they're lifted. (MtGoxLive updated to show my bid, so it hadn't stalled)

It may be a high frequency trading expert has cornered the bitcoin market. This is very bad for everyone, as it means the bid / ask spread will be much wider than you think when anyone trades. At the moment, most people are ignorant of the cost of HF trading manipulation because it's so hidden. eg. http://ftalphaville.ft.com/blog/2011/12/19/797701/alphachat-sal-arnuk-on-high-frequency-trading/ [nofollow] It's effectively using inside information to front run your trade.

Here's a proposal to make it harder : exchanges only allow trading every 30 seconds. You place orders whenever, they get filled using an auction mechanism every 30 seconds where the market gets filled the best bid / ask price below/above their order. Think of it like decimalisation of time. It should also help reduce volatility. Please can someone make this? I'll pledge some BTC, I'm tired of paying huge BTC transaction fees.