THE FORBES JOURNAL. Why do seasoned Traders choose Central Bullion Market?
THE FORBES JOURNAL
Why do seasoned Traders choose Central Bullion Market?
It’s a no buy-side bot-free world.
If you have been trading in precious metals for any length of time, you have likely run into a few problems that regular trading platforms put in your way by their nature. The first problem is with bots on a platform, trading side by side with humans, and the second is the issue of a platform trading against its own users.
We will explain why these are problems and how the Central Bullion Market solves them with their unique peer-to-peer trading market.
Many investors who are trading precious metals have found that the bane of their existence is bots. Quite simply, bots are a kind of computer code that will request from a platform data, usually price volume and directions of movement, and then with this data use its algorithm to do one of three things:
2. Open a position(long or short)
3. Close a long or short position
They do this process over and over, searching for the best deal that fits their algorithm with the information provided. Most precious metal trading platforms love bots, defending their use by saying that they generally make the same decision a human who programmed them would make, but they can make it many times a second. They usually neglect to mention that as market makers, they also collect a fee for every trade, so the more trades the better.
Bots can use different strategies to prosper, and depending on the market conditions, each strategy will be more profitable. For example, they can be passive buyers or sellers, a passive buyer bot wants to increase holdings and looks to acquire gold passively, or vice versa.
A bot’s benefits to an investor are their speed to react to new data, and their ability to always be trading with no downtime at little to no cost. They suffer from a limited input amount, and they don’t know how to react to all of the data that is available beyond the trading data on the website. Human traders are slower but can incorporate this additional data into their trading strategy.
As human traders, we run into bot problems when we put in a buy offer on an inefficient price we find and the Bot will run ahead of our trade (leapfrog) and buy at a dime higher than our bid(this happens in milliseconds). We lose our order in this time.
Bot users are in a bit of an arms race building better algorithms to trade faster and make better decisions, this comes at a cost, and so investment needs to be made to ensure a trader has the best Bot or else they fall behind.
Platforms trading against their own clients
Now even if you have the ability to set up your own Bot, and the Bot you have is the best available, as far as ability, this does not make you all-powerful. What is worse is that some of the platforms we trade on, like bullion vault, use their own bots with which to trade against us, claiming, “To ensure fairness our bots see absolutely nothing extra from the exchange; they run on separate machinery from the exchange; and they connect to it across the internet via exactly the same protocols and networks as other bots and human users of the exchange.” There is a lot in the neglected details here; they say that their operations are separate but neglect to mention that the server (“separate machinery”) that they run their Bot from is physically next to (within inches of) the server that the trading platform is hosted on in order to access the data as fast as possible. When we are talking microseconds, if you were trading with a bot from just a few miles away, this would make the difference.
Fortunately for human traders, the Central Bullion Market does not have a buy-side. They have built a fair peer-to-peer pool allocated bullion trading space where traders are only able to buy manually through their dashboard the amounts that are offered by the peer-to-peer sellers at any given time. This process means that not only do they not allow bots on their trading platform, but the system also makes it impossible even to trade using a Bot. This gives traders a more level playing field on which to trade, making them more comfortable and free to find the best deals with all available information.
The peer-to-peer Central Bullion Market operates 24/7 and creates competition between human Central Bullion users resulting in genuinely competitive physical precious metal bullion price.