There is a user named
Xeda who used to do arbitrage from the auction to HVMarket. Now that mat stacks in the auction usually go for market price or above, they've moved to HVMarket -> HVMarket arbitrage, and it seems that they're making good money at it. #2 on the Top Earners Last 30 days, #8 on the Top Spenders, for a difference of +32.6 million credits. Little other evident income; they're at #610 on Hentai @ Home past month and not in the top 1000 for past year; level 387, so the amount of grinding they can have done is also limited, yet the scale of their operations on HVMarket has been expanding dramatically.
I spent quite some time bid warring with them the other day, and I don't think it's a bot yet; the behavior was not algorithmic enough. But a bot would be much more efficient, and it's evident that someone running a buy-sell bot on HVMarket could pull down possibly tens of millions of credits per month.
So, is running a bot to compete with them allowed? Are there going to be any checks to prevent it, like a random chance of riddlemasters on price adjustments?
In principle, arbitrage can be useful. It reduces the buy-sell spread, so people who want to sell now or buy now can get a higher or lower price respectively. But there need to be multiple competing arbitrageurs or they can make ridiculous amounts of money for very little work.
As soon as there are two people trying it, it's necessary to constantly (meat)-bot the exchange in order to compete. You have to continually move your price 1c above the other account in order to be able to buy while still maximizing profits, and move down when they move down. This is where a bot would excel.
A built-in HVMarket bot would reduce the rewards for running an external bot. You could set a minimum and maximum offer price. If there are no other bidders, it bids your specified minimum, since nobody would sell to a 1c offer, else it bids 1c above the second-highest offer up to your max, and automatically moves down when they move down. But it would never have every possible competitively useful feature, so there would still be an incentive to run a better one. For example, someone wants to troll-bid you with a buy offer for 1 unit 1c below your maximum, to force you to pay max price. You'd want to be able to set an ignore threshold of x units; your offer would move up only if the offers above it totalled at least x units. Any features like that which weren't implemented yet in the internal bot would give avantage to external bots.
In the real world, exchanges don't worry about it, and let trading houses write their own bots for program trading, and competition keeps the profits sensible. How do we want to do it here?