For example, if I'm on Bitfinex and take a short position in a rallying coin w/a relatively small market cap, it can drive the price down substantially (even if momentarily). How do these exchange houses deal w/blatant market manipulators?
Simply: they don't. Why would they? They care about trading volume and commission, not morality. Not to mention it is an unregulated business (hey you didn't want oversight, that's why you are in bitcoin) so you have to take the good with the bad.
I may have read something about some bearwhale incident and the guy getting flagged by the exchange. Don't get me wrong, it's a hypothetical I'd like to try, I just don't want to get burned before I start.
Any tricks for retail traders to get an edge in BTC trading? Maybe some worthy stuff to read? thanks in advance.
Those guys are dealt with by liquidity providers who are connected to all the different exchanges across the globe. They can try to move the market but once it has moved enough, I will take the other side of their trades and arb across other platforms. It's no different from other products traded across exchanges. But you do need accounts with all the platforms and confidence in how you store your bitcoins in terms of digital wallets - that's the risk - your wallet being hacked and steal your Bitcoins.