Bitcoin Forum

can anyone walk me through how to use the bitcoinica interface to, say sell short? i know very little about margin calls, leverage, et cetera. i already have a position and am a little anxious because i don't really know what all the values signify. help would be much appreciated  :)

If you're just learning how to use bitcoinica, my advice is either not to use leverage at all or use leverage, but only place very tiny (0.01BTC or whatever) orders until you understand what you're doing.

thanks for the replies! question -- why is my unrealized p/l just the difference between my base price and the current price times the size of my position? with 2.5x leveraging, shouldnt my profits/losses be multiplied by that much?

Minimum order is 1BTC AFAIK.

Here is how you use Bitcoinica.

You put a huge margin and a lot of money into which way you think (and as it should) the market is headed.

A lot of small trades by regular Bitcoin traders moves you into that direction and you come close to the break even mark waiting to start making money.

Then, as Bitcoinica sees a bunch of people all margined out in one direction, Bitcoinica buys or sells a buttload of BTC on MtGox and the price either spirals down or skyrockets to a new price which you can not maintain because of the huge spread and margin.

You lose your Bitcoin.

Bitcoinica profits.

The price eventually makes its way back to where it should have been because the market intervenes.

Also you can use bitcoinica like this:

1.  Log in to your bitcoinica account.
2.  Drive to your bank.
3.  Withdraw some money.
4.  Burn it.
5.  Drive home.
6.  Log off bitcoinica.

Yes, I also found out its much easier to set cash ablaze in back yard.. 
Log off bitcoinica...

that was a great read for risk management but i still don't understand the point of leverage if my p/l is solely calculated by the size of my actual position. is leveraging just to inflate my "tradable balance"?

Yes.

ah i see. i covered my position with USD to avoid the mathematical complexity of doing so with bitcoin, but shorting with a large tradable balance in USD affords me little opportunity to profit from the leverage. i caught the drop though, and profited a small amount, so all in all a pretty good first run with bitcoinica.

Also you can use bitcoinica like this:

1.  Log in to your bitcoinica account.
2.  Drive to your bank.
3.  Withdraw some money.
4.  Burn it.
5.  Drive home.
6.  Log off bitcoinica.
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  I guess you get double banged cuz gas aint cheap either.. lol

The only reason people are losing shitloads on bitcoinia is cause they're idiots.

There are both enormous transaction fees and forced price taking. This means there is a huge cost in both putting on and taking off positions, and consequently the only suitable usage of bitcoinia is for longer term trades.

But people are trying to trade intraday using it!

Then they wonder why they blow up.

Blaming zhou tong for ones stupidity is sour grapes tbh.

There is only one reason to use bitcoinia, and it is for the leverage. I have a small position there for that reason, and no other one. And even that is roughtly 2x leverage. Nothing else would work with the volatlity and spreads.

There is a house in Singapore,
They call it Bitcoinica.
Its been the ruin of many a poor boy,
And God I know I'm one.

Wait!!! I did step 5 and 6 before burning my money!

Does this mean I win?

Could be ... but it definitely states your lousy in sticking to a simple recipe!  ;D

so im trying to liquidate my position, and it was active for 15 minutes without a single 50 BTC increment executing. there is no star on buy or sell... should his be happening? isn't some level of liquidity guaranteed? what actually happens when bitcoinica buys/sells btc for you? it isn't matched at mtgox, so say i placed a limit order -- how much slippage is there going to be? if i sell a few thousand btc with a market order will it affect the mtgox price? and how is the price at which it will execute calculated?

I don't see much slippage in bitcoinica's favor on limits. I only see occasional slippage on larger market orders.
IIRC, zhoutong has said that they guarantee 50BTC liquidity on Market orders - since I saw him say that I've been just using market orders for 50BTC at a crack, and the majority of the time, slippage is in my favor. YMMV

Market orders I make for 50BTC tend to execute in 5 seconds or less, but I have seen up to 30 seconds. I haven't seen this change my slippage - the only time the order has been executed well off the expected price was due to serious volatility dropping the price before I actually posted the click on the sell order.

Market orders should be right at, or right outside the spread. In the limit book, I've seen some several K buy orders just above the ask. These are filled too slowly to severely impact the mtgox price.

so then how do you leverage a short? if my position is covered only by the funds i invest, and not by my tradeable balance, then i only see how one would leverage a long position.