[ANN] 1Broker.io - Trade forex, indices, stocks and commodities

[exxe]

Some updates:
The last weeks I worked hard on improving stability.

In general the server had a good uptime of >99.9% but the market data had only an uptime of about 98.8%.
Starting this weekend we now have a redundant system which can provide market data and should improve the situation a lot.

There is also a new status page available at https://1broker.com/status/
If there are problems with the platform you'll find information there.

The next milestone is the SMS 2FA which should be ready in 1-2 weeks.

-exxe

[picobit]

I am a latecomer trying out the site with a trivial amount, and have a number of worries and questions, that I hope you can address.

My main worry is this text in the FAQ:

Backing positions in some form is, however, in our interest. We don't want to lose money if a customer wins.

I am mainly worried about what you do not write: You do not write that you actually back our positions 100% automatically (or manually, although that is more risky).  If you do not, then that introduces a significant counter-party risk to your users.  If a lot of users go long, and prices go up, you may not be able to honor their winning and all users' funds are in peril.  I guess that is what is normally meant by a "bucket shop" (*).  On the BTC/USD market, you can easily back your users' positions, on the other markets that seems a lot harder.  This is different in a futures market like icbit.se, where the number of short and long positions are always balanced (by the market price changing to make the popular choice more expensive).

A related question: When I trade on margin, I am essentially borrowing money to trade for.  From whom do I borrow?

The rate that is displayed on the BTC/USD market, is that the instantaneous MtGox rate, or is it somehow adjusted to balance the positions? (if so, how?)

How do you profit without fees?  Is that from the spread, and is that spread fixed by you or is it the MtGox spread (possibly plus a bit)?  Note that there is nothing wrong with you guys making a profit, in fact that is your only motivation to keep the site running and thus in our interest too - I just like to know what my expenses are :-)

Finally, how is profit and loss treated: If I open a 10 BTC position, and the market moves my way so it becomes worth 11 BTC, do I then have a position equivalent to a newly opened 11 BTC position, or do I still have a 10 BTC position but now with a 1 BTC profit?  And in the latter case, what happens to the profit; is it paid out daily at a "clearing time" or only when the position is closed?

I hope you do not feel that I accuse you of being scammers by mentioning "bucket shops".  If I did not think that you are legit, I would not bother writing.  But margin trading and trusting bitcoins to websites are both risky - and I need to try to assess the risks before going in.


(*) Note that "bucket shop" does not mean scam, just that trades go "into the bucket" (i.e. are not backed by real market trades),  http://en.wikipedia.org/wiki/Bucket_shop_(stock_market).  This is forbidden in the US as it induces high counterparty risk and opportunities to scam the customers.  I think you site is sufficiently transparent to eliminate the latter risk.  "Bucket shop" appears to be a US term, where it is forbidden.  Incidentally, CFDs are forbidden in the US too, but I do not know if is because of the bucket shop law.  CFDs are legal in many other places.

[exxe]

I am mainly worried about what you do not write: You do not write that you actually back our positions 100% automatically (or manually, although that is more risky).  If you do not, then that introduces a significant counter-party risk to your users.

You are right. Not backing positions automatically is a risk and I don't want to deny that. We try to handle these risks with limits on positions sizes (e.g. currently 50 BTC on BTC/USD) mixed with a large amount of traders and enough reserves to cover a worst case. I tried to answer a related question in this post: https://bitcointalk.org/index.php?topic=123492.msg1448781#msg1448781

A related question: When I trade on margin, I am essentially borrowing money to trade for.  From whom do I borrow?

From us. Most CFD Brokers take a small interest every day for leveraged positions. We do not take this interest currently, but maybe this changes in the future. (Without affecting old positions of course)

The rate that is displayed on the BTC/USD market, is that the instantaneous MtGox rate, or is it somehow adjusted to balance the positions? (if so, how?)
How do you profit without fees?  Is that from the spread, and is that spread fixed by you or is it the MtGox spread (possibly plus a bit)?

Yes it's basically the MtGox Bid and Ask and only adjusted if the spread < 0.05 BTC. We profit from the spreads, yes.

Finally, how is profit and loss treated: If I open a 10 BTC position, and the market moves my way so it becomes worth 11 BTC, do I then have a position equivalent to a newly opened 11 BTC position, or do I still have a 10 BTC position but now with a 1 BTC profit?  And in the latter case, what happens to the profit; is it paid out daily at a "clearing time" or only when the position is closed?

An example: Investing 10 BTC in Apple Inc. (with leverage 1; long) means that you buy Apple contracts worth of 10 BTC. Currently this would be 10/453.82 = 0.0220546072 contracts. When you close your position you sell your 0.0220546072 contracts to the bid price. It's like buying a stock share.
A leverage of 2 would mean in this example that you buy contracts for 20 BTC with 10 BTC borrowed from us.

I hope you do not feel that I accuse you of being scammers by mentioning "bucket shops".  If I did not think that you are legit, I would not bother writing.  But margin trading and trusting bitcoins to websites are both risky - and I need to try to assess the risks before going in.

No problem. By your (and en.wikipedia's) definition we are partly a bucket shop because we only hedge when it's necessary. However, the German Wikipedia defines Bucket Shops as a scam which manipulate live prices to their advantage.

I fully understand your worries of trusting us. I was scammed myself in 2011: https://bitcointalk.org/index.php?topic=37279.msg467674#msg467674

[picobit]

No problem. By your (and en.wikipedia's) definition we are partly a bucket shop because we only hedge when it's necessary. However, the German Wikipedia defines Bucket Shops as a scam which manipulate live prices to their advantage.

I fully understand your worries of trusting us. I was scammed myself in 2011: https://bitcointalk.org/index.php?topic=37279.msg467674#msg467674

Thank you very much for your clear and honest answers.  I am not too worried about getting scammed, I am more worried about you guys folding when everybody goes long on BTC and the price skyrockets.  This will not keep me away, but it will certainly limit the how much I am willing to gamble on your site.  I would be very worried if I were you, you could end up loosing a huge amount of money very quickly.

[MPOE-PR]

I am mainly worried about what you do not write: You do not write that you actually back our positions 100% automatically (or manually, although that is more risky).  If you do not, then that introduces a significant counter-party risk to your users.

You are right. Not backing positions automatically is a risk and I don't want to deny that. We try to handle these risks with limits on positions sizes (e.g. currently 50 BTC on BTC/USD) mixed with a large amount of traders and enough reserves to cover a worst case. I tried to answer a related question in this post: https://bitcointalk.org/index.php?topic=123492.msg1448781#msg1448781

A related question: When I trade on margin, I am essentially borrowing money to trade for.  From whom do I borrow?

From us. Most CFD Brokers take a small interest every day for leveraged positions. We do not take this interest currently, but maybe this changes in the future. (Without affecting old positions of course)

I hope you do not feel that I accuse you of being scammers by mentioning "bucket shops".  If I did not think that you are legit, I would not bother writing.  But margin trading and trusting bitcoins to websites are both risky - and I need to try to assess the risks before going in.

No problem. By your (and en.wikipedia's) definition we are partly a bucket shop because we only hedge when it's necessary. However, the German Wikipedia defines Bucket Shops as a scam which manipulate live prices to their advantage.

I fully understand your worries of trusting us. I was scammed myself in 2011: https://bitcointalk.org/index.php?topic=37279.msg467674#msg467674

Is there some way a third party can verify you indeed limit ALL accounts, and verify your total exposure on the markets? Is there some way a third party can verify you do indeed have the capital you're lending on margin?

[🏰 TradeFortress 🏰]

Knowing your identity helps nothing. We all know Pirate is Trendon Shavers.. but nothing's came out of it.

[exxe]

No problem. By your (and en.wikipedia's) definition we are partly a bucket shop because we only hedge when it's necessary. However, the German Wikipedia defines Bucket Shops as a scam which manipulate live prices to their advantage.

I fully understand your worries of trusting us. I was scammed myself in 2011: https://bitcointalk.org/index.php?topic=37279.msg467674#msg467674

Thank you very much for your clear and honest answers.  I am not too worried about getting scammed, I am more worried about you guys folding when everybody goes long on BTC and the price skyrockets.  This will not keep me away, but it will certainly limit the how much I am willing to gamble on your site.  I would be very worried if I were you, you could end up loosing a huge amount of money very quickly.

It is unlikely that everybody goes long in a natural market. But even IF everybody goes long, the price skyrockets, we forgot to hedge and have no reserves left it will ALWAYS be possible to pay out at least the margins. I'm not very worried that this could become a problem with the current system, however.

Thanks for the questions and for giving us a try, btw 

Is there some way a third party can verify you indeed limit ALL accounts, and verify your total exposure on the markets? Is there some way a third party can verify you do indeed have the capital you're lending on margin?

It's hard to prove these things, since I could send you manipulated data, documents, screenshots ... The majority of our reserves are held in Euro and unfortunately there is no cryptographic proof that these reserves really exist, too.
However, the limits are hardcoded and not user specific. You can verify this by asking other users.

Knowing your identity helps nothing. We all know Pirate is Trendon Shavers.. but nothing's came out of it.

Partly true. But keep in mind that, unlike Trendon Shavers, we have working business model which is used by thousands of companies around the world.

[🏰 TradeFortress 🏰]

Withdraw fee is 0.005 btc which is $0.15 instead of 0.0005 btc which is $0.015..

[exxe]

Withdraw fee is 0.005 btc which is $0.15 instead of 0.0005 btc which is $0.015..

Right.

We will not raise this fee for the upcoming smsTAN system, however. (The cost for the SMS is included in the fee)

[🏰 TradeFortress 🏰]

Mt Gox Last: $34.39798
1Broker: 34.0242/34.2302

[exxe]

1broker lies about market prices because they are a bucket shop:

Mt Gox Last: $34.39798
1Broker: 34.0242/34.2302

We are using MtGox bid and ask price (not the last price) for the calculation.

[🏰 TradeFortress 🏰]

1broker lies about market prices because they are a bucket shop:

Mt Gox Last: $34.39798
1Broker: 34.0242/34.2302

We are using MtGox bid and ask price (not the last price) for the calculation.

The last price had to be a former bid/ask price. Maybe there was network problems but I did not observe $34.39 for ask on 1broker.

Either way, I suggest using the API to automatically buy BTC on Mtgox when someone longs, and vice versa, and get rid of the 50BTC limit..

[picobit]

1broker lies about market prices because they are a bucket shop:

Mt Gox Last: $34.39798
1Broker: 34.0242/34.2302

We are using MtGox bid and ask price (not the last price) for the calculation.

The last price had to be a former bid/ask price.

On any sensible platform, yes.  But not on MtGox!!!

The last price is often above the daily max too.  This is apparently because the bid, ask, max and min prices all refer to a single market (BTC/USD) but the last price may come from a much smaller market with a huge gap (BTC/CHF for example), translated into USD.

[ElectricMucus]

Whoever made this is engaging in sockpuppet advertising, take care.

[poly]

Whoever made this is engaging in sockpuppet advertising, take care.

Links / sources please? I'd be very interested.

[exxe]

Whoever made this is engaging in sockpuppet advertising, take care.

This is a nonsense-statement, which contains no information for readers and for me to answer your accusation.
We would never do something like this.

[exxe]

Due to small MtGox market manipulations we had to increase the spread on BTCUSD a little bit.

Sorry for this inconvenience, but currently there is no way around.

[exxe]

Bad News:
We have to close BTCUSD market (at least temporarily)
https://1broker.com/?c=news&newsid=5

While these are really bad news this opens the possibility that we redefine us and offer a DMA (Direct market access) trading in the future and solve the "bucket shop" discussions.

[2112]

We have to close BTCUSD market (at least temporarily)
https://1broker.com/?c=news&newsid=5

Just for the posterity:

Dear customers,
 With much regret we have to announce that we will temporarily close the BTC/USD (Symbol: BTCUSD) market. A user successfully demonstrated the possibility to win constantly on our platform by moving the underlying market. This problem was known but thought to be not profitable because of position limits, market fees, and spreads. This issue is, with our current system, not trivial to fix and as a result we are forced to close this market. All opened positions on BTCUSD will be automatically closed on Tuesday 12th March, 6 p.m. UTC. Of course you can also close your positions manually until this time.

Since 85% of all trades were made on BTCUSD this is a backlash for 1Broker, but in the interest of our users and their funds there is no way around this decision. We are currently thinking of new strategies with this CFD, but we cannot guarantee a solution yet. We hope you enjoy trading on our other 14 markets, in the future.

 All the best,
 exxe

[🏰 TradeFortress 🏰]

In other words, people were buying/selling a penny on gox and changing the price.