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Author Topic: *Unofficial* ICBIT (BTC Futures Trading) - Help & FAQ's  (Read 23356 times)
Super T
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April 01, 2013, 08:17:49 PM
 #1

This thread is intended to support and mutually benefit the ICBIT user community, I'll try (edit: failing miserably) to keep up to date as poss - corrections or additional info/clarifications welcome.

UPDATE - 19/07/2014 - semi-official training guide available.

There is a nice trading guide called ICBIT Futures for Dummies. Check it out.

INTRODUCTION TO ICBIT FUTURES TRADING

https://icbit.se/

You want to hedge, arbitrage, or simply open a leveraged position against BTC price changes.  ICBIT offers leveraged trades through "futures" contracts, which are exchanged as a quantity of units between buyers and sellers.

Update: there is now an official rules page: https://icbit.se/rules

CONTRACT VALUE

https://icbit.se/BUH4 (example contract spec)

Each contract unit represents $10 worth of BTC at the specified price in $, so:

   > 1 unit at a trade price of $100 represents $10 worth of BTC, or 0.1 BTC in contract value.
   > 100 units at a trade price of $100 represents $1000 worth of BTC, or 10BTC in contract value.

The current trade value of each open futures instrument is not pegged to the underlying spot price, but is instead based on speculation as to what the final settlement value will be.  For this reason it is not guaranteed/expected to rise and fall as the spot price does.  Final settlement value is determined on listed the day of settlement for each instrument (currently 14th Apr, 14th Jun and 16th Sep), and the final settlement value is the 24 hour volume weighted average price (VWAP) from the largest exchange at the time of the settlement (i.e. 20:00 UTC).


OPENING A POSITION

Use the Buy/Sell buttons if you want to place an order with specific price conditions, if no corresponding offers exist at the specified price, then the order will enter the order book and become visible to others as an active bid/ask, if another user places an order which meets the specified price, the order will be filled and contract positions activated.

Use the Buy/Sell at Market button if you simply want to purchase at the most favorable currently available price.

To open a position, the following key fields must be populated.

  • Quantity  = The number of $10 chunks of Bitcoin you want to bet on.
  • Price       = The price you are prepared to buy/sell at.
  • Amount   = Calculated field displaying the amount of underlying BTC you are effectively betting on (Quantity * 10 / Price).
  • Margin    = Calculated field displaying the amount in BTC which must be "reserved" in the account to cover any potential loss incurred against the position (15% I believe).

CLEARING

The nature of the contracts is such that ongoing profit or loss against open contracts is re-distributed twice a day (08:00 and 20:00 UTC / GMT) in a system wide clearing process (rather than only being realised when a position is closed).

During Clearing all contract positions are evaluated and the latest trade price is used to determine the relative gain loss between the buyer and seller of each open contract. This difference (variance) is then transferred from the loser to the gainer, the contract remains active and will be re-evaluated at the next clearing session.

So if trade prices increase from 100 to 110, then the variance will be ((100*10)/100)-(100*10/110) = 10 - 9.09 = 0.91.  
     > Prior to clearing, the sellers account would show an unrealised loss of 0.91BTC, and the buyer +0.91BTC.
     > At clearing the loss of 0.91 would be deducted from the sellers account, and credited to the buyers account.  
     > After clearing:
               > "Unrealised P/L" balance reverts to 0 for both buyer and seller.
               > "Execution Price" for the open position is reset to the trade price upon which the variance adjustment was made.
               > "Margin" will also be adjusted (again, not sure of the precise margin calculation).

So, open a position of 100 units at around $100 and sell after a rise/fall of say 10 bucks, you are looking at just under 1BTC profit/loss (excluding fees).


RANGE

Another feature of the contract format is the use of trading range controls, an upper and lower limit on each instrument beyond which trading cannot occur within the current (12hr) session.  The range for the session is set during clearing based on the variable weighted average price (VWAP) price plus or minus 10% (edit: some newer instruments have wider range boundaries), so if the last trade price was 100 at clearing, the range for the following session will be set to 90 - 110.

Range boundaries are a safety feature to protect market participants from exceptional price swings in the underlying spot market, and limits risk exposure to traders (e.g. during intraday spikes/dips), given Bitcoin price volatility it is not unusual to see prices reaching upper/lower range limits, resulting at times in cessation of trade as no-one is prepared to buy/sell within session range threshold.

FEES

Each trading instrument will operate one of two fee models:
  • Lower transaction fees, but a twice-daily holding fee per contract applied at clearing (designed to encourage day-trading)
  • Higher per-transaction fees, but no holding fees (designed to support longer term trades)

Per transaction fees are calculated in BTC and are chargeable at the point of contract purchase/sale, therefore each position will incur fees twice (open and close).  Fees are charged according to the quantity of contracts being bought/sold, so whilst the fee is not displayed prior to purchase, it can be calculated by multiplying the quantity by the fee (and double if you also need to consider closure fees).

Actual fees are listed on the instrument reference pages (e.g. https://icbit.se/BUH4) and vary per instrument, usually with lower fees on contracts which are furthest form settlement.

Update 01/04/13: Fee discounts based on trade volume - fee discounts are now applied based on trading volumes, so if you trade a lot your fees will be lower - as outlined here: https://bitcointalk.org/index.php?topic=50817.msg1717445#msg1717445

MARGIN CALLS AND FORCED LIQUIDATION

https://icbit.se/margincall

Already spelled out pretty well on the ICBIT site, but many people still ask this, so here is the text:

"Every user's balance is continually checked by the trading engine if that user has any open positions. Margin call (forced close) is issued when his balance (actual money in the account plus total variation margin) is less than or equal to 75% of the total maintenance (initial) margin necessary to keep the positions.

If there are no respective bids/asks in the order book, the worst case scenario begins. The trading engine will go through users holding counter positions and forcibly close them by such a price that the user's balance who has the loss never goes negative."

API

https://icbit.se/api

There is an API available which offers full access to order book info, as well as order execution capabilities.  Personally I think the specs page could be improved through the inclusion of some additional specific worked examples, as well as instructions for the configuration of a very simple user control interface (excel/vba would be a start)... submissions welcome!

edit: example code here http://captainbodgit.blogspot.co.uk/2013/04/exploring-icbit-bitcoin-exchange-api.html


BUGS, HOT ISSUES

[NOW CLOSED] 1. Unscheduled clearing.
There is currently some controversy surrounding the use of unscheduled clearing sessions.  These appear to be run as exceptional events when large variations in BTC/USD spot price occur, and form part of a risk management strategy used to limit ICBIT's potential exposure to loss where over-leveraged contract losses can exceed the available account balances before any forced position closure has occurred.

There have been several instances of unscheduled clearing resulting in trading range increase/reduction, and subsequent forced closure of positions resulting in trading losses to individuals, prompting heated discussion of the legitimacy of such clearing.

Solution agreed and implemented (10/04/13): Fireball has confirmed ICBIT will now operate two daily clearing sessions, 20:00 and 08:00 UTC, and ad-hoc clearing sessions should no longer take place.

[NOW CLOSED] 2. Range Manipulation during the clearing process.

Each day during clearing the trading range for the following session is adjusted for each instrument, previously the adjustment is based on the price of the last single trade prior to clearing.  As a result, there were frequent attempts to influence the adjustment by shooting low/high orders in at the last second before clearing.  Range adjustment manipulation is attempted as a means of limiting losses and maximising the potential for profit during the following trading session, it can also result in forced closure of otherwise profitable trading positions, and has resulted in much heated discussion.

Solution implemented (December 2013): Range and variance adjustment calculations during clearing are now based on a new Volume Weighted Average Price, which should resolve the problem.
Target Fix Date: TBC

3. Forced closure of "winning" contract positions.  

Because ICBIT does not assume the counterparty risk for futures contracts being traded, gains must come directly from counterparty contract holders.  So if you buy a contract, and BTC rises, your profit must come from the loss of a corresponding seller.  In extreme market scenarios, those on the negative side of a contract will decide not to replenish a heavily depleted margin (and are perfectly entitled to do so).  Under normal conditions such contracts will then be forced back onto the market and transferred to a new seller at the best offered market price, however in the event that no other sellers exist, there is no way to continue maintain the contract obligation to pay profit to the gaining party, so contracts are force-closed at the "optimal" price (which essentially means the best possible price for the "gaining" side).

Because market price gaps can cause a contract loss to exceed both available margin, and the entire available account balance (if low enough), it is possible that already "realised" profit against an open contract can be reversed at the point of closure.

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Stephen Gornick
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April 02, 2013, 04:27:51 AM
 #2

You might want to inject an "Unofficial" in the title or somewhere to clarify that ICBIT did not author this.



Final settlement value is determined on listed the day of settlement for each instrument (currently 14th Apr, 14th Jun and 16th Sep) and is based on the spot price of BTC/USD on that day.

Because that could be misinterpreted, each contract type specifies the method that determines the settlement value .  For BTC/USD contracts, the final settlement value is the 24 hour volume weighted average price (VWAP) from the largest exchange at the time of the settlement (i.e., 20:00 UTC).

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April 02, 2013, 08:09:08 PM
 #3

Thanks Stephen - yes 100% unofficial - I have amended the title.

Also - I have amended the settlement specifics to incorporate the text you provided, thanks for the clarification.

Any features you would like to see on the platform?

Here's one - the way I see it, liquidity is a problem, also the contango arbitrage opportunities are very often HUGE on the futures instrument range.  If we could somehow make the arbitrage process more accessible, I bet we could vastly improve liquidity.  There could be opportunities to do this via both the UI and the API...

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April 03, 2013, 07:20:52 AM
 #4

Adding requirement - "margin" field within "your orders" view (esp. useful against unfilled orders).

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April 05, 2013, 05:18:56 PM
 #5

RANGE

Another feature of the contract format is the use of trading range controls, an upper and lower limit on each instrument beyond which trading cannot occur within the current (24hr) session.  The range for the session is set during clearing as the latest trade price plus or minus 10%, so if the last trade price was 100 at clearing, the range for the following session will be set to 90 - 110.

This appears to be a safety feature to prevent exceptional price swings, and limits risk exposure to traders, however the rapid appreciation of bitcoin has on many occasions led to prices quickly reaching threshold levels, resulting at times in cessation of trade as no-one is prepared to sell within session range threshold.

This is patently false. The trading range SHOULD provide safety to the trader, but on multiple occasions the admin of the site has performed a 'manual clearing' that reset the prices so that trading could drop far below the 10% maximum in 24 hours. This happened due to market manipulation that drove the price down to 75 briefly from 94 (similar to what happened a couple days ago). The spot price quickly returned to normal, but the admin removed the trading range protection, and caused loss of many positions and forced margin selling on lot of traders. This has resulted in a great loss to many traders, who are still trying to get the admin to repay at least the considerable amount of fees that went into opening these positions that were unfairly closed.

This all happened BEFORE the admin added the arbitrary manual clearing clause to the futures description.
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April 05, 2013, 05:39:23 PM
 #6

Unscheduled clearing is being tracked as hot issue #1!

@ Fireball - are you able to confirm the planned deployment date for the move to twice daily clearing and the associated guarantee against unscheduled clearing?

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April 09, 2013, 05:01:00 PM
 #7

Unscheduled clearing is being tracked as hot issue #1!

@ Fireball - are you able to confirm the planned deployment date for the move to twice daily clearing and the associated guarantee against unscheduled clearing?
Already moved today.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
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April 10, 2013, 11:29:20 PM
 #8

Cool thanks - updated.

Also added requirement for a damn order summary before final submission!

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May 03, 2013, 05:09:14 PM
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admin! I'm in shock! why I closed the 50 futures on 140?? (At that time, as Bitcoin was worth 85)
I am engaged in arbitration, AND SO THE FUTURES FOR ALL I HAVE BOUGHT Bitcoins

a month ago also closed several hundred at the rate of twice the rate at Gokcen. I swallowed a pill that, although the loss was enormous
I'm arbitration, and under all the futures I bought bitcoins.
I see the clearing in 8utra occurred at the rate of 130.49. HOW my futures then could close at a higher rate?
the more that ever were willing to buy, so I understand it, you are required to change more quickly before my partner, closing futures to someone who did not have enough collateral
Why is the second time I have to myself to bear huge losses (in percentage terms), while the administration admitted mistakes (not relevant market situation margin requirement GO untimely margin call)
Please answer, because if such losses occur without sharp collapse (in contrast to the situation in the past month), then the arbitration between Gokcen and this exchange does not really.
before that, when on April 12, I closed the 200fyuchersov to 143 when Bitcoin was 80, I swallowed it, though, and lost a lot of nested, the more that a month before, I was on these futures suffered loss (here), and constantly added here Bitcoins
But many of those futures, I was selling more on 55, 70, 90. And forcibly bought at 143! (
but I understand that at that time there was a sharp decline, and many have suffered from the fact that at the time were not increased margin requirements
but on the basis of what is now closed my contracts, the relatively quiet market, always with a willing to buy contracts at a reasonable price, and the more that the price is above the clearing price!
I want my money! This is an obvious miscalculation ADMINISTRATION AND I SHOULD NOT BECAUSE THEY SUFFER IN WHICH THE TIMES

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May 04, 2013, 11:24:16 AM
 #10

newminer spammed all ICBIT threads. His concern are address in the official english and russian threads.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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June 20, 2013, 03:01:31 AM
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Is there a way to programmatically download a history of all my trades?
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June 30, 2013, 04:27:14 PM
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Newminer was telling the truth. Be cautious about icbit.
https://bitcointalk.org/index.php?topic=246845.0
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July 04, 2013, 09:43:40 AM
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Newminer was telling the truth. Be cautious about icbit.
https://bitcointalk.org/index.php?topic=246845.0

Another trader, who says "September has to be above $100 even if spot is $30 lower". Sorry guys, you have to be cautious. Contango and backwardation are normal, and you have to take additional care when trading with leverage.

Trading with leverage provides the ability to get higher profit, however it also means that your loss may be higher.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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July 08, 2013, 11:46:53 PM
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Another trader, who says "September has to be above $100 even if spot is $30 lower". Sorry guys, you have to be cautious. Contango and backwardation are normal, and you have to take additional care when trading with leverage.

Trading with leverage provides the ability to get higher profit, however it also means that your loss may be higher.

"Contango" and "backwardation" are real words, and they are used constantly on the icbit site, along with "arbitrage" to explain any unusual price move, but those words are a smokescreen and the actual meanings have nothing to do with the price moves.

icbit is running a complex scam that has stolen a lot of bitcoin from naive traders. Already three people have posted on the scam and more will be following.

The rats that steal bitcoin from small players need to be exposed and cursed.
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July 09, 2013, 06:47:22 AM
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Another trader, who says "September has to be above $100 even if spot is $30 lower". Sorry guys, you have to be cautious. Contango and backwardation are normal, and you have to take additional care when trading with leverage.

Trading with leverage provides the ability to get higher profit, however it also means that your loss may be higher.

"Contango" and "backwardation" are real words, and they are used constantly on the icbit site, along with "arbitrage" to explain any unusual price move, but those words are a smokescreen and the actual meanings have nothing to do with the price moves.

icbit is running a complex scam that has stolen a lot of bitcoin from naive traders. Already three people have posted on the scam and more will be following.

The rats that steal bitcoin from small players need to be exposed and cursed.

I have to say, I don't think your views are particularly well thought out, or widely held.

I have used ICBIT for some time and whilst the platform has obvious problems (such as the ability to weald a disproportionate influence over the clearing range adjustment), I have not been scammed, and in general my profits/losses have correlated with the trend in underlying price movement.

I have read your accusation thread linked to above, and your assumptions about what the 'normal' futures premium for BTC should be are simply wrong.  Sure the contango/premium reached 150 USD in March when BTC appeared to be running away like an unstoppable train and all the dinner menus read bear soup, but Fireball has made no secret about the fact he was unhappy with that situation and the risk it posed to his platform due the way counterparty loss is managed (the validity of which was demonstrated during the ugly counterparty contract liquidations which occurred during the subsequent March crash).  It was also no secret that Fireball has been publically reaching out for market makers, citing the large arbitration opportunities available as an incentive.  Combined with the recent slide in BTC which has deterred many bulls from making further long investments it is not at all surprising that contango has significantly retracted and in some cases we have seen backwardation.

I also think it is reasonable that if you no longer meet the margin requirement for a position, then your position should be liquidated.  If that means listing your assets for sale at an attractive price then so be it, ICBIT do not close out your long position by buying your assets from you (right or wrong, this is their stated business model) they are listed for sale to other platform users, and If there are no corresponding bids/asks to cancel out against I would expect them to be priced to reflect the need for a quick sale in order to preserve the risk of loss to others.  As a trader exposed to the risk that your losses may affect my profit, I EXPECT this safeguard.

ICBIT is a small platform and certainly high volume traders can heavily influence the market prices, but this is life, you will find the same situation within any tradeable asset market.  The way you have simply jumped to the conclusion that losses = conspiracy = ICBIT are out to rob us all (and then started throwing public accusations around) is not cool.

I could be wrong and Fireball may have some scheme in action designed to relieve you of your assets, but I don't believe this is the case, he once described the ICBIT venture to me as a once in a lifetime opportunity, and I believe this is how he sees it, as something he cares about and wants to see succeed.


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July 09, 2013, 07:13:25 AM
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My BTC withdrawals keep being rejected with "not enough funds". Yet I have more than I am requesting in my "available" balance. Any ideas?
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July 09, 2013, 02:21:30 PM
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My BTC withdrawals keep being rejected with "not enough funds". Yet I have more than I am requesting in my "available" balance. Any ideas?

qxzn - If you file a support request via official email it's going to be investigated much faster.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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July 09, 2013, 02:27:05 PM
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I could be wrong and Fireball may have some scheme in action designed to relieve you of your assets, but I don't believe this is the case, he once described the ICBIT venture to me as a once in a lifetime opportunity, and I believe this is how he sees it, as something he cares about and wants to see succeed.

Thank you, yes, that is right. There were a lot of scammers in the Bitcoin world, so I understand people jumping into conclusion very fast, however we are constantly improving ICBIT to add transparency, to stick to the rules, etc.
I still stand on the words - it is a once in a lifetime opportunity, and I am not interested in robbing people for a few hundreds BTCs when this thing could grow into a multimillion US dollars venture. That's the goal I wish to achieve, and our team is putting all efforts to make that happen.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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July 09, 2013, 02:52:25 PM
 #19

You have a very sophisticated con running.

A few points.

1) Trading by icbit which makes use of their knowledge of client accounts.
2) Procedures which make no sense except as part of a scan, e.g. clearing at last single trade price.
3) Use of several online personas by one single person on icbit chat.

icbit is a scam. Some people will make money on it, as with most scams.
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July 09, 2013, 03:08:19 PM
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I have to say, I don't think your views are particularly well thought out, or widely held.


I am not especially articulate and have deficits that may make my explanations unclear. For a more intelligible explanation of part of the icbit scam see http://polimedia.us/trilema/2012/icbitse-the-bucket-shop/
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