New Forex Broker Offers Bitcoin Shorting via GOX

[smoothie]

http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/

What does this imply for the price?

How does an institution offer leveraged Bitcoin trading through another exchange?

I know bitcoinica did this and failed. Hoping someone can explain this.

Thanks

 

[notme]

http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/

What does this imply for the price?

How does an institution offer leveraged Bitcoin trading through another exchange?

I know bitcoinica did this and failed. Hoping someone can explain this.

Thanks

 

Down, down, then up, Up, UP.

[ColdHardMetal]

http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/

What does this imply for the price?

How does an institution offer leveraged Bitcoin trading through another exchange?

I know bitcoinica did this and failed. Hoping someone can explain this.

Thanks

 

They aren't actually interacting with MTGox at all. They are just using the MTGox price as a reference for settlement of CFD (Contract-for-Difference) contracts that they are offering.

[smoothie]

http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/

What does this imply for the price?

How does an institution offer leveraged Bitcoin trading through another exchange?

I know bitcoinica did this and failed. Hoping someone can explain this.

Thanks

 

They aren't actually interacting with MTGox at all. They are just using the MTGox price as a reference for settlement of CFD (Contract-for-Difference) contracts that they are offering.

So how do they hedge against their users leveraging in the opposite direction that they are on?

If a user shorts bitcoins on their platform are bitcoins actually borrowed or sold? This is what I'm unsure about.

[notme]

http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/

What does this imply for the price?

How does an institution offer leveraged Bitcoin trading through another exchange?

I know bitcoinica did this and failed. Hoping someone can explain this.

Thanks

 

They aren't actually interacting with MTGox at all. They are just using the MTGox price as a reference for settlement of CFD (Contract-for-Difference) contracts that they are offering.

So how do they hedge against their users leveraging in the opposite direction that they are on?

If a user shorts bitcoins on their platform are bitcoins actually borrowed or sold? This is what I'm unsure about.

I think with CFD you only allow trades between two users.  The house never takes a position.  When the contract ends or a margin call occurs the loser's margin is transferred to the winner.

[Zaih]

The more the merrier. Definitely up 

[loanexpress]

I think with CFD you only allow trades between two users.  The house never takes a position.  When the contract ends or a margin call occurs the loser's margin is transferred to the winner.

In theory yes. However there have been cases of less than ethical houses front-running against their own clients. Think about it - they know about the price changes before their exchange platform uses it. (because they just get the exchange rate from MtGox like everyone else).

On the flip side if they do run a ethical exchange, why not write your own bot, and set it up on a server in Japan. You'll get the price change information first and can potentially outsmart your competition on their exchange.

[im3w1l]

I just hope they volume weight the price over some period for the settlement price. Otherwise manipulation is just a question of time. And then, worst case scenario, there will be people not sharing the BTC values shouting for TPTB to baton the manipulators.