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Author Topic: Bitcoin traders, why don't you just trade forex?  (Read 17356 times)
haydent
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July 11, 2011, 12:08:23 AM
 #21

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That's the EXACT same position you're in with Bitcoin trading, which was the point I was making.  At least with a FX bucket shop you've got the law and regulatory agencies on your side, not to mention the fact that you're trading with a real business and not some dude with a server in his mom's garage.


this is untrue, majority of forex markets are unregulated and can and do trade/hedge against you, also they can be run out of some dude's garage. many are just 'games' (software run on servers that you play on), there is very little connection between the servers you trade on and the open market.

to trade on the open market takes 100's of thousands of dollars


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July 11, 2011, 01:03:07 AM
 #22

In contrast I put only 5 GBP into BTC and traded in multiple times daily whenever I wanted to, so far over a few days.

It took little time to set up but less than a week and was fairly easy to do this using Britcoin and was then even easier to put some of the part bitcoin I had now already purchased with GBP and is in Britcoin into MtGox.

I have 0% charge on each trade, 0% running costs each day, 0% charge for adding or withdrawing money, no or practically no loss due to rounding and 0% trading overhead charges with no additional charges after that.

It's easy to perform a buy/sell and http://bitcoincharts.com/charts/mtgoxUSD#rg2zig1-minzvztgMzm1g10zm2g25 has a good ratio of simple to powerfull showing me to the minute whats happening.
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July 11, 2011, 01:52:03 AM
 #23

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That's the EXACT same position you're in with Bitcoin trading, which was the point I was making.  At least with a FX bucket shop you've got the law and regulatory agencies on your side, not to mention the fact that you're trading with a real business and not some dude with a server in his mom's garage.


this is untrue, majority of forex markets are unregulated and can and do trade/hedge against you, also they can be run out of some dude's garage. many are just 'games' (software run on servers that you play on), there is very little connection between the servers you trade on and the open market.

to trade on the open market takes 100's of thousands of dollars




There are scams in every industry, but I'd challenge you to find a non-legit MM these days.


Once again, everything you'd said about FX, and then some, applies to Bitcoin.  Again I ask you, how do you know your MtGox and Tradehill data feeds are even real?

You're worried about trading with FX market makers that have been around and not scamming anyone for 20+ years, but you put full faith in a couple random guys from Japan running an ultra low budget, proven unreliable, trading website that isn't even licensed as a legit business?

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July 11, 2011, 01:59:55 AM
 #24

Finally, you can't have expectations of entrepreneurs in a new market to have bureaucratic certifications and be following non-existent regulations.

How do you propose an exchange should be set up for the Bitcoin market?



I aboslutely can, because every other legitimate start up business does it.  If the new pizza place down the road from me can begin business in full complance with the law, so can a Bitcoin exchange.  They can collect the proper information from traders, just like a real exchange.  They can submit to regulatory bodies and follow all national laws (using an off-shore bsaed currency trading account is NOT legal for US citizens, for starters).  You know, all that good stuff that every other legit brokerage and exchange goes through.  Real businesses that people plan on sustaining and growing dot all their i's and cross all their t's FIRST.  No one just wings and hopes for the best, unless it's because they plan to be a fly by night scam shop.

MtGox is processing millions of dollars per day, but the website looks like it was made by a five year old, they have no real contact information, they aren't a registered business, they are not in compliance with local or international laws (have fun when your funds are seized and never returned), and there's absolutely zero transparency.

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July 11, 2011, 04:27:12 AM
 #25

Finally, you can't have expectations of entrepreneurs in a new market to have bureaucratic certifications and be following non-existent regulations.

How do you propose an exchange should be set up for the Bitcoin market?
I aboslutely can, because every other legitimate start up business does it.  If the new pizza place down the road from me can begin business in full complance with the law, so can a Bitcoin exchange.  They can collect the proper information from traders, just like a real exchange.  They can submit to regulatory bodies and follow all national laws (using an off-shore bsaed currency trading account is NOT legal for US citizens, for starters).  You know, all that good stuff that every other legit brokerage and exchange goes through.  Real businesses that people plan on sustaining and growing dot all their i's and cross all their t's FIRST.  No one just wings and hopes for the best, unless it's because they plan to be a fly by night scam shop.

MtGox is processing millions of dollars per day, but the website looks like it was made by a five year old, they have no real contact information, they aren't a registered business, they are not in compliance with local or international laws (have fun when your funds are seized and never returned), and there's absolutely zero transparency.

Valid Points.
However, Mt Gox is not the only exchange in existence - point being that people who outweigh benefits over risk of using said exchange, will make do with the time being, and adopt when appropriate.
A pizza place is well established market segment, but Bitcoins are a grey area with Zero, 0, Null, bureaucratic regulations and certifications, in relation to Bitcoin oriented businesses.
Which (current) regulatory body will acknowledge a business that exchanges fiat monies for BTC as a legit exchange?
It is true that they can still be in compliance with all laws, on the other hand, they may have their own agenda for not doing so.

Laws are there to protect you, can you not protect yourself?
You may think this is a bold statement, but it is entirely possible for sensitive activity to occur between trusted parties, without regards to law. I can buy dope from my friend safely and easily even though it illegal.
How does this apply? People who take the time to evaluate the risk, examine their own trust towards who they are trading.
Some, like yourself, who wish for all the walls and thorns to be up already will have to wait for slow bureaucracy to catch up. Others enjoy a web of trust.

Some do wing it and hope for the best. Either way, Mt Gox is not the only exchange, the majority have chosen to use that one, even if its sheep mentality, ignorance to risks, or whatever. It is the reality and to comprehend it you will not succeed by putting forward proposals why it shouldn't be that way.

If you expect for there to be a safety net, you have the up most right. However, you will have to wait for an exchange that wants to be in full compliance with the law, and slow bureaucracy to catch up.
Look for another exchange such as Tradehill, and find out if they are violating some law. If you find they are, why? Surely they have their own reasons, same with Mt Gox. You may conclude scamming but maybe its protection from conflicting laws etc. If there are no good reasons why an exchange might be avoiding certain laws, I'm sure their will be entrepreneurs to start new exchanges that do.

There is definitely room for improvement for a lot of aspects of the exchanges, however that will come with time.

I'm not going to argue if they can do it better, that will be solved by competition.
I was simply stating they can't follow non-existent regulations and certifications in regards to a Bitcoin oriented business.

Also, if its so illegal, why hasn't it been shutdown?

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July 11, 2011, 08:45:58 AM
 #26

It's quite simple really:

I understand bitcoin, and I don't understand regular forex.

I have been following bitcoin for almost a year. I know the technology, the community, and the bitcoin economy inside out.   The bitcoin exchanges may be flawed, they may be more risky than other exchanges, but at least those flaws and risks are 100% known to me.

Regular forex lacks transparency. The murky, insider-dominated fundamentals that affect regular forex seem too inaccessible to an amateur trader.
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July 11, 2011, 02:46:38 PM
 #27

Regular forex lacks transparency.

That's very true. Also don't forget, in FOREX you don't buy *currency*, you buy "currency pair". In case with BTC, you do a real exchange. You buy USD by selling BTC, or you buy real BTC by selling USD. Forex became a very good simulated game nowadays for small players.

That's why I believe in the BTC market and that's what drives my development of a fast trading platform which is modeled after a real stock exchange, not some hacked during 2 nights amateur stuff.

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July 11, 2011, 03:11:58 PM
 #28

Regular forex lacks transparency.

That's very true. Also don't forget, in FOREX you don't buy *currency*, you buy "currency pair". In case with BTC, you do a real exchange. You buy USD by selling BTC, or you buy real BTC by selling USD. Forex became a very good simulated game nowadays for small players.

Clearly demonstrating that you have no idea what you're talking about.  Roll Eyes


Currencies are paired because you have to sell something to buy something and vise versa.

You don't buy currency pairs.  You buy the base of the pair by selling the paired curency.   i.e. If you "buy" USD/JPY, you're selling Yen to buy USD.  If you "buy" AUD/USD, you're selling USD to buy Aussie Dollars.  So in your case, the answer to the OP is, "because I have no idea what I'm doing."


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July 11, 2011, 03:32:56 PM
 #29

It's quite simple really:

I understand bitcoin, and I don't understand regular forex.

I have been following bitcoin for almost a year. I know the technology, the community, and the bitcoin economy inside out.   The bitcoin exchanges may be flawed, they may be more risky than other exchanges, but at least those flaws and risks are 100% known to me.

Regular forex lacks transparency. The murky, insider-dominated fundamentals that affect regular forex seem too inaccessible to an amateur trader.

This. I'm an engineer; if it wasn't for Bitcoin I wouldn't trade currency at all. Doing the required homework for another currency would be less fun and not worth my time.
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July 12, 2011, 07:19:46 AM
 #30

Clearly demonstrating that you have no idea what you're talking about.  Roll Eyes


Currencies are paired because you have to sell something to buy something and vise versa.

You don't buy currency pairs.  You buy the base of the pair by selling the paired curency.   i.e. If you "buy" USD/JPY, you're selling Yen to buy USD.  If you "buy" AUD/USD, you're selling USD to buy Aussie Dollars.  So in your case, the answer to the OP is, "because I have no idea what I'm doing."

AyeYo - no reason to jump into conclusions so fast Smiley

I'm explaining a very simple case: for that 25 USD account, if you "buy" JPY/USD, you won't get Japanese Yen into your forex account in exchange for those 25 USD! You will only get JPY/USD pair, which you later have to sell anyway in order to get back your USD (higher or lower).

P.S. Don't be so personal, your attitude sucks. I have many years of trading experience in the stock and futures market, not to tell about base economic education. If I'm wrong somewhere - just tell what's wrong, this will be useful for everyone here. Personal attacks are nothing useful.

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July 14, 2011, 10:26:45 AM
 #31

AyeYo seems that you is the one who does not know how Forex operates Smiley For small traders, under a million usd, you most probably don't even do any real deals. It's all in your broker's cumulative position, if he even has one. Or it can be a pure simulation, because more often than not people lose everything and you can just run it casino-style. Just hedge that big bets to the real market and you will be safe.

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July 14, 2011, 02:35:37 PM
 #32

Let's say I was just learning to trade currencies.  Would I want to

a) learn in a market where most others have roughly the same level of experience?
b) learn in a market with vastly more experienced people?

Let's say I was a rookie.  Would I want to

a) play somewhere where even my limited experience gives me a competitive advantage?
b) trade in a market where others are vastly more experienced?

Let's say I was an experienced trader.  Would I want to:

a) fleece the inexperienced armed with knowledge of what I did wrong when starting out?
b) compete in the cuthroat zero-sum-game world I know the professional markets to be?

Let's say I was a professional.  Would I want to:

a) trade in a market I could buy with my pocket lint, knowing full well my potential upside is a tiny fraction of my bonus check?
b) make my living the usual way

Understand these scenarios and you understand who is trading bitcoins and why comparing the bitcoin market to a real forex is like comparing apples and minivans.
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July 14, 2011, 10:09:05 PM
 #33

AyeYo seems that you is the one who does not know how Forex operates Smiley For small traders, under a million usd, you most probably don't even do any real deals. It's all in your broker's cumulative position, if he even has one. Or it can be a pure simulation, because more often than not people lose everything and you can just run it casino-style. Just hedge that big bets to the real market and you will be safe.

That's called market making.  No mysteries there.  I fail to see why it's a problem when you're dealing with a real business that's under laws and regulations and is TELLING YOU that they're a market maker.  That's totally different than hack site MtGox that doesn't promote itself as a market maker, but yet could very well be on the other side of your trades.

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July 15, 2011, 08:14:53 AM
 #34

That's called market making.  No mysteries there.  I fail to see why it's a problem when you're dealing with a real business that's under laws and regulations and is TELLING YOU that they're a market maker.

According to [1], a market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.

Market making is not related to simulating quotes to clients, pretending that client placed order when in reality it purely remains in the forex broker's "casino".

Market making mainly means providing liquidity to the market, not cheating a client.


1. Radcliffe, Robert C. (1997). Investment: Concepts, Analysis, Strategy. Addison-Wesley Educational Publishers, Inc.. p. 134.

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July 15, 2011, 03:15:59 PM
 #35

That's called market making.  No mysteries there.  I fail to see why it's a problem when you're dealing with a real business that's under laws and regulations and is TELLING YOU that they're a market maker.

According to [1], a market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.

Market making is not related to simulating quotes to clients, pretending that client placed order when in reality it purely remains in the forex broker's "casino".

Market making mainly means providing liquidity to the market, not cheating a client.


1. Radcliffe, Robert C. (1997). Investment: Concepts, Analysis, Strategy. Addison-Wesley Educational Publishers, Inc.. p. 134.


Cool.  What's your point?

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July 15, 2011, 03:17:32 PM
 #36

Let's say I was just learning to trade currencies.  Would I want to

a) learn in a market where most others have roughly the same level of experience?
b) learn in a market with vastly more experienced people?

Let's say I was a rookie.  Would I want to

a) play somewhere where even my limited experience gives me a competitive advantage?
b) trade in a market where others are vastly more experienced?

Let's say I was an experienced trader.  Would I want to:

a) fleece the inexperienced armed with knowledge of what I did wrong when starting out?
b) compete in the cuthroat zero-sum-game world I know the professional markets to be?

Let's say I was a professional.  Would I want to:

a) trade in a market I could buy with my pocket lint, knowing full well my potential upside is a tiny fraction of my bonus check?
b) make my living the usual way

Understand these scenarios and you understand who is trading bitcoins and why comparing the bitcoin market to a real forex is like comparing apples and minivans.


I get that and I even agree.  What I don't understand is how people trust these exchanges.  I'd trade BTC too for the exact same reasons, but it's the safety of the exchanges and why people trust them that doesn't make sense to me.

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July 15, 2011, 03:45:53 PM
 #37

I get that and I even agree.  What I don't understand is how people trust these exchanges.  I'd trade BTC too for the exact same reasons, but it's the safety of the exchanges and why people trust them that doesn't make sense to me.

I'm not seeing much potential to scale in the Bitcoin market. It's fine as a sandbox, but can you really ramp up the size of your trades? Not only is the liquidity not there, but what if you did make some real money? Do you really want to have hundreds of thousands of dollars sitting on their servers?

And even as a sandbox, is it really a good sandbox if it doesn't move like the real markets do?

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July 15, 2011, 03:48:23 PM
 #38

That's called market making.  No mysteries there.  I fail to see why it's a problem when you're dealing with a real business that's under laws and regulations and is TELLING YOU that they're a market maker.

According to [1], a market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.

Market making is not related to simulating quotes to clients, pretending that client placed order when in reality it purely remains in the forex broker's "casino".

Market making mainly means providing liquidity to the market, not cheating a client.


1. Radcliffe, Robert C. (1997). Investment: Concepts, Analysis, Strategy. Addison-Wesley Educational Publishers, Inc.. p. 134.

Do your own research, both in terms of selecting a broker, and in choosing your trades. The money you make or lose will be reflective of the markets and how you choose to interact with them.

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July 15, 2011, 05:09:19 PM
 #39

Stop saying they aren't registered when Tibanne Ltd. runs Mt. Gox and pays taxes in Japan. They have also hired personnel so it's not just '2 guys running it in moms basement'.

You can even phone up the landlord of their office, Cerulean Tower, Shibuya, Tokyo and ask the receptionist if such a company operates there.

The office rents there are about $20k monthly so I wouldn't say it's a low budget operation.
It's in one of the finest areas of Tokyo.

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July 15, 2011, 05:22:57 PM
 #40

The office rents there are about $20k monthly so I wouldn't say it's a low budget operation.
It's in one of the finest areas of Tokyo.

Which only makes the points made herein stronger. Spend money on IT infrastructure - not marble receptionist desks and expansive views of the Tokyo skyline.

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