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Author Topic: Warning: Do not leave negative USD on bitcoinica...  (Read 3108 times)
tvbcof
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October 21, 2011, 04:43:28 AM
 #21

Since OP runs a worthless scummy ponzi scheme, I'll use termonology he can relate to.

Warning! Don't put money in a ponzi scheme if you're going to be the last person depositing! You'll lose everything without notice!

Gee, thanks for the head-up Mr. Matthew N. Obvious.

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October 21, 2011, 06:11:41 AM
 #22

Forex is definitely a dangerous investment, but it is definitely not a ponzi.  But I guess Bitcoins are even more dangerous Smiley
tvbcof
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October 21, 2011, 06:17:52 AM
 #23

Since OP runs a worthless scummy ponzi scheme, I'll use termonology he can relate to.

Warning! Don't put money in a ponzi scheme if you're going to be the last person depositing! You'll lose everything without notice!

Gee, thanks for the head-up Mr. Matthew N. Obvious.

Aaaaaand humor is wasted.

Right.  Sorry about that.  New image?  Much better, although you look a little depressed.  Is that the dog-poop-girl train?

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October 21, 2011, 10:16:10 AM
 #24

I guess I should remove that link (it does not even work anyway, someone hacked the server and destroyed it... and no, I am not running it... it is a thing from "ancient" times of bitcoin, this mean, earlier this year, when it was valued 0.7)



But for thsoe that do not understood: I had a normal, and a leveraged long position, as BTC got a spike down, it instantly margin called at very crap prices (ie: the spike was so hard, that it went through my stop and bitcoinica margin call... slipping about 30 cents).  This is a thing that I learned the hard way: BTC balance can get margin called WAAAAY easier than USD balance, because as the price falls, you both have losses on your "bet" and in your whole account value.

This made the USD of the account go negative.


I left the account negative, holding only the long position, hoping that BTC would one day rise again. But bitcoinica force-sold my BTC, without telling me, in fact it does not even show in the history, there are no way to prove it with screenshots unless I show a old screenshot and a new screenshot, and then there are no way to prove I did not clicked the button myself... but I did not, since it would be stupid (I bought BTC at 8, selling it around 3 is idiotic).




So, the intention of my warning is: Bitcoinica might reserve the right to close your long positions, without warning, without informing you, and they will not even bother to show information about it, you will only notice if you take a look at your balance.

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October 21, 2011, 02:07:03 PM
 #25

I had a normal, and a leveraged long position, as BTC got a spike down, it instantly margin called at very crap prices (ie: the spike was so hard, that it went through my stop and bitcoinica margin call... slipping about 30 cents).  This is a thing that I learned the hard way: BTC balance can get margin called WAAAAY easier than USD balance, because as the price falls, you both have losses on your "bet" and in your whole account value.

Exactly you used leverage on a currency which has sometimes 50%+ daily volatility.   


Quote
This made the USD of the account go negative.

I left the account negative, holding only the long position, hoping that BTC would one day rise again.

Ok this is where it gets kinda stupid/sad.   You left a negative cash balance based on "hope"?  Why didn't you deposit more USD or sell some of the BTC?

I am trying to understand if you thought the company was going to allow you to keep a negative balance open indefinately?  What if BTC dropped to $0.01 and the company left this uncovered levered posistion open.  Who was going to absorb that loss?  The company?  You get the profits they eat the losses?

Quote
But bitcoinica force-sold my BTC, without telling me, in fact it does not even show in the history, there are no way to prove it with screenshots unless I show a old screenshot and a new screenshot, and then there are no way to prove I did not clicked the button myself... but I did not, since it would be stupid (I bought BTC at 8, selling it around 3 is idiotic).

Yes that forced selling is called a margin call.  Any brokerage in the world would do the exact same thing.  If the shortfall is small, you have very good long term relationship with the brokerage, and a large diverse portfolio they may give you a small window to immediately deposit cash to cover the margin-call.

If you read any brokerage contract regarding margin they all give the brokerage the right to close any posistion at any time to cover a margin call.   The forced selling closed the negative USD balance, reduced your leverage and ensured the company didn't take a loss for your bad bet.

Quote
So, the intention of my warning is: Bitcoinica might reserve the right to close your long positions, without warning, without informing you, and they will not even bother to show information about it, you will only notice if you take a look at your balance.

I would remove the "might". 

Bitcoinica like any brokerage in the world DOES reserve the right to close any levered posistion (long or short is irrelivent) if you exceed the margin requirements. 

Bitcoinica should include any forced selling in transaction log.   If they don't (would like to hear a response from Bitcoinica on that) it is something that should be corrected promptly.
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October 21, 2011, 02:18:27 PM
 #26

Well, since the spike happened, I was dumping more and more BTC to cover the account without selling the BTC (ie: as BTC went lower, I bought more BTC, and put in the account, making the account as whole positive).

Now that Bitcoinica forcefully closed my BTC position, I have no more incentive to do that. I think is a loss for them... (yes, they recovered their USD, but I was planning in throwing about 4 times what they got in the sale, by repeatedly trying to catch the falling knife).



Now I am wondering how stupid I am (I spent 280 BTC + 20 BTC from someone else to save the 70 BTC that got a spike down while leveraged on long).

:/

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October 21, 2011, 03:17:07 PM
 #27

that forced selling is called a margin call.   Any brokerage in the world would do the exact same thing.

+1


Now I am wondering how stupid I am.

Don't think of yourself as stupid.  You just didn't understand what you were doing.  Hopefully you've learned something from this experience, in which case your money was well spent.  Most adults I know don't comprehend margin trading.  If you do now, you're a step ahead of the game.

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speeder
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October 21, 2011, 03:43:23 PM
 #28

Well... I still cannot calculate on my head how fast margin call happen on leveraged long positions if my account is based on BTC instead of USD...

But yes, I understood how it work, and losing far less money (I have a friend that lost 30 times what I lost, in a margin call, trading on traditional stock exchange).

But still... Sad

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October 21, 2011, 06:21:18 PM
 #29


Bitcoinica should include any forced selling in transaction log.  If they don't (would like to hear a response from Bitcoinica on that) it is something that should be corrected promptly.

We include all the forced liquidations (for all long/short positions of BTC/USD) and their prices in the Order History.

However, since BTC deposits are new, the forced conversions (only for traders who leave negative USD) are manually reviewed case by case at the moment. I apologize for any lack of communication but we always give some time window for traders to deposit money back.

In OP's case, I believe that we have given more than 3 days to 7 days before we finally decide to force a settlement. But it's our fault that we didn't send an automatic email to notify the users.

In our next launch, we will show the detailed ledger to the user so that everything, including forced settlements, will be clear. Also, we are developing a reliable email system to ensure deliverability (important emails don't go into spam).

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October 21, 2011, 06:29:33 PM
 #30

lol, we are going to have quite a show with all those underage (and two digit IQ)  shorts finally getting some education on topic of margin, leverage and short squeeezes. Get popcorn ready. 17 year old from Singapore is going to be your professor on this dear clueless shorts. The market will be his teaching assistant in charge of visual aids.


The first bitcoin short squeeeeze is coming up. I do not know when, but I am certain it is going to be violent.

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October 21, 2011, 06:44:29 PM
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Bitcoinica should include any forced selling in transaction log.  If they don't (would like to hear a response from Bitcoinica on that) it is something that should be corrected promptly.

We include all the forced liquidations (for all long/short positions of BTC/USD) and their prices in the Order History.

However, since BTC deposits are new, the forced conversions (only for traders who leave negative USD) are manually reviewed case by case at the moment. I apologize for any lack of communication but we always give some time window for traders to deposit money back.

I think he meant: Because BTC is forced manually, it does not show up on logs. (also on the e-mail, he wrote to me he did not knew the automatic closing of BTC deposit was in place... Contradicting himself, much?)

In OP's case, I believe that we have given more than 3 days to 7 days before we finally decide to force a settlement. But it's our fault that we didn't send an automatic email to notify the users.

In our next launch, we will show the detailed ledger to the user so that everything, including forced settlements, will be clear. Also, we are developing a reliable email system to ensure deliverability (important emails don't go into spam).

Yes, I am very happy I was not warned that my BTC would be taken... and even happier I was not informed my BTC was taken.

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