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Author Topic: ICBIT Derivatives Market (USD/BTC futures trading) - LIVE  (Read 88568 times)
picobit
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November 16, 2012, 12:09:08 PM
 #241

Looks like someone has opened too many shorts around 10 and now holding the market to avoid losses.
That is of course a loosing strategy, unless the spot BTC prices falls between now and 15. dec.  The rest of us can try to benefit from his strategy. :-)
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November 16, 2012, 12:24:48 PM
 #242

I was developing my own derivative trading platform a while ago, and now as people are actively trading USD/BTC futures on ICBIT, I wonder if there is any interest for other kind of derivative contracts.

Let's call them "capped non-deliverable forwards":

  • capped: there is a hard limit on maximum profit/loss
  • non-deliverable: settled in bitcoins, exactly like ICBIT futures contracts
  • forwards: there is no such thing as variation margin and there is no such thing as margin call. Initial margin is your maximum loss.

So unlike futures, forward is essentially a contract between two parties, exchange does not need to manage it. And since they are capped and initial margin is required, there is no counterparty risk.

However the downside is that initial margin might be considerably higher than you have with ICBIT futures. (But it's up to market players, it might be tiny if they are OK with small profit caps.)

Also since forward is settled between two parties it can be done via multisig escrow, so there is no need to trust exchange your money, at least in theory.

(I'm sorry if it looks like an advert for my non-existent service, but I was discussing this topic with Fireball before he made ICBIT and I wonder what people think about it now. That's all.)

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November 16, 2012, 05:13:40 PM
 #243

Also since forward is settled between two parties it can be done via multisig escrow, so there is no need to trust exchange your money, at least in theory.

(I'm sorry if it looks like an advert for my non-existent service, but I was discussing this topic with Fireball before he made ICBIT and I wonder what people think about it now. That's all.)

What you indicate here would be a more advanced kind of platform, technology-wise. Exactly that kind of development the bitcoin trading community would badly need, to get out of that situation where you're forced to expose your BTC when you need to hedge or want to trade. So, from a theoretical point of view (or let's call it bitcoin project roadmap), such a platform would be very desirable.

Regarding the actual market demands. Yes, there is need for leveraged trading (both because of speculation and because of the need to hedge with limited risk exposure). My gut feeling is that there is enough demand to support several offerings.

On the other hand, it looks like even very basic financial instruments are still a bit of a challenge for many community members. A good example is the complete failure of the BitcoinOPX platform this summer. Probably this was partially due also to usability problems, but such could have been worked out if people really wanted bitcoin options. Indeed, it is a bit surprising, that there isn't more demand for options. Maybe everyone loves Contracts-for-Difference, since these are easy to grasp. You know, "If war is God's way to teach geography to Americans, then Bitcoin is God's way to teach geeks economics!" Wink

Quote from: killerstorm
However the downside is that initial margin might be considerably higher than you have with ICBIT futures. (But it's up to market players, it might be tiny if they are OK with small profit caps.)
Would that mean that, when placing a bid/ask, you would also indicate the provided margin, so the counter party could make an educated decision if (s)he wants to enter into such a contract?
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November 16, 2012, 05:20:56 PM
 #244

Looks like someone has opened too many shorts around 10 and now holding the market to avoid losses.

That is of course a loosing strategy, unless the spot BTC prices falls between now and 15. dec.
The rest of us can try to benefit from his strategy. :-)

Yes, indeed  Grin
But beware. If everyone jumps upon that wagon, on closure we might enter what Fireball termed "the worst case scenario": The bear will be squeezed out of his position, and everyone else would not get all the theoretically possible profit, but just what can be distributed from that position.

Thus I'd really prefer if the market slowly grinds towards the spot rates, since the mark-to-market on this way will prevent such a situation (and squeeze the bear(s) exactly at that point when their positions are burned).
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November 16, 2012, 07:59:31 PM
 #245

Clearing will be delayed up to 20-30 minutes because of the need to perform some maintenance within current trading session.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
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November 16, 2012, 08:09:21 PM
 #246

nervous bear just ate up the all bids

or was that the maintenance ;-)
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November 16, 2012, 08:14:51 PM
 #247

Oh man, that totaly makes no sens! Are we now all gone kickt out of our Positions becaouse of empty Orderbook?
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November 16, 2012, 08:15:09 PM
 #248

hey... getting BUZ at $9    Roll Eyes
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November 16, 2012, 08:17:40 PM
 #249

....and again the whole ask side sprayed with dummy offers, so no one can see the market depth
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November 16, 2012, 08:19:46 PM
 #250

whoaaa the bear seems to be raging in despair now   Tongue
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November 16, 2012, 08:23:52 PM
 #251

this is not good

picobit
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November 16, 2012, 08:24:42 PM
 #252

It is really strange what is going on right now.  Just have to hope this is a desperate bear, and not what is being insinuated (well a bit more than insinuated) here: https://bitcointalk.org/index.php?topic=125376.0
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November 16, 2012, 08:30:33 PM
 #253

Somebody really ought to buy those ridiculously cheap BUZ2s.  But perhaps noone has any margin left due to the large unrealized loss due to the low BUZ2 price, so noone can buy them raising the price freeing the BTC to buy BUZ2.  Huh

Catch 22.  Undecided
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November 16, 2012, 08:33:31 PM
 #254

Somebody really ought to buy those ridiculously cheap BUZ2s.  But perhaps noone has any margin left...

probably no one can do that alone at the moment, and this is what the maniulator(s) are speculating on.
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November 16, 2012, 08:34:54 PM
 #255

could really be a bear with thousands of btc short now strugglin' for life


on the other hand it could be an extraordinary pain resistant person

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November 16, 2012, 08:35:43 PM
 #256

Somebody just did.  Smiley
killerstorm
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November 16, 2012, 08:35:53 PM
 #257

Would that mean that, when placing a bid/ask, you would also indicate the provided margin, so the counter party could make an educated decision if (s)he wants to enter into such a contract?

Yes. Orders with compatible margin requirements will be matched.

Although I guess it would be more convenient to have few standard contracts. E.g. daytraders can work with 5% margin requirements (equivalent to 20x leverage), while long-term investors might use 25% (4x leverage).

As for ease of use, I thought of having two front-ends:

1) a simple one which would simply offer users to make bets, e.g. "I bet that bitcoin will trade above 10.5 tomorrow"

2) and a more elaborate one which would expose details about forwards/options

"Simple-minded" users don't even need to see the order-book: they would either use suggested parameters thus buying/selling at market, or they'll place an order which might later be filled by a "sophisticated" user doing arbitrage.

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November 16, 2012, 08:37:29 PM
 #258

Somebody really ought to buy those ridiculously cheap BUZ2s.  But perhaps noone has any margin left...

probably no one can do that alone at the moment, and this is what the maniulator(s) are speculating on.

well... together we're stronger than the bear....
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November 16, 2012, 08:41:15 PM
 #259

Fireball, what about some comments about that situation from you?
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November 16, 2012, 08:49:35 PM
 #260

Fireball, what about some comments about that situation from you?
Just one comment: This is extremely dangerous play.
"Flash crash" is not possible, because short spikes won't produce a mass position liquidation in our system, especially if it goes *against* spot market. However, don't forget: if you're in "margin call zone", liquidation of your open positions may happen at every moment. Either fill up your account as soon as you can, or face consequences.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
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