trogdorjw73
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November 26, 2011, 08:27:52 PM |
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This is ridiculous. I have googled the topic and I'm quite versed in technology affairs (I write about technology for a living, thanks). If I can't find a reasonable explanation for how to set up a short sell with a stop loss on Bitcoinica on the first five pages of Google results, but I do find a bunch of essentially advertisement posts and links to those posts saying, "You can now short Bitcoin!", there's a hole that needs filling. So here we have a perfect opportunity for someone to take a minute to say, "Do X, Y, and Z for what you're asking". The response is from several of the more established players basically telling me to get lost and not try to playing around with my whole freaking 3BTC on Bitcoinica -- as though I'm a threat to them. And going through the history of this forum (via Google) I have read more than my share of threads of a similar nature.
In short (hahaha), I hardly find it surprising at all that Mr. ">12 years trading experience" liked the comment telling me that expecting Bitcoinica to have a short section in their FAQ on a couple specific scenarios was like expecting Adidas to tell me how to play soccer; maybe if I subscribed to his 20BTC trading newsletter he's be similarly helpful? ("This is the Bad Analogy Police, sir, and you're under arrest for that comment.") Here's a better analogy: expecting a site whose owner has offered a free $1 credit to anyone to test it out to then have a reasonable explanation of how his system works is like expecting a board game to come with an instruction manual that tells you the rules. No wonder he's willing to give a free $1 trial to people, because in the trial and error process people are going to lose that $1 quite quickly. I don't want the math or calculations behind the spreads and such; just a concise example of the various options.
Se let me just summarize my stance this way, and I'll forget about asking all you "knowledgeable" people for any explanations. Bitcoinica/Zhoutong offers a free $1USD to give the system a try. Great. They have to manually credit your account for each person, which takes time to do. How long would it take to put together a quick tutorial in his FAQ (or maybe even under a "Tutorial" link, if that's not too blatantly obvious) showing how each of the options plays out. So take the current price of $2.50 as a reference point (you could even make this dynamic!), and then show what happens for: Limit Buy @ $2.25 (executed when the price drops below $2.25?), Limit Sell @ $2.75 (executed when price is above $2.75), Stop Buy @ $2.75 (executed when price is above $2.75 -- creates a position?), Stop Sell @ $2.25 (executed when the price drops below $2.25 -- another position), Trailing Stop Buy/Sell of $2.25/$2.75 (this is the one that really gets confusing), and then a regular Market Buy/Sell at $2.5 (with the spread factored in).
Hell, give me the information and I'll draw up the sixteen scenarios (eight potential orders, and price can either go up or down for each one). I'd be happy to do it, because then I'd at least understand what is supposed to happen, and I wouldn't need stupid comments like, "If you can't understand this in five minutes you're an idiot and shouldn't be on Bitcoinica." Here's some similar statements: "If you don't know how to derive pi using calculus, you shouldn't take any math classes. If you don't own a home, you shouldn't rent. If you have a Radeon GPU, you shouldn't mine for Bitcoins. If you're smart, you'll stay the hell away from the Bitcoin forums." Oh, wait... that last one might be true. And for those interested, I've now invested far more than four hours of time into trying to fathom exactly what the various order options do at Bitcoinica, so clearly I'm an idiot. Just read this post as another example of how stupid I am, because it's poorly written and has all sorts of errors, right? Anyway, let's try this:
Scenario Setup: You deposit 10BTC into Bitcoinica. With 10BTC at a current price of $2.50, you have a margin balance of $25, and a tradable balance of $62.50. With 2.5:1 leverage, you can sell or buy up to 25BTC, but at maximum leverage you're more susceptible to a margin call. A conservative order to start would be to place a sell/buy of 10BTC. You now have a position and a maintenance value of $1.00 (not sure if that's correct on the amount). If you place a Sell order at $2.50 and price goes down to $2.25, you can choose to liquidate your position and you now realize a profit of $2.50 (10%), minus the spread. On the other hand, if the price jumps to $3.00 you now have a P/L ($) of -$5.00, and a P/L (%) of -20.0%. With your deposit of 10BTC, you will be force liquidated should the price of Bitcoins reach $5, at which point the 10BTC sell order at $2.50 would be exactly enough to cover your $25 loss. On the other hand, if you had sold your maximum leverage of 25BTC at $2.50, you would be force liquidated if the price hits... here's where I'm not quite sure of the value, so maybe I'll come back in a bit and see what input others have.
Addendum: Further investigations into Bitcoinica reveal yet another confusing area: I deposited 2.8BTC, which is different than depositing $7USD in some fashion -- though how I'm not sure. Poking around a bit more with orders, I have now apparently managed to liquidate my position and have a negative USD balance of -$0.16 while still holding 2.8BTC, and now I need to cover that. Which is weird since with 2.8BTC the price would need to drop all the way to $0.06 for BTC for my BTC balance to prove insufficient. This is all rather mind boggling to me, as on the one hand Bitcoinica treats my BTC balance as USD, but on the other hand it doesn't. Do I need to deposit USD as well just to keep from having negative USD liquidations?
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