Selling short in an exchange...the biggest scam of all

[adhitthana]

Perhaps the biggest scam of all; happening every day, is exchanges allowing "market makers" to sell you coins in the hope of buying them back cheaper. If a value of a coin falls hundreds maybe thousands of people in the community lose, but one or a small handful make money.

Exchange owners  allow "market makers", special privileges on their sites. These would include small or no fees and the ability to sell your coins out of the "hot wallet", hoping to buy them back cheaper..
 There are at least 6 of these market making operations globally, who enjoy these special privileges. This came to light if it wasn't known before when an bitcoin company made a back door listing on the Australian Securities exchange. As a listing requirement they had to disclose the particulars of their business which included short selling crypto currencies.3. Exchange owners win, market making firms win, and the community loses.

You will see thins in various markets where "bots", computer trading systems try to drive down the price after already having sold short coins from the "hot wallet".

If this is not in our interest we need to stand up to them

[barryzand]

Perhaops the biggest scam of all happening every day is exchanges allowing "market makers" to sell you coins in the hope of buying them back cheaper. If a value of a coin falls hundreds maybe thousands of people in the community lose, but one or a small handful make money.

Exchange owners  allow "market makers", special privileges on their sites. These would include small or no fees and the ability to sell your coins out of the "hot wallet", hoping to buy them back cheaper..
 There are at least 6 of these market making operations globally, who enjoy these special privileges. This came to light if it wasn't known before when an bitcoin company made a back door listing on the Australian Securities exchange. As a listing requirement they had to disclose the particulars of their business which included short selling crypto currencies.3. Exchange owners win, market making firms win, and the community loses.

You will see thins in various markets where "bots", computer trading systems try to drive down the price after already having sold short coins from the "hot wallet".

If this is not in our interest we need to stand up to them

interesting... so what is your source of proof?

[meliz98]

They cannot dictate the price the trader is. If they short sell there is a possibility they will also lose.

[adhitthana]

Perhaops the biggest scam of all happening every day is exchanges allowing "market makers" to sell you coins in the hope of buying them back cheaper. If a value of a coin falls hundreds maybe thousands of people in the community lose, but one or a small handful make money.

Exchange owners  allow "market makers", special privileges on their sites. These would include small or no fees and the ability to sell your coins out of the "hot wallet", hoping to buy them back cheaper..
 There are at least 6 of these market making operations globally, who enjoy these special privileges. This came to light if it wasn't known before when an bitcoin company made a back door listing on the Australian Securities exchange. As a listing requirement they had to disclose the particulars of their business which included short selling crypto currencies.3. Exchange owners win, market making firms win, and the community loses.

You will see thins in various markets where "bots", computer trading systems try to drive down the price after already having sold short coins from the "hot wallet".

If this is not in our interest we need to stand up to them

interesting... so what is your source of proof?

The only proof I have so far , and I can quote the ASX release when i get back to work (as these disclosures don't seem to be on the website), is that DigitalBtC had to disclose their business practices, which included short selling bitcoin and others coins. So I'd say they must be doing it from the hot wallet with the blessing of the exchange.
The thing that made me think about it was watching a bot pressure down the price of a coin. There is no rationale to design a program that does that unless you are "short". You don't design a program to push the price down if you are a holder.

As we have seen recently in the press with the release of Michael Lewis's new book, greedy exchanges are all too willing to accommodate predatory trading firms, and with cryptos being unregulated we should expect the same greediness and feigned naivety

[dyask]

Perhaps the biggest scam of all; happening every day, is exchanges allowing "market makers" to sell you coins in the hope of buying them back cheaper. If a value of a coin falls hundreds maybe thousands of people in the community lose, but one or a small handful make money.

Exchange owners  allow "market makers", special privileges on their sites. These would include small or no fees and the ability to sell your coins out of the "hot wallet", hoping to buy them back cheaper..
 There are at least 6 of these market making operations globally, who enjoy these special privileges. This came to light if it wasn't known before when an bitcoin company made a back door listing on the Australian Securities exchange. As a listing requirement they had to disclose the particulars of their business which included short selling crypto currencies.3. Exchange owners win, market making firms win, and the community loses.

You will see thins in various markets where "bots", computer trading systems try to drive down the price after already having sold short coins from the "hot wallet".

If this is not in our interest we need to stand up to them

So how are market makers that provide liquidity are hurting the community?   If you couldn't sell when you wanted to wouldn't that a problem?

[adhitthana]

They cannot dictate the price the trader is. If they short sell there is a possibility they will also lose.

True....but algorithmic trading is quite mature now. They don't do it all the time. They have studied markets in depth for years, they know when to act.
So when China makes a negative statement about BTC....they can laugh and sell short. All the BTC  holders lose, and they win.

[dyask]

They cannot dictate the price the trader is. If they short sell there is a possibility they will also lose.

True....but algorithmic trading is quite mature now. They don't do it all the time. They have studied markets in depth for years, they know when to act.
So when China makes a negative statement about BTC....they can laugh and sell short. All the BTC  holders lose, and they win.

You would only lose if you sell.   You aren't making any sense.

[adhitthana]

So how are market makers that provide liquidity are hurting the community? 

What is finally coming to light, following the release of Michael Lewis's latest book is that algorithmic traders aren't your friend. They never intend to add liquidity. They are predators

[dyask]

So how are market makers that provide liquidity are hurting the community? 

What is finally coming to light, following the release of Michael Lewis's latest book is that algorithmic traders aren't your friend. They never intend to add liquidity. They are predators

Well if you can't see your coins when you want to, how is that a good thing?   

[adhitthana]

You would only lose if you sell.   You aren't making any sense.

Not everyone who bought BTC at $1200 USD has the luxury of being able to hold it. Most ordinary people, at some point have to sell. If you have so much money that you never have to sell, but can sit on losing positions for years if necessary, then you are part of a small minority

[dyask]

You would only lose if you sell.   You aren't making any sense.

Not everyone who bought BTC at $1200 USD has the luxury of being able to hold it. Most ordinary people, at some point have to sell. If you have so much money that you never have to sell, but can sit on losing positions for years if necessary, then you are part of a small minority

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem. 

[adhitthana]

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem.  

If you don't mind exchanges allowing other people to sell your bitcoins, then good for you. Do you really think it is Ok for an exchange to let someone else sell your Bitcoins?

[dyask]

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem. 

If you don't mind exchanges allowing other people to sell your bitcoins, then good for you. I suspect others would be concerned.

First you say the market makers get to sell their bitcoins instead of the someone on the exchange and now are saying the exchange would sell your bitcoins.  You seem confused.     

The fact is short selling isn't anything new and it is a normal part of most markets.   Just because you don't understand how it works, doesn't make it a scam.   If you short sell something you have to cover it at some point and it can be highly risky for the short seller.   

[Obfuscode]

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem. 

If you don't mind exchanges allowing other people to sell your bitcoins, then good for you. I suspect others would be concerned.

First you say the market makers get to sell their bitcoins instead of the someone on the exchange and now are saying the exchange would sell your bitcoins.  You seem confused.     

The fact is short selling isn't anything new and it is a normal part of most markets.   Just because you don't understand how it works, doesn't make it a scam.   If you short sell something you have to cover it at some point and it can be highly risky for the short seller.   

+1

No difference IRL. If you hold your money in a bank account, do you really think they keep it safe? I remember how the financial crisis (pick any of them) happened... Banks use your money to make profit and in worst case you even pay an account fee to them.

BTC Markets are well alive and nobody forces you to sell your *coin for less than it's worth to you.

The fact that there are no lawful regulations doesnt make it a scam.

[WildCrescent]

Short selling is fine as far as backed with real coins. Btw apart BTCe which exchanges openly allow short selling?

[adhitthana]

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem.  

If you don't mind exchanges allowing other people to sell your bitcoins, then good for you. I suspect others would be concerned.

First you say the market makers get to sell their bitcoins

No I never claimed this[/quote]

instead of the someone on the exchange

You'll have to reword this it makes no sense

and now are saying the exchange would sell your bitcoins.  You seem confused.      

No, you are still not getting it. I never said the exchange sells anything.

The fact is short selling isn't anything new and it is a normal part of most markets

. Did I say it was new?

Just because you don't understand how it works, doesn't make it a scam.   If you short sell something you have to cover it at some point and it can be highly risky for the short seller.  

Like I said, no one would randomly short sell anything. Bad news comes out, they can short sell but you cant. They win and the holders lose.

[adhitthana]

No difference IRL. If you hold your money in a bank account, do you really think they keep it safe?

Banks are your friend too. Just ask them. 
I;ve never seen anyone claim a practice was good and fair because it's just like a bank. 

[adhitthana]

  Just because you don't understand how it works, doesn't make it a scam.    

I understand how it works. though I'm not sure you are too familiar with it.
Normally the short seller will have to gain title to the instrument before they can short sell.
Obviously this would not be the case on crypto exchanges.  This is a HUGE difference. Do you understand that?
What I am concerned about is back door deals done by exchanges which allow certain participants to short sell using algorithmic trading systems.
Most people trading on crypto exchanges are "small fis" so it's quite easy for someone with deeper pockets to manipulate the markets.

It's a little naive to think these guys are helping you or even neutral participants.

[adhitthana]

Short selling is fine as far as backed with real coins.

It's fine if there is a level playing field. What I'm suggesting is there is not one.
Secondly I'm sure you can imagine the potential problems if title is not granted when coins are short sold..
 

Btw apart BTCe which exchanges openly allow short selling?

I don't know. Do you think they will tell you if they are letting people sell your coins?
I'm suggesting it is happening because there is no rational for bots to keep pressuring prices down unless they are short. The way these bots are operating (at times) is the same MO as bots that are designed to see how low they can get the price of this or that financial instrument.
You just have watch the price action.
If you offer to sell they immediately jump in front. I you buy the price up a little, they immediately (and I mean immediately) tick the price down lower. They fill the screen with tiny sell orders. They continually sell small amounts as low as they can.

There is only one strategy this type of algorithm fits. Its the way computer trading systems are programmed to act when they are short. Not at any other time.

[dyask]

  Just because you don't understand how it works, doesn't make it a scam.    

I understand how it works. though I'm not sure you are too familiar with it.
Normally the short seller will have to gain title to the instrument before they can short sell.
Obviously this would not be the case on crypto exchanges.  This is a HUGE difference. Do you understand that?
What I am concerned about is back door deals done by exchanges which allow certain participants to short sell using algorithmic trading systems.
Most people trading on crypto exchanges are "small fis" so it's quite easy for someone with deeper pockets to manipulate the markets.

It's a little naive to think these guys are helping you or even neutral participants.

Excuse me, I've short sold many times.   I think I understand it very well.   Have you actually ever short sold anything?   Short selling requires borrowing the asset and selling that, then you pay interest on that borrowing and pay back with the asset.   It is pretty simple.   There isn't any gaining title to the asset you sell, at least not with stocks or contracts so I don't see how it is any different with a crypto currency.