Topic: Best way to profit from BTC going up is with FUTURES! (Read 890 times)
contango, not backwardation.
I hate to sound like a total nard-dawg, but I don't really understand futures. I kind of want to play along, but I literally do not know what a futures contract is or how to use it.
A future is just an IOU on something other than USD, only its traditionally sold for USD (or other fiat currency).
Basically:
IOU: "You give me $1 now I'll give you $1 + $interest in the future."
Future: "You give me $1 - $interest now and I'll give you $1 worth of Bitcoin in the future."
The funky bit? On ICBIT, due to weirdness & volatility of Bitcoin, its in constant backwardation ($interest is negative assuming the current Bitcoin price). In other words, it only makes sense to own those futures if you think Bitcoin is going to go up wildly.
I hate to sound like a total nard-dawg, but I don't really understand futures. I kind of want to play along, but I literally do not know what a futures contract is or how to use it.
Futures are't options. You don't have any proceeds to withdraw and buy another BTC with until the prices drops and you cover your short.
But yes, you can certainly use it to short. Also keep in mind you are leveraged. If the price moves against you, you'll lose your position.
But yes, you can certainly use it to short. Also keep in mind you are leveraged. If the price moves against you, you'll lose your position.
Why not just take BTC, sell a future on ICBIT, use the proceeds of that sale, to buy another BTC? And keep on doing that? You'll never get a margin call, since the BTC will float with your future.
So, you think bitcoin is going to $500?
On a regular exchange, you can't profit from the price going up without depositing some FIAT and buying more BTC... The BTC balance you have in your account is useless, because the exchange doesn't give you leverage.
That's why you should use FUTURES contracts to bet on the price of BTC increasing.
At ICBIT.se, you can buy November, December, or March contracts with BTC. I think you currently get around 4:1 leverage. So you can buy 100BTC worth of contracts with only 25BTC. If that position rises 25%, you will double your original BTC balance.
They currently have 0% trading fees for the next two weeks.
On a regular exchange, you can't profit from the price going up without depositing some FIAT and buying more BTC... The BTC balance you have in your account is useless, because the exchange doesn't give you leverage.
That's why you should use FUTURES contracts to bet on the price of BTC increasing.
At ICBIT.se, you can buy November, December, or March contracts with BTC. I think you currently get around 4:1 leverage. So you can buy 100BTC worth of contracts with only 25BTC. If that position rises 25%, you will double your original BTC balance.
They currently have 0% trading fees for the next two weeks.
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