Topic: Bitcoin Risk Management Offer by Kazu: Benefit from Uptrends, hedge out of Down - page 2. (Read 2026 times)
August 02, 2013, 10:45:50 PM
It would be interesting to see your previous trading performance. Mind to post your trade history? What is your experience and on which exchange did you trade in the past?
August 02, 2013, 10:06:46 PM
Hello, I'm looking for BTC loans to allow me to short BTC so as to accomplish my hedging strategy. Now, my terms are slightly different than a normal loan, due to the strategy I am attempting. So please read this in full to understand (A) what I am asking (B) why I am asking for it (C) what I will be doing with your Bitcoins when I get them and (D) what risks you face.
My Strategy - Why I need your coins
I am taking advantage of the Bitcoin-denominated accounts available at 1broker. As you can see, I can long BTC there, and if BTC goes up, the BTC I win is worth more than the amount I would lose if BTC goes down. My strategy is to try to minimize risk when attempting this strategy. By using your coins to short at another exchange, I am able to acheive lower exposure to the BTC price. Lets look into this a bit, shall we?
Say I deposit 1 BTC into 1broker, when BTC price is $100.
1) I will take 1 Bitcoin, and sell it at Gox or Bitstamp. I will choose the exchange depending on the circumstances at which I receive your coin. Once I get one or more lenders, I will post daily updates regarding my activity at the exchanges (including 1broker).
2) I will take the Bitcoin I deposited into 1broker, and use it to long BTC at some leverage you specify, such that the total exposure, AFTER LEVERAGE, is equal to the amount i shorted on gox/bitstamp.
3) I will wait for the Bitcoin price to change some amount. This amount depends on leverage and must be at least 25%.
4) Once the price changes by this much, I will close both positions, i.e, rebuy coins with the money at gox, and close the position at Broker1.
5) Since the broker1 is denominated in BTC, should BTC go up 25% at 4 leverage, I will have doubled my money. The 0.25 BTC deposited will now be 0.5 BTC, and I will have to re-buy at gox. $100 / $125 = 0.8. The Bitcoin total has increased to 1.3, where only 1.25 was invested. I pocket the interest, as well as the 0.05 BTC as profit, and return to you your coins IN FULL. If I lost my money at Broker1, then I can re-buy at gox at a rate of $75/BTC, allowing my purchase of 1.333333333 BTC, which I will return to you. I will also have collected some interest at broker1.
6) As a result, by lending to me, you will not receive any set interest rate. Instead, you will protect your BTC from a downward move, while also collecting bonus BTC if the price decreases, effectively allowing you to benefit from a BTC price increase, while remaining relatively unaffected by a BTC decrease, and in fact increasing your BTC holdings.
Risks, Charges & Expenses
1) While this strategy may sound risk-free, there are several risks that may put your investment in danger. The first and most obvious risk is counterparty risk - the risk that broker1 and/or my choice of exchange will steal/lose your coins in some way.
2) The second and perhaps most major risk you face is too large of a deviating exchange rate. Should my choice of exchange deviate far from the volume weighted average (what broker1 uses), your investment may be placed in risk. I will obviously dig out of my own profits to pay you back as promised, but in an extreme scenario, I may be unable to pay you back in full.
3) Only one fee may apply, and this is really not my fee at all, but the exchanges. I currently have a 0.42 Bitstamp exchange fee and a 0.55 Gox exchange fee, which will go down with volume. In a falling market, I will pay back your fees using the broker1 interest payments. However, should this not cover it, you will pay these fees so long as you still are receiving more BTC than you lent to me. In a raising market, these fees are not an issue. I reserve the right to short slightly more than I long in order to protect myself from these fees in a falling market. You will still receive the same amount of BTC in either case.
Get Started!
Please send your loan to 17CrErdvdrw5xWWTeyBsP4g7Zj7FstuSzQ.
Please post on this thread or send me a PM specifying (1) your address, (2) your leverage, (3) any other comments/instructions. In case of two people claiming the same deposit address, I may ask you to send me a signed message proving who you are.
Available leverages are: 1:1 (50% change), 2:1 (33% change), 3:1 (25% change), 4:1 (20% change), 5:1 (15% change).
You will receive your money back plus your profit after the BTC price has changed at least the amount specified depending on your leverage.
Thanks, & contact me if you have any questions.
My Strategy - Why I need your coins
I am taking advantage of the Bitcoin-denominated accounts available at 1broker. As you can see, I can long BTC there, and if BTC goes up, the BTC I win is worth more than the amount I would lose if BTC goes down. My strategy is to try to minimize risk when attempting this strategy. By using your coins to short at another exchange, I am able to acheive lower exposure to the BTC price. Lets look into this a bit, shall we?
Say I deposit 1 BTC into 1broker, when BTC price is $100.
1) I will take 1 Bitcoin, and sell it at Gox or Bitstamp. I will choose the exchange depending on the circumstances at which I receive your coin. Once I get one or more lenders, I will post daily updates regarding my activity at the exchanges (including 1broker).
2) I will take the Bitcoin I deposited into 1broker, and use it to long BTC at some leverage you specify, such that the total exposure, AFTER LEVERAGE, is equal to the amount i shorted on gox/bitstamp.
3) I will wait for the Bitcoin price to change some amount. This amount depends on leverage and must be at least 25%.
4) Once the price changes by this much, I will close both positions, i.e, rebuy coins with the money at gox, and close the position at Broker1.
5) Since the broker1 is denominated in BTC, should BTC go up 25% at 4 leverage, I will have doubled my money. The 0.25 BTC deposited will now be 0.5 BTC, and I will have to re-buy at gox. $100 / $125 = 0.8. The Bitcoin total has increased to 1.3, where only 1.25 was invested. I pocket the interest, as well as the 0.05 BTC as profit, and return to you your coins IN FULL. If I lost my money at Broker1, then I can re-buy at gox at a rate of $75/BTC, allowing my purchase of 1.333333333 BTC, which I will return to you. I will also have collected some interest at broker1.
6) As a result, by lending to me, you will not receive any set interest rate. Instead, you will protect your BTC from a downward move, while also collecting bonus BTC if the price decreases, effectively allowing you to benefit from a BTC price increase, while remaining relatively unaffected by a BTC decrease, and in fact increasing your BTC holdings.
Risks, Charges & Expenses
1) While this strategy may sound risk-free, there are several risks that may put your investment in danger. The first and most obvious risk is counterparty risk - the risk that broker1 and/or my choice of exchange will steal/lose your coins in some way.
2) The second and perhaps most major risk you face is too large of a deviating exchange rate. Should my choice of exchange deviate far from the volume weighted average (what broker1 uses), your investment may be placed in risk. I will obviously dig out of my own profits to pay you back as promised, but in an extreme scenario, I may be unable to pay you back in full.
3) Only one fee may apply, and this is really not my fee at all, but the exchanges. I currently have a 0.42 Bitstamp exchange fee and a 0.55 Gox exchange fee, which will go down with volume. In a falling market, I will pay back your fees using the broker1 interest payments. However, should this not cover it, you will pay these fees so long as you still are receiving more BTC than you lent to me. In a raising market, these fees are not an issue. I reserve the right to short slightly more than I long in order to protect myself from these fees in a falling market. You will still receive the same amount of BTC in either case.
Get Started!
Please send your loan to 17CrErdvdrw5xWWTeyBsP4g7Zj7FstuSzQ.
Please post on this thread or send me a PM specifying (1) your address, (2) your leverage, (3) any other comments/instructions. In case of two people claiming the same deposit address, I may ask you to send me a signed message proving who you are.
Available leverages are: 1:1 (50% change), 2:1 (33% change), 3:1 (25% change), 4:1 (20% change), 5:1 (15% change).
You will receive your money back plus your profit after the BTC price has changed at least the amount specified depending on your leverage.
Thanks, & contact me if you have any questions.
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