Topic: Bitcoinica - Advanced Bitcoin Trading Platform - page 31. (Read 51103 times)

There's some discussion of Bitcoinica on HN that's worth reading: http://news.ycombinator.com/item?id=2973301

Thank you for your wishes! We will definitely do a good job to expand the Bitcoin community.

The spreads have reduced by 13% during the last few hours despite the crash. Generally it will be even smaller when the prices are stable. But you can't simply compare with Forex brokerages who can trade millions of dollars without affecting the market. Bitcoin fluctuates 5% - 20% everyday, and our spreads are only about 0.5% - 2% for single side. There are a lot of opportunities to make profits.

Plus, you have margin trading and short selling, which are not yet available in other exchanges. We believed that we should build a platform that every wants to sign up. And we did.

Yes, you're right! We exactly want to do that.

We will never manipulate the prices like what some evil Forex brokers do. All our pricing algorithms are absolutely independent of our clients' positions. (We would suffer some losses from some transactions rather than hurting our dear investors.)

I think the margin level is not really a problem, because we want to give traders some control over their own finances. Some people may just want to try the platform out and they invest only $1 to have a some taste. For those who trade a large amount, we may subsequently increase their margin requirement instead.

We're pretty transparent about margin calls and our prices. After we launch our APIs (coming soon), everyone will be able to see our historical prices and compare that with Mt. Gox or other exchanges.

We have clients who buy and sell. Generally our portfolio is quite balanced. We invested our own money into our Mt. Gox account to allow investors to trade with margin. Now 24 hours have passed, and it seems that our cash flow is very smooth now.

We don't hedge all transactions at 100%. We have a specially designed algorithm to selectively hedge transactions above a certain threshold (undisclosed) to save on commissions. We currently trade at Mt. Gox only, but we will extend our partnership to TradeHill soon.

Bitcoinica has traded 3,724.12 BTC in the past 24 hours, our of which, a bit more than 2,000 BTC is hedged in Mt. Gox.

We're partly responsible for the crash a few hours ago, because some of our clients received margin calls for their long positions (at $6.9 - $7) and following that, forced liquidation.

1) Depositing Bitcoins is equivalent to opening a long position of BTCUSD. Actually you do get some more trading power, but you won't get the full 1:5 leverage. Your position's value is floating, so we can't allow you to trade using full leverage unless you convert them to USD, which is our accounting currency.

2) I'm sorry for the unclear specification of margin calls. Actually we have a very systematic approach: You can see your Net Value and Maintenance in your Account Overview, when NV < 2 * M, you will receive a margin call. Forced liquidation will occur when NV < M. When the market condition is extremely harsh (almost no liquidity), the losses may be bigger than initial deposit. You will have to deposit it back to resume trading using that account.  (We won't/can't take legal actions anyway, because we don't aim to make profits on every single transaction.)

3) Everyone in Bitcoin community is watching the crash just now. Nothing unexpected has happened at Bitcoinica. We liquidated our clients' positions (by their Stop orders or Force) within 2 seconds of the start of the massive sell-off at Mt. Gox. (We're partly responsible for the drop.) We will use what we have earned to compensate all the customers if this unlikely event happened.

Bitcoinica has traded 3,724.12 BTC in the past 24 hours, this makes us the third largest trading platform right now (following Mt. Gox and TradeHill).

1:5 is maybe a bit much, specially with the volatility we have right now. Maybe it is better with 1:3 or 1:4. Then start taking interest on the leveraging part (you could call it a fee or whatever). Hedge all your positions all the way.

All this will give you a incentive NOT wanting to get the trader/user losing money, instead you will want them to hold their position as long as possible. This will be much better for the Bitcoin community in the long run.

I come from a trading background (11 years now) on the financial markets. So I have one very important question. You say that you allow leveraging, actually a massive 1:5, where is all the money from the leveraging come from (leveraging means pretty much that I as a speculator borrow money from you if everything is done right, and you as a exchange will hedge that position by buying BTC at I would guess Mt.Gox exchange), or are you as I suppose as many exchange platforms that does high level leveraging are in to this business hoping that the traders will lose out because of the volatility.

We as a community will very fast notice if you guys have the money to hedge your positions. If you are doing that, this is a legit business (when it comes to this specific point).

Are you hedging to 100 %? If so, at which exchanges?

  A great idea, but I have a few questions.

 1) When depositing Bitcoins, you say I have to sell them first in order to use margin, but with 1:5 margin I should still have
4/5 of the buying power to buy more Bitcoins, on a margin.

 2) If I sell short, and the price goes up, do I get a margin call?
     How much time do I have to comply?
     When will you automatically close the position?
     Can the losses in the account be bigger then the initial deposit?

 3) In case you suffer trading losses (e.g. from untimely hedging), what capital cushion do you have to protect my money?

Thanks for the good advice!

We will offer RESTful APIs!

I wish you good luck with the website, this actually might be something I am looking for:> Although the spread is a bit substantial

Ok, fair enough

Just one Hint: If you implement an API keep it as compatbile to Mt.Gox as possible.
If not, document it well (especially the return values => give an example what the json return value will look like)
The Mt.Gox API Doc is not very good on that.

What about swaps?

I can't really prove to you how we're different from any other market maker who steal your money. I didn't write the algorithm for human invention on prices, and all our algorithms are absolutely independent of our customers' positions.

Time will prove that Bitcoinica's midpoint prices are more than 90% correlated to Mt. Gox's.

1. We offer 1 : 5 margin for long and short positions. Anyone can sign up for a margin account. You can try it out with a few dollars first. Everything, including margin calls, is transparent. (It's not yet well documented though.)

2. We will try to release in a week. But can't guarantee anything yet.

3. We use Ruby on Rails. So the answer should be easy to guess. :-)

Don't trust Market Makers!!!! They will stole your money!!!

I have to say it looks quite nice! (Altough I don't like Godaddy SSL certificates  )

3 Questions:
- What margin are you offering?
- When is the API ready (and tested)?
- Do you have Unit and Integration tests for your platform?

I'm the founder of Bitcoinica. It has been featured by Hacker News, @bitcoinmedia, etc.

I recommend you to give Bitcoinica a try, it's really advanced!

https://www.bitcoinica.com

(You should visit the website for a real feeling. The texts below are copied from homepage.)

Elegant.
Professional.
Revolutionary.
Margin Trading, Stop Orders, Guaranteed Liquidity, Short Selling, and many more.


Why Bitcoinica?

Advanced Trading

We're the first Bitcoin trading platform that supports Market, Limit, Stop, Trailing Stop order types.
All accounts are by default Margin Accounts, which means that you can trade more than what you deposit.

Security

We don't operate a Bitcoin wallet. All our funds are stored in Mt. Gox and our bank accounts.
Bitcoinica runs on Heroku, a secure cloud platform that hosts thousands of popular websites.

Forex-like Experience

Unlike other Bitcoin exchanges, we guarantee liquidity. All exchange rates you see are meant for any orders under ฿50. No transaction fees!