Topic: ICBIT Derivatives Market (USD/BTC futures trading) - LIVE - page 20. (Read 97654 times)

I personally have no problems with the way these contracts work. Sure, it's different from a classic future, but it accomplishes the same goal.

The real problem here stays liquidity, and that's what I would want to see improved.
Lower fees, decreasing fees, price-dependent fees, lower fees for market-making. There's plenty of solutions on that side.

Another way would probably be to increase confidence on the platform, especially for newcomers (the classic "what's preventing him to run with my money" problem). But for that I have no clue, other than incorporating which doesn't seems to be your choice (and even that is limited).

Please explain. Like, $100 lot contract, quoted in BTC per $100, e.g. current price of that futures would be 2.0946 ? That's nearly the same as the existing one, just without the inverse part (price inversion and sign inversion) and with higher lot size - $10 instead of $100.

I'm all for eliminating confusing parts. As a futures trader myself I certainly understand all complexities related to the currently trading BTC futures.

Good discussion! (it reappears once in a while though )

Really, please propose alternative futures, I will review and if all is well, we can just launch them.
The only real proposal I got so far is to launch additional linear USD/BTC, quoted in USD per BTC and with margin transferred in USD. But this requires dealing with USD in addition to BTC, and my desire was to help BTC economy grow, not add yet another dependency on US Dollar.

But anyway it's up to traders. Every exchange exists to service traders.

Trading on iCBIT for seven months without any problem. Got some good profit. What am I doing wrong?

The problem is that iCBIT is calling this a futures contract.. when in fact its more of an exotic derivative.

When someone buys a futures contract, and has 100% of the value in cash, he would expect never to get a margin call. If he buys a 100 oz Gold future contract at $1000 an oz, the contract value is $100k. If he has $100k in his account, he can sleep knowing that he can never get a margin call.

When a hedger shorts a commodity futures contract to eliminate the risk of his physical holding going down, he should be able to sleep, knowing that no matter how high the price goes, come settlement the price of his short contract and his physical commodity will converge.

If a trader has $5000 in cash and 100 shares of AAPL stock worth $400, and then he shorts an 100 lot AAPL future contract at $500 . He knows that even if AAPL goes up 100% to $1000 and wipes out all his cash, he can always sell the the 100 shares at $800 or even more. He knows that if he owns the stock and shorts the future, his risk is very small, and barring an extreme move, the prices will converge at expiration.

However these iCBIT "Exotic Derivatives" do not act anything like a futures contract.  

Long Case:

1. Trader has 1 BTC in his account
2. He buys 1 BTCUSD futures contract at $10

    The iCBIT screen shows him that his contract equates to 1 BTC. The equation is 1/10 * 10 = 1 BTC .

    He has 1BTC in his account, and has a futures contract worth 1BTC. Naturally he assumes that his 1 BTC would cover his loses all the    way down to BTC price of 0.0.

3. Price of BTC drops to $5. he would expect his account balance to be .5 BTCs. Instead he learns that he is wiped out and now has 0BTCs.

    PnL = -(1/5 - 1/10) *10 = -1/10 * 10 = -1 BTC

    How can he lose 100% of his BTCs when the price only dropped 50% and he had enough BTCs to cover 100% of the contract when he opened it?  
          Answer: "EXOTIC DERIVATIVES"  

    As the price drops the size of the contract in BTC is getting larger! By the time price hits $5, he is now long 2 BTCs! The equation is 1/5 * 10 = 2 BTCs


Short Case:

1. Merchant has 100 BTCs coming in next month and wants to lock in the current price, to eliminate the risk of a drop in price.

   The formula for getting short exactly 100 BTCs is  10*Price = size. So if price is 20 size is 200, if  Price is 4 size is 40.

2. At expiration time, the BTC price is up 50%. The Merchant is not worried, because he has already locked in his price. Whatever he loses in the futures contract he makes up from the gains in his 100 coins. This the classic case for futures, to hedge against falling prices.  

Not so fast... our Exotic Derivatives have a special feature. It is price dependent!   For all BTC prices above $10 the hedge will work perfectly, however for all BTC prices below $10 he would lose more on the shorts then was gained in the price!  

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If it looks like a Duck, but doesn't act or smell like duck.. its a Penguin!  
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• iCBIT can call it a "Futures contract on the Bitcoin - US dollar exchange rate".
• iCBIT can claim their "Futures contract"..  is like other  "standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today"
• iCBIT can say that they " are similar to any major futures exchange."
• iCBIT can list the "Typical use cases" on, who, how, and , why uses futures contracts to hedge.
• iCBIT can flat out deceive its traders by saying "Traders who want to arbitrage and make the market.
      Trading futures contracts provides perfect possibility to arbitrage between spot market and futures market"

It doesn't change the fact: there are no BTC futures contracts traded on their exchange!. Rather, they offer toxic exotic derivative time-bombs that are erratic, unpredictable and impossible for any of us mere mortals comprehend.

 

maybe you can start with changing this page to the truth: https://icbit.se/futures

Sure, it is a bit strange that the price is quoted in inverse - but exceedingly practical!  If you want a "linear" future, just convert the prices in the order book to BTC/USD, and it behaves just like you expect.  I do the opposite with the gold future, to convert to an "effective BTC price" since BTC are more volatile than gold.

Suggesting that they reverse all trades just because the futures contract behaves exactly like it is described on their web pages instead of like you expect seems a bit ... extreme.

i agree.. but there is a way to do this with linear prices. see EURUSD futures on CME. All accounting is done in USD, and there are linear fx futures contracts.

http://www.cmegroup.com/trading/fx/g10/euro-fx_contract_specifications.html

...calling a futures contract "wrong" is a bit of a stretch, since a future is a derivative and basically just works the way it is defined. We might debate if what you call a "future" must work exactly the same way as a "future" in the world of the conventional banking industry? Personally I don't think so, Bitcoin is a new endeavour, and we can make things the way we like.



The author of ICBIT, Fireball, has pointed out numerous times that he wants to build a platform were all accounting is done in Bitcoin, not in fiat any more. Thus, all of this debate boils down to the question:


is 1 BTC more "valuable", when there happens to be an exchange rate to an obsolete, irrelevant, failed currency called USD somewhere in the lesser developed parts of this planet, and this exchange rate is now at $50 / BTC ?



@Fireball:
People are now trading Gold and Oil futures on your platform since quite some time, and this shows that people are capable of working out the "right" price. Don't you think this indicates that its time to create a new futures contract, e.g. for $100 per lot, which is quoted just plain-flat in Bitcoin, the same way the Gold and Oil futures are quoted plain-flat in Bitcoin?

The futures contracts are all wrong!

see my thread: https://bitcointalksearch.org/topic/icbit-weird-fees-and-weird-fillslogs-152784


the tick value is not uniform.. the miostake is that theprice is quoted in USD/BTC but the lot size is 10USD?

so the contract value is 1/price * 10 ? Lot size should be a multiple of BTC not UDS. I believe your margin calcs are all wrong. Should stop trading and reverse all trades.

what a joke.

Update the page please if it still doesn't show up properly.
API server was inaccessible for a couple of minutes.

Status shows "Trading"  but no data shows, except for charts.  [Resolved]

I just read about 1Broker closing its BTC/USD market:

- https://1broker.com/?c=news&newsid=5

ICBIT stands without much competition for selling Bitcoin short.

I just deployed a major update to the system. As usual please reload your browsers, clear cache if necessary, and try it out.
You will notice some goods things for sure, but to help you a bit:
- Further consolidation and minification of the client-side javascript code. Less files, less size, faster page loading time
- Orders are now submitted using the api channel + clientside javascript, which is about a magnitude faster than previously using page request and server-side processing. Just try to put some orders and you are going to feel they are there instantly
- Notifications are much prettier now (try to enter orders and see how they work)
- If the order is rejected by the server, the reason for rejection is going to be displayed in the status column

Additionally:
- JQuery updated to 1.7.2
- Now trading API allows to specify custom token (a number) when submitting an order create command. This may help you track orders in the algotrading systems
- Thorough testing of the API for extreme cases was performed (overflow/etc)
- Various minor improvements to the Exchange market. It's nearly ready to be jumpstarted

Toby, this is indeed because chart is informational only.
I'm working on a series of major updates to the trading interface, which will improve both Futures and Exchange market, and one of the things to be introduced is the real-time chart showing ICBIT prices, recent trades log, etc etc.
ETA for deployment - this week.

I suppose this chart is from mtgox and placed here as illustration.

I'm sure this is due to my misunderstanding, but icbit isn't doing what I'd expect. I made an entry order on the Exchange screen, to sell 1 BTC at $47.9. The price passed this a couple of hours ago, according to the candlestick chart, but the order hasn't been executed. Here's a screenshot.

http://mb.tobold.org/icbit.png

I'm wondering if the chart shows Ask or Bid prices? And how can I choose which to show? And what's the spread? Oh, and what does the blue "L" next to my order in the orderbook mean?

All clues gratefully received!

Thanks, Toby.

Everyone can do market making, it's an open market. As of now, the kind of market making I do doesn't lead to any income.

However, what I'm going to propose soon is reduced fees for market makers, so that the spread narrows down significantly. As usual, majority of futures exchanges offer special fees for liquidity providers. We'll do so too soon.

I'm just finishing another update (considered major this time) to client trading platform code, which will allow many new possibilities.

Why do you charge any fees if you can do marketmaking?
Because of such fees it's not possible to hold any descent spread..

More so having such access to the realtime database of all trades it would be possible to predict the market
or at the very least to see it from the other side (but options stats maybe required along with futures for that)..

Thanks, I will check this.

There seems to be something wrong with the clearing price for futures with no trading volume in the last 24h.  For more than 24h the gold order book has had asks all the way down to the lower limit of the trading range (33.3 BTC/oz).  But since that is apparently still too high a price for gold, no-one buys and the "last" price remains the same.  Clearly, this is because the trading range is too high, and it should center around the lowest ask price when there are no bids.  

Something similar is happening with BUU3, where the bid side is full almost to the top of the allowed range, and the range does not move because no-one wants to sell to these apparently too low prices.


EDIT: The problem seems to have solved itself for the gold futures at least.  Somebody bought at the lowest ask price, and the price is now free to move again.