Topic: If you were to start a position on bitcoinica RIGHT NOW... (Read 3180 times)

I'm not sure at the moment it one should be long or short. If you want to take a position you are usually best to wait for an extreme. E.g. you short at the highest tip of a raging rally or you long just after a big crash. You can then either cash out or make that a long term position if you think that is the way the market is going to go.

At the moment I do not know if we are going to $5 or $1.

When I first started on bitcoinica I was really stupid but lucky!... I put about $900 in and bought as many bitcoins as I could. When I realised I was losing money I started selling like mad. What happened next was that I kept selling without realising and I was actually in a negative BTC position which meant I was shorting! After that BTC had a very sharp decline. I think it dropped almost $2 that night. I remember waking up and checking my computer and seeing I'd made $600!

Beginners luck!

still short

short

You probably don't have much to worry about from 401k folks (like myself) but were I in your situation, I would be significantly concerned about someone with actual money playing around in the market for shits and giggles.  The entire Bitcoin economy is tiny.  Even if you were well protected with stop loss (vs. being crouched over your keyboard) you may still end up wiped out since orders do not get filled at predictable (or desirable) prices in a run.  We've already seen that happen to a small extent in even in our relatively stable and uninteresting little embryonic economy as I recall (from people having bitched about it.)  Then there is also the issue that Bitcoinica and Mt. Gox may not be the best of friends, and Bitcoinica seems to have a relationship only with that particular exchange.

Figuring out how to trade is quite different from figuring out how to make money with 100% certainty.

The former takes 5 minutes and the latter no human being has managed to figure out yet.

You did forget to mention that the spike below 2 was caused by exactly the same thing.
Also stop losses have the same effect, only more gradual. And pump & dumpers are betting it that's why I don't use them.

If this should evolve in a market reversal I can take losses when I want to, not when some retard decides to put their 401k into bitcoin.

I found various info about using Forex, but on platforms that were orders of magnitude more sophisticated than Bitcoinica.  They would have graphical markers and histories which would make some of the question marks on Bitcoinica's platform fairly clear.


Ya, most of my losses were associated with trying to get some positive cash balance in order to avoid a negative one.  After digging around in the historic mail on the site, I did find that this was a common question.  Seems that Bitcoinica can convert BTC to USD in order to zero a balance, but cannot (or will not) go to a positive balance (but will happily pocket a lot of spread if people try.)  Basically it seems that it is not their business model to 'act as an exchange'.  I've no idea if Bitcoinica's behavior in this arena would be obvious by knowing the details of other Forex platforms or not since I've not used any others.

If you end up taking it upon yourself to produce some usable documentation, I'd love to read it out of general interest but as I said, I don't have much need for Bitcoinica at this time.  It seems like a good tool for undercapitalized gamblers however.

This is ridiculous. I have googled the topic and I'm quite versed in technology affairs (I write about technology for a living, thanks). If I can't find a reasonable explanation for how to set up a short sell with a stop loss on Bitcoinica on the first five pages of Google results, but I do find a bunch of essentially advertisement posts and links to those posts saying, "You can now short Bitcoin!", there's a hole that needs filling. So here we have a perfect opportunity for someone to take a minute to say, "Do X, Y, and Z for what you're asking". The response is from several of the more established players basically telling me to get lost and not try to playing around with my whole freaking 3BTC on Bitcoinica -- as though I'm a threat to them. And going through the history of this forum (via Google) I have read more than my share of threads of a similar nature.

In short (hahaha), I hardly find it surprising at all that Mr. ">12 years trading experience" liked the comment telling me that expecting Bitcoinica to have a short section in their FAQ on a couple specific scenarios was like expecting Adidas to tell me how to play soccer; maybe if I subscribed to his 20BTC trading newsletter he's be similarly helpful? ("This is the Bad Analogy Police, sir, and you're under arrest for that comment.") Here's a better analogy: expecting a site whose owner has offered a free $1 credit to anyone to test it out to then have a reasonable explanation of how his system works is like expecting a board game to come with an instruction manual that tells you the rules. No wonder he's willing to give a free $1 trial to people, because in the trial and error process people are going to lose that $1 quite quickly. I don't want the math or calculations behind the spreads and such; just a concise example of the various options.

Se let me just summarize my stance this way, and I'll forget about asking all you "knowledgeable" people for any explanations. Bitcoinica/Zhoutong offers a free $1USD to give the system a try. Great. They have to manually credit your account for each person, which takes time to do. How long would it take to put together a quick tutorial in his FAQ (or maybe even under a "Tutorial" link, if that's not too blatantly obvious) showing how each of the options plays out. So take the current price of $2.50 as a reference point (you could even make this dynamic!), and then show what happens for: Limit Buy @ $2.25 (executed when the price drops below $2.25?), Limit Sell @ $2.75 (executed when price is above $2.75), Stop Buy @ $2.75 (executed when price is above $2.75 -- creates a position?), Stop Sell @ $2.25 (executed when the price drops below $2.25 -- another position), Trailing Stop Buy/Sell of $2.25/$2.75 (this is the one that really gets confusing), and then a regular Market Buy/Sell at $2.5 (with the spread factored in).

Hell, give me the information and I'll draw up the sixteen scenarios (eight potential orders, and price can either go up or down for each one). I'd be happy to do it, because then I'd at least understand what is supposed to happen, and I wouldn't need stupid comments like, "If you can't understand this in five minutes you're an idiot and shouldn't be on Bitcoinica." Here's some similar statements: "If you don't know how to derive pi using calculus, you shouldn't take any math classes. If you don't own a home, you shouldn't rent. If you have a Radeon GPU, you shouldn't mine for Bitcoins. If you're smart, you'll stay the hell away from the Bitcoin forums." Oh, wait... that last one might be true. And for those interested, I've now invested far more than four hours of time into trying to fathom exactly what the various order options do at Bitcoinica, so clearly I'm an idiot. Just read this post as another example of how stupid I am, because it's poorly written and has all sorts of errors, right? Anyway, let's try this:

Scenario Setup: You deposit 10BTC into Bitcoinica. With 10BTC at a current price of $2.50, you have a margin balance of $25, and a tradable balance of $62.50. With 2.5:1 leverage, you can sell or buy up to 25BTC, but at maximum leverage you're more susceptible to a margin call. A conservative order to start would be to place a sell/buy of 10BTC. You now have a position and a maintenance value of $1.00 (not sure if that's correct on the amount). If you place a Sell order at $2.50 and price goes down to $2.25, you can choose to liquidate your position and you now realize a profit of $2.50 (10%), minus the spread. On the other hand, if the price jumps to $3.00 you now have a P/L ($) of -$5.00, and a P/L (%) of -20.0%. With your deposit of 10BTC, you will be force liquidated should the price of Bitcoins reach $5, at which point the 10BTC sell order at $2.50 would be exactly enough to cover your $25 loss. On the other hand, if you had sold your maximum leverage of 25BTC at $2.50, you would be force liquidated if the price hits... here's where I'm not quite sure of the value, so maybe I'll come back in a bit and see what input others have.

Addendum:
Further investigations into Bitcoinica reveal yet another confusing area: I deposited 2.8BTC, which is different than depositing $7USD in some fashion -- though how I'm not sure. Poking around a bit more with orders, I have now apparently managed to liquidate my position and have a negative USD balance of -$0.16 while still holding 2.8BTC, and now I need to cover that. Which is weird since with 2.8BTC the price would need to drop all the way to $0.06 for BTC for my BTC balance to prove insufficient. This is all rather mind boggling to me, as on the one hand Bitcoinica treats my BTC balance as USD, but on the other hand it doesn't. Do I need to deposit USD as well just to keep from having negative USD liquidations?

It could be that if you can figure out how to short within 5 minutes, then trading is not for you.  IIRC, Z let slip that pretty much all of the shorts were cleaned out on the 80% rise a month ago.

I would not short unless I spent another 5 minutes figuring out how to put in effective stop loss.  In fact, that was the first thing I did on Bitcoinica. It worked exactly like I thought it should.

+1... honestly, 1 minute of Googling should be enough to learn how to use Bitcoinica.

I did not accuse Bitcoinica relying on customer ignorance for their profits, and actually do not believe that that is the case.

My point was that although the 'soccer' comments got some people all giggly, they really don't make a lot of sense.

No offense, but if you can't figure out how to short within 5 minutes then trading probably isn't for you.

The best school is the school of hard knocks... you will find that out soon enough

That is wrong, while they profit from people using it the wrong way they still make profit from regular usage. You could probably exploit their business model with a bot, but in order to do that you would already need a pretty smart predictive bot which would drain the exchanges anyway.

If Bitcoinica's business model is based on their customers not knowing how to use the platform, then yes, it would be absurd and counterproductive to spend effort on training and documentation.

 

To answer the caps question above "HOW DOES IT RELATE TO BITCOINICA" bitcoinica works pretty much the exact same way as well, any market, be it stocks or forex.

Orders page =  http://puu.sh/9m9o
What happened in that image is: I bought 26 bitcoins, my original bid was $2.50 (You cannot see this here) however a cheaper price was available at $2.471 so that was the final buying price, it purchased coins at the best available price because I used a 'buy limit' order.

Positions Page: http://puu.sh/9m9K
A position is an order that has been filled, so since I bought 26 coins (and 1 more in a trade I didnt screenshot) my position is 27 bitcoins, although there are no deliveries the best way to think about it is that I now, after buying them, have 27 coins in my wallet.  The P/L field is simply profit/loss, red means a loss, green means profit. P/L % Same except in percent form. The liquidate button is the button you use to close your position (Either secure profits or cut losses), if you bought coins, I like to think of it as bitcoinica is selling them back to other people and giving you the USD value of them credited to your account.

To the guys above me, I don't mean to be rude here, but if you dont have a decent understanding of margin/leverage, order types and the ideas behind going long and short, you shouldn't be on bitcoinica, all you will do is lose your money unless you get lucky, in which case you will lose your money at a later time. Simply google some basic forex tutorials, the concepts are all the same.


This guy speaks the truth, it is not bitcoinicas role to teach you how to trade, they offer you a platform, not a school.

imho expecting bitcoinica to teach you how to trade is like expecting adidas to teach you how to play soccer.

@trogdorjw73

I'm struggling to interpreted things as well.  I guess if I'd played around with Forex, the stuff would be obvious.  Even futures would probably help, but I've done neither.  Here are some details/observations which may or may not help shed light on things.

I actually decided that I did not need Bitcoinica since I have both the USD and BTC to fund my own gambling and pocket the spread.  Additionally, operations on the exchanges are much faster, cheaper, and more intuitive.  Futures markets would probably be more useful for real business with a legitimate need to hedge I would think.  But I left a few BTC in in order to piss them away on leverage.

I've found that while the spread numbers are updated continuousness, the rest of the details are not.  And sometimes re-loads are particularly slow.  I think that some of my head-scratching was associated with not waiting long enough for things to update.

I have always been under the impression that one wants to 'buy low and sell high' to end up making money.  This seems to be either wrong on Bitcoinica/Forex, or I am looking at things from the wrong perspective about who, exactly, is buying and who is selling.

Wishing to 'go long', I put in a 'limit sell' for a higher price than market.  I thought that what would happen would be that Bitcoinica would 'buy' my order at current market price, then sell it if/when it reached my target price.  What seemed to happen was basically nothing.  After the market rose to my target price, it was still on the 'order' books.  So I tried to get rid of it.  That seemed to switch it to a 'position', and nothing I could do could get rid of it.  Later, when the price rose some more, I was able to 'liquidate' it.

My various attempts to get rid of the order or liquidate the possition were not successful in doing that, but lost me a fair amount of money (as a percentage of my meager funding) in a hurry while trying.  I guess that was the 'spread' kicking  in.

So, I thought I would try again.  This time I accidentally put in a 'limit buy' for a much higher price.  This was basically an accident to do a 'buy' rather than a 'sell', but in this case the 'order' turned into a 'position' immediately.  The market price has been going higher, and my p/l is green and rising.  Dunno what will happen if/when I hit my target price (North of $3.00) but I'll try to update this post if it does.

Except, LightRider, even having read that (and several other items of a similar nature, e.g. on Wikipedia), that DOES NOT EXPLAIN HOW IT RELATES TO Bitcoinica. Yup, I'm shouting there to get the point across. So, if you understand exactly how the limit, stop, and trailing stop orders relate specifically to Bitcoinica, please take a couple minutes instead to enlighten me on what exactly I  should do if I expect price to drop. We're at "2.47504 / 2.52631" right now, I have $12 of tradeable balance. How do I put in an order so that I benefit if the price drops -- e.g. let's just say $2.40 as a starting point? How much can I benefit off a drop to $2.40 given my current $12 tradeable balance? Those are the questions I'd like explained, and WikiPedia and your SEC link don't cover it after going through them both several times.

If I put in a "Limit Buy", for instance, right now I can say "Limit Buy 20 BTC @ $2.30" and it shows up as an open order. However, I don't have the necessary funds to buy that many BTC, so I don't know what this means. I can cancel the order, though. The reverse would seem to be a "Limit Sell of 20 BTC @ $2.70", on the assumption the price will go up (?). Neither one of these is particularly helpful, as I don't know what Bitcoinica will do if the price reaches one of those values. Does Bitcoinica then give me a position? Do I profit from guessing correctly? I don't know.

So let's go to the "Stop Buy" option. The description says, "Your order is executed when the market price is higher (buying), lower (selling) or equal than your specified price." Okay, so if I put a Stop Buy of 1BTC at $2.80 (as I have already done), that says if the price hits $2.80... then what? I "buy" 1BTC? Or do I now profit $0.30 because I guess correctly that the price would go up $0.30?

I guess ultimately I'm just going to walk away, come back in the morning, and hopefully the price has changed and I can see what happened and go from there. Right now, I've got four orders that "executed" (and apparently turned into positions), which looks like so:

BTCUSD   Limit   -1.0   $2.4500   Executed @ 2.475   7 minutes ago   
BTCUSD   Stop   1.0   $2.4500   Executed @ 2.5127   9 minutes ago   
BTCUSD   Stop   1.0   $2.3000   Executed @ 2.5273   about 1 hour ago   
BTCUSD   Limit   1.0   $2.8000   Executed @ 2.5274   about 1 hour ago   

The result of the above (apparently my limit and stop at $2.45 canceled out?) is a position that says:

BTCUSD   2.0   $2.5462   -$0.14   -2.795%

And looking at that line, I ain't got a clue in Hades as to what it actually means, other than that it appears I'm currently down -2.795%. That would make sense on the one hand: price hasn't moved much and so the spread works against me. In the morning, I'll return and if it goes up, my $2.80 position benefits I guess, and if it goes down, the other positions benefit? Or maybe that $2.80 was put in wrong and so I'm actually hoping it goes down. Whee. Time to go to bed.