Methods for Shorting Altcoins with BTC

thebatletbet

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Quote from: Undermood on February 25, 2017, 02:34:25 PM

Try bitmex.com which offers swap or future contracts for Bitcoin, XMR, ETH.

if have high skill trading and expert trading
trading in bitmex is good, because use margin trading system with leverage until reach 1:100
but if not expert trading is danger because you can get margin call, and youre all bitcoin can gone and lost

Jumpy

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Quote from: bitart on March 01, 2017, 03:44:09 PM

Quote from: Jumpy on February 25, 2017, 05:20:42 PM

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).

For making more bitcoins, I guess you need not looking for shorting altcoins. Making use of altcoin trading and just holding bitcoins will help you to earn better in more effective way within short period of time than you expect.

I am not looking for a profit from the short. I want to hedge my investments, so that I have a net neutral position in that currency while investing in it. To help illustrate, I'll give you an example.

Let's say that I can earn 3% return on an investment by paying the borrower 100 LTC for a period of time. However, according to my stated investment goals, I do not want to be exposed to the risk of fluctuations of LTC.

So
1) I buy 100 LTC with my BTC
2) I make the investment
3) I short a further 100 LTC

This has the effect of canceling out the gains or losses from changes in the value of LTC relative to BTC, leaving me with only the stated 3% goal (minus the fees and vig of these transactions).

While many investors use shorting as a high-risk/high return method of investing, using shorts in this way is a more traditional method of hedging an investment of activity.

Is there any specific reason that makes you lend in LTC instead of BTC? You could avoid the risk of the exchange rate changes, if you keep your invesments in BTC and also lend in BTC.
Does lending in LTC offers better ROI? If yes, do you trust BTC much better than LTC and this is why you won't keep a smaller part of your investments in LTC on the long run?
If you trust both BTC and LTC, why don't you just keep a constant amount of LTC (let's say 100 LTC) and lend it to borrowers again and again? In this case, if you really don't want to grow your LTC position but only BTC, you only need to hedge your 3% ROI (3 LTC) and you're protected, you can exchange it to BTC without worrying about the exchange rate anytime. This costs much less (to hedge only 3 LTC compared to 100 LTC).
Or LTC was just an example, and you plan to lend in several kind of alts (even parallel) and you want to protect yourself from the exchange rate change? As you're the lender, you can tell the borrower that you lend e.g. 100 LTC (and it worths e.g. 200 BTC at that moment), and you want to get the repayment in BTC (200 BTC plus 3%), and you're covered, without a need to hedge anything. This makes the borrower to run the risk of the exchange rate change, and you're fine.

Great question. Take a look at lending rates on Polo right now. At time of writing, lending DASH pays over 2% daily. That's better than some HYIPs. This is just a temporary situation caused by a bunch of leverage and short interest, but it would be cool to take advantage of. BTC, meanwhile has rates like 0.01%.

The problem is that shorting DASH to hedge would make you borrow at the same rates. There is some playing the liquidity market possible. If I had locked in a low rate a couple of days ago, I could lend an equal amount now and have a net neutral position and just make the delta on the rates (divided by 2 and minus the commission that Polo takes). In my opinion, the EV on holding most currencies should be roughly 0 in the short term, so it's not worth hedging and cutting your returns by more than half unless you are REALLY risk averse. Diversification seems better.

bitart

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Vires in Numeris

Quote from: Jumpy on February 25, 2017, 05:20:42 PM

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).

For making more bitcoins, I guess you need not looking for shorting altcoins. Making use of altcoin trading and just holding bitcoins will help you to earn better in more effective way within short period of time than you expect.

I am not looking for a profit from the short. I want to hedge my investments, so that I have a net neutral position in that currency while investing in it. To help illustrate, I'll give you an example.

Let's say that I can earn 3% return on an investment by paying the borrower 100 LTC for a period of time. However, according to my stated investment goals, I do not want to be exposed to the risk of fluctuations of LTC.

So
1) I buy 100 LTC with my BTC
2) I make the investment
3) I short a further 100 LTC

This has the effect of canceling out the gains or losses from changes in the value of LTC relative to BTC, leaving me with only the stated 3% goal (minus the fees and vig of these transactions).

While many investors use shorting as a high-risk/high return method of investing, using shorts in this way is a more traditional method of hedging an investment of activity.

Is there any specific reason that makes you lend in LTC instead of BTC? You could avoid the risk of the exchange rate changes, if you keep your invesments in BTC and also lend in BTC.
Does lending in LTC offers better ROI? If yes, do you trust BTC much better than LTC and this is why you won't keep a smaller part of your investments in LTC on the long run?
If you trust both BTC and LTC, why don't you just keep a constant amount of LTC (let's say 100 LTC) and lend it to borrowers again and again? In this case, if you really don't want to grow your LTC position but only BTC, you only need to hedge your 3% ROI (3 LTC) and you're protected, you can exchange it to BTC without worrying about the exchange rate anytime. This costs much less (to hedge only 3 LTC compared to 100 LTC).
Or LTC was just an example, and you plan to lend in several kind of alts (even parallel) and you want to protect yourself from the exchange rate change? As you're the lender, you can tell the borrower that you lend e.g. 100 LTC (and it worths e.g. 200 BTC at that moment), and you want to get the repayment in BTC (200 BTC plus 3%), and you're covered, without a need to hedge anything. This makes the borrower to run the risk of the exchange rate change, and you're fine.

Idrisu

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Activity: 924

Merit: 260

Quote from: Jumpy on February 25, 2017, 10:33:51 AM

Looks like you are right that they offer simple shorts. Back in 2013 most of the shorting was done by OTC contracts that were clunky and risky.

Thanks!

poloniex and yobit are two best place for shorting bitcoin and altcoins. Though altcoins and bitcoin trading is very risk I have to avoid it after I could not understand it very well. Op because of risky nature of trading either is margin, speculation and buy and hold for short time or long term purposes I will advice you to study the altcoins very well as this will determine your success in it.

PokerFace3

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Activity: 700

Merit: 500

Quote from: Henkkaa on February 25, 2017, 09:57:27 AM

As far as I know, the most trusted exchange that offers shorting is Poloniex. If you haven't used it before, I recommend setting up an account there, as it is very easy. Correct me if I'm wrong, but Poloniex has the largest volume on all coins by far. Don't know what you mean by instruments, mind specifying a bit?

Are you sure, we can do sell first and buy later kind of trades in poloniex ?

I am sorry I am not finding any that kind of options with them. Are you denoting "STOP-LIMIT" orders ? I guess this is a functionality for order values other than current market value. If you are finding time to explain on how to do shorting on poloniex exchange with screen shot, it would be highly useful for numerous traders here.

Jumpy

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Activity: 182

Merit: 100

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).

For making more bitcoins, I guess you need not looking for shorting altcoins. Making use of altcoin trading and just holding bitcoins will help you to earn better in more effective way within short period of time than you expect.
[/quote]

I am not looking for a profit from the short. I want to hedge my investments, so that I have a net neutral position in that currency while investing in it. To help illustrate, I'll give you an example.

Let's say that I can earn 3% return on an investment by paying the borrower 100 LTC for a period of time. However, according to my stated investment goals, I do not want to be exposed to the risk of fluctuations of LTC.

So
1) I buy 100 LTC with my BTC
2) I make the investment
3) I short a further 100 LTC

This has the effect of canceling out the gains or losses from changes in the value of LTC relative to BTC, leaving me with only the stated 3% goal (minus the fees and vig of these transactions).

While many investors use shorting as a high-risk/high return method of investing, using shorts in this way is a more traditional method of hedging an investment of activity.

justdimin

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Activity: 3164

Merit: 675

www.Crypto.Games: Multiple coins, multiple games

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

I basically want to use a short as a hedge while investing in altcoin-denominated investments/securities.

I am not finding any exchanges offering selling-first types of trading. I have seen this feature only with Forex trading platforms. I believe, for cryptocurrency world it is completely new thing. Basically cryptocurrency exchanges are still working peer-to-peer type of exchanges whereas forex works peer-to-broker kind of exchange.

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).

For making more bitcoins, I guess you need not looking for shorting altcoins. Making use of altcoin trading and just holding bitcoins will help you to earn better in more effective way within short period of time than you expect.

Undermood

legendary

Activity: 950

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Try bitmex.com which offers swap or future contracts for Bitcoin, XMR, ETH.

Jumpy

full member

Activity: 182

Merit: 100

Looks like you are right that they offer simple shorts. Back in 2013 most of the shorting was done by OTC contracts that were clunky and risky.

Thanks!

Henkkaa

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Activity: 210

Merit: 100

Quote from: Jumpy on February 24, 2017, 06:14:34 PM

Hey Guys,
I am coming back from a years-long hiatus from cryptos and am working on diving headlong back in. I am wondering what exchanges offer shorting and what the instruments are for this.
I basically want to use a short as a hedge while investing in altcoin-denominated investments/securities.
My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).
Thanks for any help!

As far as I know, the most trusted exchange that offers shorting is Poloniex. If you haven't used it before, I recommend setting up an account there, as it is very easy. Correct me if I'm wrong, but Poloniex has the largest volume on all coins by far. Don't know what you mean by instruments, mind specifying a bit?

Jumpy

full member

Activity: 182

Merit: 100

Hey Guys,

I am coming back from a years-long hiatus from cryptos and am working on diving headlong back in. I am wondering what exchanges offer shorting and what the instruments are for this.

I basically want to use a short as a hedge while investing in altcoin-denominated investments/securities.

My long term investment goal is to grow my BTC position (regardless of current exchange rate in terms of USD).

Thanks for any help!

Topic: Methods for Shorting Altcoins with BTC (Read 805 times)