my ICBit questions | Bitcointalksearch.org

Fireball

hero member

Activity: 674

Merit: 500

Quote from: Ichthyo on August 03, 2012, 06:05:14 PM

In this example the first value in the "Initial Margin" column, i.e. 53.3 is the margin still available, is that correct?

This is approximate amount of bitcoins available for other operations (e.g. to open more positions in this or other futures contract). 114.23608 - 53.3 = 60.93 is the amount of bitcoins reserved for various things. In your case, it's reserved as initial and maintenance margin for 55 BUZ2 contracts.

Now, as to how the initial margin value for one contract is calculated. I will post an explanation a bit later as we are improving the algorithm right now. However, for the time being, it calculates the initial margin as the maximum amount of BTC one person can loose if he/she buys at the highest price during the session and sells at the lowest price. It's done so that the intraday price fluctuations would not result in massive margin calling.

Ichthyo

hero member

Activity: 602

Merit: 500

Hello,
I'd like to pose another question about how ICBIT works, especially about margin and leverage

In this example the first value in the "Initial Margin" column, i.e. 53.3 is the margin still available, is that correct?

But what is the value in the second row, the 60.94 ? And what is the unit of measurment? contracts, Bitcoins, $$ ?

Obviously 53.3 + 60.94 == 114,24, i.e. the effective amount of BTC in my account right now.

But I'm confused about the value: how to you calculate that margin?
Basically, what I'm doing here is to promise to sell 55 packages next December with a lot size of 10 USD each. And I want Bitcoins in return, assuming a BTC/USD rate of 11.08045. Thus, each contract would cost 10$ / 11.08045 $/BTC == 0.90249 BTC. Thus my counterparty has to pay me 55* 0.90249 == 49,6369 BTC on settlement next December. Is that reasoning correct?

But how then do you arrive at those figures for the margin? Is there any leverage included, and how is that calculated?

Thanks for any clarification

Fireball

hero member

Activity: 674

Merit: 500

Yes, that's right. Unlike Bitcoinica, trades happen only between users. This opens good arbitrage opportunities, since ICBIT does not limit the market making to only one party. Everyone can arbitrage between spot market rate (MtGox for example) and nearest futures contract and thus make profit.

Furthermore, we are going to release a reference opensource version of that abitrage bot so that everyone can put their money to work Wink

ThePok

full member

Activity: 131

Merit: 100

No its not like Bitcoinica! You trade with other Users. If no one wants to go short at your demanded price, while you want to go long, you cant trade.

alan2here

hero member

Activity: 1778

Merit: 504

WorkAsPro

Are ICBit futures like Bitcoinica positions?

Will my futures come into existance quickly or do they require matching up with other users, like a trade?

Why not have an option of marlet price or selecting a price, at the moment it looks like both can be input wheras if I use market price button, presumably the price is ignored. It's only a small thing, but I think it's confusing for beginners.

How do I select a leverage?

Do spreads cause a legeraged loss on leveraged futures even before the price has changed. If so is there a preview showing what will be the case immedeatly after a future has been created?

If a future falls to 0 because it is leveraged and so able to so, presumably it is automatically liquidated at 0?

Is it possible to do things on a future by future bases, so if one future is forced liquidated then the others continue as they were, each containing the money it had when it was created + or - Profit/Loss. As would occur on Bitcoinica if a new account was created for each position?

Topic: my ICBit questions (Read 1433 times)