I just pulled out of Bitcoinica after using it for months. The algorithm that determines the spread is rigged, I have no other way to explain it. The interest rates are nice, but if you look at the history they often fall to 0% throughout the day for no reason. But the spread is horrendous. The price on goxlive, btccharts, clark moody can be swinging wildly up and down on my screen, and yet the Bitcoinica spread will stay dead flat for hours. I'm used to watching real forex spreads react immediately to the market up and down all day. That's ignoring the fact that the spread is super massive, which limits you to swing trading only. If you overlayed a candlestick chart of Gox on top of the Bitcoinica "Daily Quote" chart you would end up with a huge "WHAT THE FUCK!?" look on your face. I guess what that does is even make swing trading impossible. During any big rally or dip the spread takes so long to react it's impossible to actually make a profit. I suppose if we were back in the days where the price moved $5 at a time you could make money, but not in this current market.
Bitcoinica pricing algorithm is very accurate. However we are not interested in the trading prices. We only concern about the liquidity. Sometimes 50 BTC can move Mt. Gox prices by a few cents, they won't be able to move Bitcoinica prices.
I personally think that Bitcoinica prices are good for offline trading, because it's not the price that was traded by others seconds ago, it is the price that you can trade at, immediately.
Now we have a much faster order processing system, and guarantee 100 BTC liquidity for a single order. The associated liquidity can be as high as 1000 BTC. (So sometimes you can place a 1000 BTC market order and trade without slippage or re-quotes!)
