Topic: Selling short in an exchange...the biggest scam of all - page 2. (Read 4494 times)

If the exchange maintains 100% reserves there isn't any additional risk.   If a fractional reserve system is used then there is additional risk.   An exchange isn't a bank and it shouldn't be using a fractional reserve system.   If they are, then you have so many more risks than short selling that it really doesn't matter.    

Anyway if you don't like program trading, you are free to start your own exchange not allow it to happen.  No shorting so bots.   You can set most of the rules you want.    It still won't stop the pump and dumps and you will still have coins like AUR losing value over time.  

No. Think this through. Anyone who has coins at the exchange is at risk.
this is an additional risk to the normal riks in putting coins in an exchange.

Then you have no basis for your claim either!

There should always be enough coins because shorting is limited to the exchange if it exists at all.  The ones at risk of being liquidated are the holders of short positions.   The only scam here is the FUD you are trying to create.  

So there are not enough coins.

The problem here is that you are trying to equate new crypto exchanges with some stock exchange or other you have traded on.
You can't take your experience on a stock exchange and assume that a crypto exchange will be the same. If that were the case there would have been no problems at Mount Gox.
You don't know what the arrangements are between the market maker and the owner of the crypto exchange, yet you are trying to tell us it will be the same as on a stock exchange.
You have no basis to make the comparison you have unless you know the arrangements.

No, you have 150,000 owed to customers, 100,000 across accounts and 50,000 the "market maker" owes.   If there is a run on the bank, the market maker gets liquidated and losses big time.   That is why you could never short 50,000 coins on 100,000 coin balance.    Every one gets their funds unless the whole exchange is a scam in the first place.     

Even in large markets, I've been assigned and partially liquidated when funds were needed.   It happens, it is part of the risk of being short.   

YES!!!! You have only 100,000 across the accounts.

BUT!!!....You have 150,000 owed to customers.

You have the original 100,000...and you have the 50,000 that was bought from the market maker, who had no coins, but sold 50,000.

I have over and over said that shorting in side the exchange is a zero sum game.   If you have 100,000 AUR and 50,000 where shorted you still have 100,000 coins cross the accounts.   100,000 - 50,000 shorted + 50,000 owed = 100,000.   You would never be able to short 50% of an asset, but that is besides the point.   The coins would still be there any you would still have access to withdraw your coins. 

However, it is extremely unlikely that shorting is even going on as it is still complex to take a short position on even bitcoin.   In any case without something external to bitcoin it wouldn't be possible to short bitcoin across exchanges because the transactions can't be reversed.   So even if it is happening it would have to be only internal to an exchange.   

Odds are there isn't any shorting going on with a tiny asset like AUR.   There wouldn't be enough money in it.   With these small assets it probably just plain old pump and dump and you are just on the wrong side of the dump.

Well that is good.
And not that hard like you say, if you do the work. Smaller crypto coins are by far  the easiest market to trade I have ever seen, and if you'be been trading things like Asiacoin (which you mentioned) and you get it right it's quite possible to turn $150 into $2500.
But there are a host of reasons why this will be difficult to continue IMHO and to do on any greater scale.

I wont go into all the reasons now (unless you really would like my thoughts ), but one will be worth pointing out. Any coin market that reaches acertain threshhold will attract the attention of players who will be a lot more sophisticated, and most likely, you, like nearly everyone else will only be able to play the market from one side, efficiently. The long side.

You and thousands of other players will be trying to buy cheap and sell dear, and unless you are trading small coins where you can't trade in any decent size, you will find that these more sophisticated players will make it a lot harder than you have found it so far IMHO.

And a few special players with special arrangements will be able to sell short, whilst you and the thousands of other wont be able to do it efficiently, or at all (with possibly a few exceptions).
Just my thoughts, but I do genuinely wish you good luck .

This can all boil down to a couple of simple questions

1.Has there been a bot active in AUR with a bias towards moving the price down?

2. How this this be accounted for apart from that party having a short position?

Odds are?
What are you basing these "odds" on?   "Odds" are a mathematical calculation. How did you decide what the "odds' were.

The point you missed before with yorur "accounting" argument is that...if AUR is being shorted everyone won't be able to withdraw their coins.

Lets say we deposit 100,000 AUR at an exchange. The market maker short sells 50,000 also

That means we should be able to withdraw 150,000 AUR..
But there is only 100,000 there

Yes, this is probably true. But this is the perfect environment for a short selling program.
If you watch the market you will see a bot actively pressuring the price down. It's not that hard to see.
But if you haven't even bothered to look and don't believe it then that's up to you . And if you did look then it begs the quesyion of why you sidestepped the points I made.
It's a bit naive to imagine that there aren't bots executing well known and well tested strategies in coin markets. But you are welcome to believe what you wish...even without looking at the evidence.
I gave you very specific information about what this bot is doing. But rather than examine the evidence you dismissed it prior to investigation.
Of course, if you follow the news at all you will see this is what has happened in other financial markets.
1.Experienced people noticed the activity of bots and saw something amiss.
2.They reported what they saw and were dismissed as paranoid.
3.years later regulators have egg on their faces.
 Peace

Odds are that no one can short AUR and it is just a problem of too many coins being dumped and not enough buyers.   If there actually are short positions driving the market down, then there will be buying pressure driving the market up when the shorts are covered.  

So far you have only thrown out a wild theory and haven't provided any proof.   Just because you are unhappy with what has happened with AUR doesn't mean there is program trading driving the price down.  

Personally I think you've got this whole "they're watching us" paranoia induced underdog worker vs CEO mentality. It makes everything seem like a conspiracy and be the ever lasting "i-told-you-so" fellow on that scenario that is always just around the corner. By giving the "environment" an impossible standard to live up to, you are fooling yourself info being content with failures and shortcomings. That's complete BS. I started trading with about 0.3 BTC about a month back, and through a series of deliberate moves of profits and losses, I'm holding a portfolio of about 5 BTC now. You just need to work hard on researching and looking for signs and snippets of news that you can use to your benefit. There are no bots pushing the price of AUR down. There are just simple people giving up on their hopes of AUR rising and using whatever BTC they get from selling to buy other alts.

Either way...there is a computer program employing a strategy that only makes sense if they have already sold short.....
And that means that the crypto community is being shafted.

You might not consider that an issue worth raising but I do.
There are computer programs trading some coins in a way that very clearly indicates that have short sold...and it's not a level playing field

AUR just broke 0.0015. There has been a bot pushing the price down now for ages. They must be making quite a lot of BTC..if they are short. While the crypto community loses

Yes coins can be taken *OUT* of an exchange from a hot wallet.   That is what a hot wallet is for, deposits and withdraws from an exchange or business.   Moving coins to/from a hot wallet is a very slow operation and wouldn't have anything to do with going short on a coin.   That is all just accounting and even on heavily traded stocks, you can only short a stock if your broker has shares of the stock available for shorting.    It all just accounting and the net sum of someone going short an asset is zero because the owe that asset back.   ( -1 + 1 = 0)  It is really that simple.  

You have made up some fruitcake scenario about hot wallets that is 100% nonsense.

EDIT:
I realize the message is falling on deaf ears ...
 
What coins are in an exchange and what is in hot wallets are not the same thing.   Typically a hot wallet will contain only some tiny amount of coins compared to the total amount of coins in the exchange.  Trading inside the exchange only results in balances being changed, not any actually movement of funds or coins.   Most money would be stored in banks and most coins would be stored in cold storage wallets.   

Don't be silly. We have seen recently at Mt Gox, C-cex, Poloniex and Cryptorush that coins were stolen out of the hot wallets. If someone can steal coins from that pool of coins then a market maker can short sell them from there too

It works where there is one exchange that does most of the volume for a coin.

As I mentioned AUR could be a good example as most of the volume happens at 1 exchange. Same with Darkcoin. Most of the volume happens at 1 exchange. Both of these coins are active and popular enough for this strategy to work.
Asiacoin would be marginal at the moment.

For the last 20 years these types of strategies have been perfected. These outfits don't just randomly trade any old coin. They can with their computers analyse every market, and make "guesses" about where any one of dozens of different strategies might work.

If the circumstances suiting this strategy arise WRT Asia coin, the program will notice it.

There is no other reason that "bots" would deliberately try to force a price down. Pressuring a price down is what these programs have been designed to do when one is short....not at any other time.
So the obvious question is..why would a bot be trying to get the price down?

these trading systems are designed to be predatory...they examine all the data...they examine it in the light of what systems have been shown to work over many many hours of trading....then when the ducks line up they initiate the strategy.
If the exchange gives them the capacity to short sell 50,000 AUR...then you wont beat them...their pockets are too deep. They will win enough of the time