Shorting on mtgox | Bitcointalksearch.org

S3052

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Quote from: ColdHardMetal on February 24, 2011, 12:03:28 AM

Quote from: S3052 on February 23, 2011, 02:38:56 PM

Short BTC:
Not currently possible automatically.
You need to find someone who lends you BTC for a certain period of time, for a percentage fee.
Then you sell the borrowed BTC on an exchange (ie MtGox)
And after that you wait until prices dropped and repurchse the BTC
Finally, you return the borrowed BTC to the lender.

Watch out: If BTC prices rise, you make a loss.

Short USD:
Easier on typical western exchanges. You need to select the currency pair (i.e. USD/EUR, USD/JPY, etc.) and you find warrants, bear certificates, etc. to play either side.
If you want to short USD vs. BTC, this is easy: It just means you buy BTC for dollars (if you have USD...)

hope this helps a bit

Well, with currencies this isn't quite accurate imo.

As you know every exchange rate is made up of a currency pair ie: BTC/USD. By holding BTC your are automatically shorting USD because you believe the value of the USD to decrease with respect to BTC. If you sell BTC for some USD then you are taking a short position in BTC (and a long position in USD) because you believe the value of BTC to decrease with respect to USD. Unlike stocks you don't need to borrow anything from anyone. If you want to short BTC, just don't buy any and wait for the price to drop, or sell some of the ones you currently have.

I think this is also not perfectly accurate.

In case the value of BTC fell lets say 70% (as it did in November), you can make a 70% profit with shorting, provided you buy back at that low value.
Just keeping them would not help making this profit.

nanotube

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i've used ripple to keep track of loan interest. works great.

ColdHardMetal

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Quote from: S3052 on February 23, 2011, 02:38:56 PM

Short BTC:
Not currently possible automatically.
You need to find someone who lends you BTC for a certain period of time, for a percentage fee.
Then you sell the borrowed BTC on an exchange (ie MtGox)
And after that you wait until prices dropped and repurchse the BTC
Finally, you return the borrowed BTC to the lender.

Watch out: If BTC prices rise, you make a loss.

Short USD:
Easier on typical western exchanges. You need to select the currency pair (i.e. USD/EUR, USD/JPY, etc.) and you find warrants, bear certificates, etc. to play either side.
If you want to short USD vs. BTC, this is easy: It just means you buy BTC for dollars (if you have USD...)

hope this helps a bit

Well, with currencies this isn't quite accurate imo.

As you know every exchange rate is made up of a currency pair ie: BTC/USD. By holding BTC your are automatically shorting USD because you believe the value of the USD to decrease with respect to BTC. If you sell BTC for some USD then you are taking a short position in BTC (and a long position in USD) because you believe the value of BTC to decrease with respect to USD. Unlike stocks you don't need to borrow anything from anyone. If you want to short BTC, just don't buy any and wait for the price to drop, or sell some of the ones you currently have.

Nefario

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Activity: 602

Merit: 513

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No I'm not serious about borrowing for shorting. I don't have the.....balls to do something like that Undecided

Yes maybe a ripple based system could be used to manage the loans.

sgornick, thanks for that information, very intersting. I guess OTC is where the big boys play.

But I think, long term bitcoin will increase relative to USD, I just want to take advantage of short price peaks and troughs.

I reall don't think I have the nerve to borrow for shorting, at least not until I can consistently come out without a loss.

Stephen Gornick

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Quote from: Nefario on February 23, 2011, 01:39:17 PM

If I wanted to short BTC or USD(is there any point in shorting this?) on mtgox, how would I go about it?

On a related note, if you believe that the BTC/USD rate is currently higher than it will be at a future date, you could offer to sell a call option:
http://wiki.bitcoin-otc.com/wiki/Option_orders#Call_Options_using_ClearCoin_Escrow

BitterTea

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Quote from: Nefario on February 23, 2011, 02:41:32 PM

Anyone want to lend me some BTC? Tongue

If you're serious, sure. I'm not super familiar with it, but could Ripple be used to keep track of such loans?

Nefario

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Anyone want to lend me some BTC? Tongue

S3052

legendary

Activity: 2100

Merit: 1000

Short BTC:
Not currently possible automatically.
You need to find someone who lends you BTC for a certain period of time, for a percentage fee.
Then you sell the borrowed BTC on an exchange (ie MtGox)
And after that you wait until prices dropped and repurchse the BTC
Finally, you return the borrowed BTC to the lender.

Watch out: If BTC prices rise, you make a loss.

Short USD:
Easier on typical western exchanges. You need to select the currency pair (i.e. USD/EUR, USD/JPY, etc.) and you find warrants, bear certificates, etc. to play either side.
If you want to short USD vs. BTC, this is easy: It just means you buy BTC for dollars (if you have USD...)

hope this helps a bit

Nefario

hero member

Activity: 602

Merit: 513

GLBSE Support [email protected]

If I wanted to short BTC or USD(is there any point in shorting this?) on mtgox, how would I go about it?

Topic: Shorting on mtgox (Read 4070 times)