its not actually bitcoin TRADING. as from what i can see using the plus500 forex platform you cant deposit bitcoin or withdraw it.
to me thats not trading.. thats placing bets against the mtgox value on a non mtgox betting site.. to put it into the most simple laymans terms.
so people using plus500 are not actually playing with bitcoin they are just using that funny money known as FIAT to gamble what will happen to mtgox prices
ill stick to the mtgox/btc-e.. i know they are nt the most secure when it comes to DDOS and hacks but atleast i know that when i press buy bitcoin button on them.. there is actually a bitcoin there to withdraw.
Topic: The First Forex Broker to Offer Bitcoin (Read 1288 times)
Quant;
and your risk of an unbalanced book is expotentially higher with BTC because if people withdraw to a secure wallet their BTC after the trade, you need to deliver a "physical" that cannot be substituted. It is like if people demand physical delivery of all their gold, it would drive the price vertical.
and your risk of an unbalanced book is expotentially higher with BTC because if people withdraw to a secure wallet their BTC after the trade, you need to deliver a "physical" that cannot be substituted. It is like if people demand physical delivery of all their gold, it would drive the price vertical.
Interesting observations. I have been wondering about this a lot. If I go long 1000$ Bitcoin they have to take the other side. Sure their capital is basically unlimited, but they can't allow significant positions. If 1000 people go long BTCUSD with 1000$ , they have 1 M$ in net exposure short BTCUSD. Imagine that during the last 8 weeks with the price going from 20$ to 200$ and you have a serious problem. Which is why an exchange traded forward has practically no couterparty risk, where as CFD expose serious risk in terms of execution. Because the CFD broker is your direct couterparty, which means they will always rip you off. If they don't have hedging capabilities of their own, that invites trouble. But at least they have a decent backend. I'm not surprised at all that 1broker had to stop trading BTC.
This is the problem with CFDs, gold exchange, options...
It's almost impossible to lay off risk...
In a market where 70% are "hoarding" and has soared 1000%.
In a rational market...
A lot of people would want to short CFD or exchange for gold to lock in profits...
In which case the counter-party gets stuck with a lot of very risky BTC.
In an irrational market everyone wants to go long...
In which case the counter-party is short a lot of very risky BTC.
Basically, you cannot be a naked counter-party...
It doesn't matter how much capital you have...
Only exchanges that MATCH counter-parties can function in this space.
Interesting observations. I have been wondering about this a lot. If I go long 1000$ Bitcoin they have to take the other side. Sure their capital is basically unlimited, but they can't allow significant positions. If 1000 people go long BTCUSD with 1000$ , they have 1 M$ in net exposure short BTCUSD. Imagine that during the last 8 weeks with the price going from 20$ to 200$ and you have a serious problem. Which is why an exchange traded forward has practically no couterparty risk, where as CFD expose serious risk in terms of execution. Because the CFD broker is your direct couterparty, which means they will always rip you off. If they don't have hedging capabilities of their own, that invites trouble. But at least they have a decent backend. I'm not surprised at all that 1broker had to stop trading BTC.
Actually, they were not the first... see these Russian guys:
https://1broker.com/
But they had to shut down the BTC/USD contract...
Because they were being manipulated, maybe couldn't stay hedged, etc.
https://1broker.com/?c=news&newsid=5
This is only temporary... lots of CFD BTC trading on the way in 2013.
The CFD and Binary Option casinos are very well capitalized...
If they maintain small spreads like 138-139...
It will revolutionize BTC trading.
Anyone with a BTC position will be able to stay hedged...
Also, this will allow BTC/gold/silver exchanges to stay hedged...
So the spread for exchanging BTC/gold will collapse from 10-20% to 2-3%.
Interesting. they can't hedge. probably if your size is bigger than say 10000$ they will walk. And executions will probably be terrible as usual.
A small, "under-the-radar" broker...
And they do 10 times the volume of Gox.
But CFD brokers still leave the huge Exchange-To-Fiat problem.
The First Forex Broker to Offer Bitcoin
http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/
http://forexmagnates.com/and-the-first-forex-broker-to-offer-bitcoin-trading-is/
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