BitShares Forum
Main => General Discussion => Topic started by: zerosum on May 06, 2015, 05:38:06 pm
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This is a note to the bitUSD bulls! Not to the BTS bears, not to the bitCNY buyers, not the one who prefer to hedge in bitUSD (as opposed to USD) or any other that might seem similar to those bitUSD bulls but not exactly....
You can's succeed !
Yes, the rules are rigged against us (even if toast believe they are not), they are rigged but not enough to make you tactics work. Your tactics were fine yesterday, today they're doomed!
And with each passing day I will educate one more BTS believer or at least one person willing to take your money - how to be safe against the unfair rules of shorting and still successfully take your money.
Oh you irrational bitUSD overbuyers...
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05/06
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Rule change!
All of you with current short bitUSD positions!
There is no need to overpay for bitUSD so you can close your position! If let alone your short will buy at the feed. Carefully think - do you really believe BTS will go down a lot fast so it is worth overpaying for bitUSD now, as opposed to letting your expired short position ride and the system auto try to buy at the feed?
If you are not all of a sudden very bearish on BTS, the correct answer is let it ride and try to buy at the feed.
05/07 *1*
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I consider the bitUSD market about normalized as of the time of this writing. If it stays permanently that way remains to be seen!!!!
Any way here is the meat of why bitUSD cannot trade with 10% premium and... bitCNY stay about 1:1 to CNY.
a. If any disparity between those 2 (bitUSD and bitCNY) do exist bitCNY shold trade with more premium than bitUSD as it has more utility. bitCNY has 2 ramps to CNY. Even the CNY itself is arguable more useful as currency as far as BTS products and the token itself is concerned - because the leading BTS exchanges has far more pairs BTS/CNY and CNY/whatever crypto; while bitUSD as well as USD itself is in no trading pair on virtualy any of them.
b. aside from point (a.) which is more or less gravy on top of the fundamental point. bitUSD and bitCNY should be pegged to each other the same way the CNY and USD are pegged. If nothing more (and there should be more) the feed prices of bitCNY and bitUSD should be relatively tightly pegged.
Based on b. above - here is a trading strategy to profit from unreasonable bitUSD bulls and stop their madness:
- Short bitUSD when its premium over the feed goes too high.
- Buy bitCNY for the same value as the bitUSD sold (i.e. about 6.19-6.21 bitCNY per bitUSD).
*How much is too much disparity between bitUSD and bitCNY premiums? It is up to anybody's judgment, sentiment risk aversion and greed :) My personal opinion on this matter is of no consequence, but I do believe if any dispairity do exist it should be in favour of bitCNY being more expensive (per point a. above)
* Practical example - if you can sell bitUSD say 7% above the feed and buy bitCNY at 0.5% above the feed. - this is give or take 6.5% arbitrage opportunity; If you do this with small amount of your total BTS - say 5-7% you have practically guaranteed this 6.5% return; you have a lot of BTS left to re-short even if the price of BTS goes way way down.
* It is very important to realize that you are not really short bitUSD.... your long bitCNY will offsets your short bitUSD (so you will win about exactly the same amount from it as you lose from the short bitUSD - if the BTS price goes down)
Enjoy trading and do not let those bitUSD bulls go too crazy...and if they do just take their money!
05/07 *2*
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Due to the latest bug (decision ???) what I said about the expiring shorts holds even more truth! Think 7 times before buying bitUSD to cover instead of just waiting the market to close your expired short!
What I mean is if you let your expired short just ride the feed, if somebody decides to short at the feed your order(s) will be matched even if somebody is offering better(higher) price (via regular buy order). .
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Reserved
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I love this thread! :)
Carry on.
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@Tonyk I am very happy that you are part of this community and post these things in simple ways that you do understand well and illuminate people like me who are soooo confused with all the changes that are going on and lose money all the time. So thank you! :)
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@Tonyk I am very happy that you are part of this community and post these things in simple ways that you do understand well and illuminate people like me who are soooo confused with all the changes that are going on and lose money all the time. So thank you! :)
Thanks. I do believe this thread can be helpful for a lot of people (even if some find it obvious, trivial whatever).
Here is a quick tip (for strong BTS bulls like you!):
Believe it or not the current BTS rules are heavily *rigged against BTS bulls. In most cases it means you cannot go all in with all your money, actually doing so is quite suicidal move. Start by taking a short positions with no more that 1-3% of your BTS. Do it slowly and right now you can sell above the feed (so do so).
* the current rules not only require you to provide 200% collateral. They do not allow you to use those money to reopen/buy/or generally do anything with those funds - so go short with very very modest amounts and keep a lot of free BTS at hand.
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Believe it or not the current BTS rules are heavily *rigged against BTS bulls.
Here's another way of looking at it: The rules are heavily designed to provide the maximum robustness to BitUSD actually working and not being under-collateralized. If this means that the opposing side that shorts BitUSD has to provide more collateral then so be it. They are taking an extra risk by leveraging their BTS. BitUSD is the product that we all want to work and succeed.
There is a much less risky way to be a BTS bull - just HODL. Shorting is like being a bull on anabolic steroids.
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Start by taking a short positions with no more that 1-3% of your BTS. Do it slowly and right now you can sell above the feed (so do so).
why only 1-3% (is it not to conservative?)
and not for example 5-10% ?
can you explain/elaborate more ?
PS If theoretical all BTS holders take your advice, would that mean that the total value of bitassets in existence would be only 3% of the BTS marketcap(like now)? In current numbers that would mean about $240000 value of bitassets? ... now I am confused ... please correct my random fast thoughts
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Believe it or not the current BTS rules are heavily *rigged against BTS bulls.
Here's another way of looking at it: The rules are heavily designed to provide the maximum robustness to BitUSD actually working and not being under-collateralized. If this means that the opposing side that shorts BitUSD has to provide more collateral then so be it. They are taking an extra risk by leveraging their BTS. BitUSD is the product that we all want to work and succeed.
There is a much less risky way to be a BTS bull - just HODL. Shorting is like being a bull on anabolic steroids.
You can call it that (maximum robustness ). I tend to call it brute force approach of securing the system.
Here are the two extremes:
- 5% collateral and margin call at 4.95%
-10,000% collateral and margin call at (chose your number? 150% sounds good enough ???)
Which one of those is more robust and at the same time market friendly?
My answer for more reasons than one is about 100% collateral and call relatively close to it (like 90%-80%) . So I usually use the average 85% (or less) as my suggestion.
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Start by taking a short positions with no more that 1-3% of your BTS. Do it slowly and right now you can sell above the feed (so do so).
why only 1-3% (is it not to conservative?)
and not for example 5-10% ?
can you explain/elaborate more ?
PS If theoretical all BTS holders take your advice, would that mean that the total value of bitassets in existence would be only 3% of the BTS marketcap(like now)? In current numbers that would mean about $240000 value of bitassets? ... now I am confused ... please correct my random fast thoughts
I can and will gladly.
1-3% is a start from which you can move to 3-5%; 5-7% etc. fairly quickly.
Why you are hitting some system induced levels at about 17.5% and why you have to take some other precautions (for example the need to definitely split your positions in more than one order) because of other system rules is another interesting topic.
But in general one of the problems that the current bulls (short bitUSD) have is not being familiar of the unfair rules that the system has in stock for them right now. This leads for their over exposure, inability to move their position for another 30 days and such unnecessary issues. Loosing on their incorrect (and leveraged) bet is enough no need for extra struggle.
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Until bitAssets 2.0 just buy BTS and hold it as BTS imo. You can buy it and hold it no matter what.
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Until bitAssets 2.0 just buy BTS and hold it as BTS imo. You can buy it and hold it no matter what.
I disagree - bitAssets 2.0 are months away. We should not treat bitAssets 1.0 as some kind of useless garbage... bitAssets 1.0 are not perfect, but still are the best stable-decentralized-(non-centrally issued or artificially-pegged) asset out there.
Additionally, as much as like bitAssets 2.0, some question still remain. For example the "maqifrnswa's problem" [i.e. the lack of self enforcing arbitrage in one direction/branch of the market] has not been adequately address by anybody.
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This is going to be a fun few days! We are essentially in bitasset 3.0 conditions. There are no limits on the price of shorts and shorts have infinite expiration. You can even do a forced call if you'd like, just sell at the feed and expired calls will be matched first. (People have been doing just that). At the same time, this is a simulation of the question I posed in BTA2.0/3.0: what would be the demand for either bitUSD (which would no longer feel pressure to be pegged to USD) or BTS (whose value comes from a predictable peg)?
Also, there will be a game of chicken going on. Shorts will be expiring like crazy over the next few days, creating a sell wall at the feed that won't be filled immediately. Who will blink first? Will it be the current bitUSD shorts that want to pull out BTS that are locked up as collateral, thus driving the price away from the feed? Or will it be bitUSD shorts and BTS longs that see this as an opportunity to buy up cheap BTS? The market is so thin, just one person can easily push it one way or the other.
Such experiment, very fascineresting!
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I remember telling tony a long time ago that he should take the time to start a day-trading group to teach people what he knew. I also remember telling him he might be able to even get a delegate running and voted in because people were interested in learning and some of them probably had a lot of BTS to vote with.
This isn't even mentioning that if he had created a group like this and was effective at it his group would gain more voting power along with the earnings...
I still don't know why he doesn't do it....
Perhaps his 5 nuts keep him too busy, but this is only a guess.
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yep, what's needed is a nice pictured guide with easy explanations on how to use/make money in bitshares eco.
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To bitUSD shorters:
with the new rule, although no need to worry about expiration, new short orders will be margin called at 90% of feed price when price of BTS drop to 66.6% (was 50% yesterday).
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To bitUSD shorters:
with the new rule, although no need to worry about expiration, new short orders will be margin called at 90% of feed price when price of BTS drop to 66.6% (was 50% yesterday).
... also there is no margin call fee of 5% anymore!!!
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To bitUSD shorters:
with the new rule, although no need to worry about expiration, new short orders will be margin called at 90% of feed price when price of BTS drop to 66.6% (was 50% yesterday).
Now I am confused...again...I do see the expiration of 30 days and I was under the impression that upon expiration with the new rules the system will cover the shorts at 1% difference of price feed and not 90% of price feed...
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To bitUSD shorters:
with the new rule, although no need to worry about expiration, new short orders will be margin called at 90% of feed price when price of BTS drop to 66.6% (was 50% yesterday).
Now I am confused...again...I do see the expiration of 30 days and I was under the impression that upon expiration with the new rules the system will cover the shorts at 1% difference of price feed and not 90% of price feed...
The 1% will come with BitAssets 2.0.
With the current BitAsset 1.0 implementation you will have to pay up to 10% when margin called (buying bitAsset from the market up to 10%) .. no 5% penalty anylonger
In contrast, if your short expires, it will put a buy order for the bitasset AT the feed .. not +- .. exactly at the feed. That's what tonyk was referring to with 'riding the price' .. because your expired shorts may move in your favor if the price feeds moves ..
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all clear again :)..thanks!
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Could someone walk me through how to short?
As I understand it:
I shouldn't use more than ~30% of my total bts holdings to short.
I should split the amount I'm willing to short into numerous small trades. (Not sure exactly why other than adding collateral might be easier?)
There is no longer an expiration and so long as I ensure at least 90% collateral I can short and 'hold' the short without too much worry.
If I'm betting that the price will not ever drop below $0.001 USD (1/3 of price today) and that bts will increase in price vs the dollar over the next year.
Could I leave a short with 300% collateral alone for 1 year, and come back to collect my winnings?
I want to gamble 10% of my holdings on this by shorting bitUSD. Can someone give me step by step instructions on what to do?
Thanks
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I consider the bitUSD market about normalized as of the time of this writing. If it stays permanently that way remains to be seen!!!!
Any way here is the meat of why bitUSD cannot trade with 10% premium and... bitCNY stay about 1:1 to CNY.
a. If any disparity between those 2 (bitUSD and bitCNY) do exist bitCNY shold trade with more premium than bitUSD as it has more utility. bitCNY has 2 ramps to CNY. Even the CNY itself is arguable more useful as currency as far as BTS products and the token itself is concerned - because the leading BTS exchanges has far more pairs BTS/CNY and CNY/whatever crypto; while bitUSD as well as USD itself is in no trading pair on virtualy any of them.
b. aside from point (a.) which is more or less gravy on top of the fundamental point. bitUSD and bitCNY should be pegged to each other the same way the CNY and USD are pegged. If nothing more (and there should be more) the feed prices of bitCNY and bitUSD should be relatively tightly pegged.
Based on b. above - here is a trading strategy to profit from unreasonable bitUSD bulls and stop their madness:
- Short bitUSD when its premium over the feed goes too high.
- Buy bitCNY for the same value as the bitUSD sold (i.e. about 6.19-6.21 bitCNY per bitUSD).
*How much is too much disparity between bitUSD and bitCNY premiums? It is up to anybody's judgment, sentiment risk aversion and greed :) My personal opinion on this matter is of no consequence, but I do believe if any dispairity do exist it should be in favour of bitCNY being more expensive (per point a. above)
* Practical example - if you can sell bitUSD say 7% above the feed and buy bitCNY at 0.5% above the feed. - this is give or take 6.5% arbitrage opportunity; If you do this with small amount of your total BTS - say 5-7% you have practically guaranteed this 6.5% return; you have a lot of BTS left to re-short even if the price of BTS goes way way down.
* It is very important to realize that you are not really short bitUSD.... your long bitCNY will offsets your short bitUSD (so you will win about exactly the same amount from it as you lose from the short bitUSD - if the BTS price goes down)
Enjoy trading and do not let those bitUSD bulls go too crazy...and if they do just take their money!
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The market matching saga continues... Only this time for my utmost surprise the latest bug favours the shorts! Unheard of in bitshares history!
Details here: https://bitsharestalk.org/index.php/topic,15900.msg207459.html#msg207459
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I triangular arb bot could help start to arb away inefficiencies between the crosses.
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The market matching saga continues... Only this time for my utmost surprise the latest bug favours the shorts! Unheard of in bitshares history!
Details here: https://bitsharestalk.org/index.php/topic,15900.msg207459.html#msg207459
Time to drive up BTS and punish the bitUSD bulls?
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are relative orders feature abandoned ?
They would help keeping the peg super tight/solid, specially after implementing the new rules.... even now they would do a great job!
Your thoughts? (specially @tonyk)
PS Right now the only ones they can take full advantage are the bot-creators aka market makers(?).... why not the poor little investors? If we want mass adoption we must focus on them...
PS I mentioned this on this thread because I think this would help users to take some extra profits in combination with tonyk excellent trade advises ;)
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Excellent time to use this low risk strategy! And yes, I ran out of money doing exactly this.
FYI: At times, one can sell(short) bitUSD for more than 20% premium and buy bitCNY for 2-3% premium or less.
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Excellent time to use this low risk strategy! And yes, I ran out of money doing exactly this.
FYI: At times, one can sell(short) bitUSD for more than 20% premium and buy bitCNY for 2-3% premium or less.
so you fix your exchangerate with the buying of CNY? the "problem" not to convert the short back will be still exist.
but i agree, now is the time to get this undervalued short sold.
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Excellent time to use this low risk strategy! And yes, I ran out of money doing exactly this.
FYI: At times, one can sell(short) bitUSD for more than 20% premium and buy bitCNY for 2-3% premium or less.
so you fix your exchangerate with the buying of CNY? the "problem" not to convert the short back will be still exist.
but i agree, now is the time to get this undervalued short sold.
Actually, if enough people employ this strategy the bitUSD and bitCNY premiums will end up being equal (let's say 10% each), [because each transaction is pushing the premium of bitCNY up and the premium of bitUSD down]. At that point you sell 100 bitCNY and buy the equivalent of 100bitCNY of bitUSD, to close your positions; effectively paying and receiving the exact same premium for net of zero loss.