BitShares Forum
Main => General Discussion => Topic started by: cylonmaker2053 on July 09, 2015, 02:11:51 pm
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Since we're getting a lot of chatter wrt shorting bitassets, i figured i'd give my two cents for some best practices. There are plenty of existing threads on the mechanics of how to go about shorting, so i won't go there. Following these steps should reduce some risk with market timing and expired shorts:
1. Consider the overall amount of your BTS you want to include in your shorting activities. A decent rule of thumb is to keep at least 20% of your BTS in reserve to be able to cover subsequent short positions.
2. Consider a time-phased shorting strategy in which you're not using more than 10% of your BTS as collateral for any given trade. Open new short positions every week and cover positions that pass the 3 week threshold.
3. Consider shorting across several bitassets. It's a good idea to rank these candidate assets by liquidity: bitCNY and bitUSD are the two most liquid assets, followed by an order of magnitude less liquidity with bitBTC, bitGOLD, and bitSILVER.
4. Covering can be tricky. My approach is to place BUY orders within the bid-ask spread starting around the 3rd week a position has been open (within 1 week of expiration). This approach gives you a chance of getting a better cover price than the price peg. If a few days pass and your order hasn't executed, then it's best to buy at the highest bid and use the proceeds to cover your near expiration short(s).
-Remember that any interest payments are due when you cover a short, so make sure you factor this into the amount of asset you
you purchase. It can't hurt having a little extra asset in your wallet for future covers, so a good practice is to buy a little more than
needed.
-DO NOT ALLOW YOUR SHORT POSITIONS TO EXPIRE UNCOVERED! This will automatically trigger a margin call with a penalty (5%) and
roll your collateral into the big cover wall, placing your order at the bottom of the queue.
5. COVERING TIP: If you want to roll your position forward for another month and you're in a rather illiquid market, it's possible to buy your own short. What you do is simultaneously input a buy and a sell order for identical amounts and identical prices (somewhere in between the highest bid and the lowest short, so there are no other buyers or sellers at that price). Use the proceeds of the trade to cover your near expiration short and you're left with the same volume net short position as you had prior to this trick, just rolled out another 30 days.
Have fun and remember that by shorting you are helping our business create its core products! Timing markets is almost impossible, but maintaining a consistent strategy that goes long BTS (short bitassets) will pay off handsomely if/when our business gains serious traction.
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-DO NOT ALLOW YOUR SHORT POSITIONS TO EXPIRE UNCOVERED! This will automatically trigger a margin call with a penalty (5%) and
roll your collateral into the big cover wall, placing your order at the bottom of the queue.
That is actually NO LONGER true .. no penalty applies for expiring shorts .. expired shorts are "converted" to buy orders at the feed-price
things are different for margin calls .. those try to buy at the price feed plus up to 10%
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-DO NOT ALLOW YOUR SHORT POSITIONS TO EXPIRE UNCOVERED! This will automatically trigger a margin call with a penalty (5%) and
roll your collateral into the big cover wall, placing your order at the bottom of the queue.
That is actually NO LONGER true .. no penalty applies for expiring shorts .. expired shorts are "converted" to buy orders at the feed-price
things are different for margin calls .. those try to buy at the price feed plus up to 10%
great, i didn't realize that changed. i'm Bitshares self-taught based on the original white paper :)
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With the recent change in the bitshares price, the "call price" of my shorts is dangerously close to the actual price.
It's at 225 but I see the 24h high was 240 and my "call price is around 240-245.
I was thinking about roll over but I see a lot of buyers (10k) making another smaller wall in front of the big wall of shorts waiting for cover.
If i understand well, I have to short and buy my own BitUSD (to roll over) at a higher price than that small wall right ?
That, or I wait and hope that the BitUSD price doesn't go up to 241 ?
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With the recent change in the bitshares price, the "call price" of my shorts is dangerously close to the actual price.
It's at 225 but I see the 24h high was 240 and my "call price is around 240-245.
I was thinking about roll over but I see a lot of buyers (10k) making another smaller wall in front of the big wall of shorts waiting for cover.
If i understand well, I have to short and buy my own BitUSD (to roll over) at a higher price than that small wall right ?
That, or I wait and hope that the BitUSD price doesn't go up to 241 ?
if you want to play it safe and not have to dork around with the margin call, you could certainly simultaneously execute a buy/short order of your own for some price point within the highest bid and lowest ask (that way there are no others orders in the queue that'd snap up your orders). i may actually do the same with some of my positions today...
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With the recent change in the bitshares price, the "call price" of my shorts is dangerously close to the actual price.
It's at 225 but I see the 24h high was 240 and my "call price is around 240-245.
I was thinking about roll over but I see a lot of buyers (10k) making another smaller wall in front of the big wall of shorts waiting for cover.
If i understand well, I have to short and buy my own BitUSD (to roll over) at a higher price than that small wall right ?
That, or I wait and hope that the BitUSD price doesn't go up to 241 ?
It is also possible to add collateral to your order via the console command:
add_collateral <from_account_name> <cover_id> <real_quantity_collateral_to_add>
Parameters:
from_account_name (account_name, required): the account that will provide funds for the ask
cover_id (order_id, required): the ID of the order to recollateralize
real_quantity_collateral_to_add (string, required): the quantity of collateral of the base asset to add to the specified position
You can find the cover_id with:
wallet_account_order_list <account name>
which returns something like this:
[[
"1e2612f144d46db25e9c5f2d5972e27be1ffc248",{ <--- This is the cover_id
"type": "cover_order",
"market_index": {
"order_price": {
"ratio": "0.000444444323056611", <---- This is the call price (move decimal 1 place to the right for USD:BTS market)
"quote_asset_id": 22, <---USD
"base_asset_id": 0 <---BTS
},
"owner": "BTS7DpWydpJE9PFXK4UPCuxtMd4DdRC5PECz"
},
"state": {
"balance": 48529, <--- This is the $ balance (move decimal 4 places to the left for USD:BTS market)
"last_update": "1970-01-01T00:00:00"
},
"collateral": 218656473, <--- move decimal 5 places left
"interest_rate": {
"ratio": "0.",
"quote_asset_id": 22, <---USD
"base_asset_id": 0 <---BTS
},
"expiration": "2015-07-13T15:04:10"
}
so you'd enter;
add_collateral xeldal 1e2612f144d46db25e9c5f2d5972e27be1ffc248 1000to add 1000 BTS to the available collateral this will push your call price further away
After doing this the order will aquire a new cover_id so if you need to do it again you will have to look up the id again.
Anyone, please correct me if I'm wrong. The above works for me, I may be off a bit on the decimal movements and this depends on the pair, but you get the idea.
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I didn't know that, I will try :)
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awesome @Xeldal, i've never traded via console before, but it seems to be more efficient. i like the idea of simply adding collateral to shorts. i've pumped a ton of BTS into maintaining my positions today. what a disaster with this price crash! really looking forward to recovery, whenever that happens...
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I'm trying to understand precisly what would happenned if I roll over at 228 bts/BitUSD (20 bts over the price feed).
I mean, is it an awful trade ?
If I was a day trader obviously it is. But if I consider BitShares is just having its newborn volatility and the price is going to go up with time (and bts 2.0) the price feed doesn't mean too much right ? I could roll over the short without loosing anything if my goal is hold for years (and it goes up obviously) ... I need confirmation about that :o
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awesome @Xeldal, i've never traded via console before, but it seems to be more efficient. i like the idea of simply adding collateral to shorts. i've pumped a ton of BTS into maintaining my positions today. what a disaster with this price crash! really looking forward to recovery, whenever that happens...
This is the problem, too many of the bitshares community keep losing their bitshares by taking a margin long position, via shorting bitassets. We need lots of people to buy and hodl BTS and not risk losing it. When people get margin called, they lose it to traders.
I know that you guys think you are 'supporting the product' by creating bitassets, but creating assets in excess of the demand that exists for them doesn't really do anything to help. What Bitshares needs more is for people to buy and hold it and accumulate over time, instead of handing over free shares to traders who take them and dump them again.
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That's a good point.
That's also why I'm trying to do it well. The best I can al least.
Is it better to add more collateral or to roll over 20 bts above the price feed ?
My point of view is that, the price beeing today quite low, if I can roll over (even at 20 bts over the price feed) I will be probably ok for the the next up and down swings.
The only worry I have is that it seem to me a little weird to do this 20 bts over the price feed. As I'm not an expert, I wanted the opinions of you guys.
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awesome @Xeldal, i've never traded via console before, but it seems to be more efficient. i like the idea of simply adding collateral to shorts. i've pumped a ton of BTS into maintaining my positions today. what a disaster with this price crash! really looking forward to recovery, whenever that happens...
This is the problem, too many of the bitshares community keep losing their bitshares by taking a margin long position, via shorting bitassets. We need lots of people to buy and hodl BTS and not risk losing it. When people get margin called, they lose it to traders.
I know that you guys think you are 'supporting the product' by creating bitassets, but creating assets in excess of the demand that exists for them doesn't really do anything to help. What Bitshares needs more is for people to buy and hold it and accumulate over time, instead of handing over free shares to traders who take them and dump them again.
@Ander, i def appreciate the sentiment, but i think the market needs all three types of agents: long buyers, short sellers, and simply traders who, at least in theory, can smooth frictions btw buyers and sellers. our business still needs products, else we are just trading tokens in nothing.
now i do think that the risks of short selling ought to be screamed from the rooftops!
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That's a good point.
That's also why I'm trying to do it well. The best I can al least.
Is it better to add more collateral or to roll over 20 bts above the price feed ?
My point of view is that, the price beeing today quite low, if I can roll over (even at 20 bts over the price feed) I will be probably ok for the the next up and down swings.
The only worry I have is that it seem to me a little weird to do this 20 bts over the price feed. As I'm not an expert, I wanted the opinions of you guys.
the only diff i can see (other than transaction costs) is that rolling the position over initiates another 30 day position, whereas adding collateral is keeping your original position and expiration.
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I just tried to roll over my shorts and something very weird happenned
I made a buy order of X BitUSD at 227 bts and a X bitUSD short order to 227 BitShares too.
I confirm both at the same time but only the short is done and the buy order remain there ... the highest buy order was at 226 and the lowest sell order was at 230.
I ask about to another member of this commmunity if he knews how it was possible and it happenned the same to him. Someone "invisible" bought his BitUSD freshly shorted directely before he could buy them to himself.
I made a last test to be sure, I tried one more time with 1$. I entered first the buy order, it appears at the top of the buyer list. Then I create the short order, I confiremd and ... POUF ! the same happenned. My buy order strayed intact and the short get bought by another invisible someone.
Another weird thing is that both shorts showing in the "COVER" tab are showing (exactely) only 90.7% of the value I enter when shorting. For ex. on the 1$ I shorted I have 9.07$ in the cover tab.
I would really apreciate some light over that situation.
Edit :
There are probably others having the same problem, I created a thread about it here : https://bitsharestalk.org/index.php/topic,17588.0.html (https://bitsharestalk.org/index.php/topic,17588.0.html)
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It's because there are expired shorts that take precedent over your new bitUSD buy order. You can only "roll over" your shorts if there are no expired short orders.
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The expired shorts waiting to cover are doing it at the price feed right ?
The price feed was at 206 bts plus some byers above up to 226 bts.
I tried to short/buy at 227 bts
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The expired shorts waiting to cover are doing it at the price feed right ?
The price feed was at 206 bts plus some byers above up to 226 bts.
I tried to short/buy at 227 bts
yes, expired shorts are in the buy queue at the price feed, so your execution didn't happen because of those. there's some other buying action that's either automatically triggered as soon as you place your short and gets to execute prior to your long; or there are buy orders in the system that are somehow hidden from the order book. this last point, if true, would be somewhat of a rigged system, so i hope it is not the case.
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Like xeroc said earlier in this thread, your "invisible" orders are the margin calls which are buying at up to +10% of the feed price, and they take precedence over normal buys.
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Like xeroc said earlier in this thread, your "invisible" orders are the margin calls which are buying at up to +10% of the feed price, and they take precedence over normal buys.
wow ok interesting, thank you for clarifying. why aren't these input in the order book? is it to protect the auto triggered buys from being gauged by sellers just setting shorts at the high end of the 10% range? do you know how this will be handled in 2.0 for either the bitUSD or bond markets?
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It's because there are expired shorts that take precedent over your new bitUSD buy order. You can only "roll over" your shorts if there are no expired short orders.
This is not true. It was true a while ago due to a bug which has now been fixed.
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It's because there are expired shorts that take precedent over your new bitUSD buy order. You can only "roll over" your shorts if there are no expired short orders.
This is not true. It was true a while ago due to a bug which has now been fixed.
so then what's causing that auto buy activity that's taking precedence over our own trades?
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It's because there are expired shorts that take precedent over your new bitUSD buy order. You can only "roll over" your shorts if there are no expired short orders.
This is not true. It was true a while ago due to a bug which has now been fixed.
so then what's causing that auto buy activity that's taking precedence over our own trades?
That I don't know. As mentioned in the other thread I haven't been able to reproduce the issue. Did you stage both the short and the buy order and then click confirm on both? I do that to minimize the odds of someone sniping me.
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It's because there are expired shorts that take precedent over your new bitUSD buy order. You can only "roll over" your shorts if there are no expired short orders.
This is not true. It was true a while ago due to a bug which has now been fixed.
so then what's causing that auto buy activity that's taking precedence over our own trades?
That I don't know. As mentioned in the other thread I haven't been able to reproduce the issue. Did you stage both the short and the buy order and then click confirm on both? I do that to minimize the odds of someone sniping me.
yeah that's exactly how i do it: i stage both orders and then hit execute right after the other. i wonder why this was a problem earlier (first time for me as i do this often), and no longer?
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I am really glad that a lot of these issues were looked at and improved upon for 2.0, that it will allow you to add to collateral for a position, and that the process of shorting a coin to yourself has been combined into one order.
Now if only 2.0 could get here. :)
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I am really glad that a lot of these issues were looked at and improved upon for 2.0, that it will allow you to add to collateral for a position, and that the process of shorting a coin to yourself has been combined into one order.
Now if only 2.0 could get here. :)
yeah i'm also really looking forward to it
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We'll have to be patient. It's better a nice and smooth product in 3 months than a buggy one in 2.
That being said and beeing short on BitAssets, I will feel better when 2.0 will be out there with everyone promoting it like crazy !
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We'll have to be patient. It's better a nice and smooth product in 3 months than a buggy one in 2.
That being said and beeing short on BitAssets, I will feel better when 2.0 will be out there with everyone promoting it like crazy !
agreed!
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We'll have to be patient. It's better a nice and smooth product in 3 months than a buggy one in 2.
That being said and beeing short on BitAssets, I will feel better when 2.0 will be out there with everyone promoting it like crazy !
That statement has been used since last November...
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That statement has been used since last November...
Yes this is exactly why the price is down 80% and no one trusts these announcements. Going to have to put out 2.0 before Bitshares wins anyone back.
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That statement has been used since last November...
Yes this is exactly why the price is down 80% and no one trusts these announcements. Going to have to put out 2.0 before Bitshares wins anyone back.
and that's understandable and to those of us who believe in the enterprise, it gives a great opportunity to continue investing at depressed prices.
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That statement has been used since last November...
Yes this is exactly why the price is down 80% and no one trusts these announcements. Going to have to put out 2.0 before Bitshares wins anyone back.
and that's understandable and to those of us who believe in the enterprise, it gives a great opportunity to continue investing at depressed prices.
True! But it's nonetheless hard enough to see Bitshares being beaten down on the markets while we know there are great things coming. I find it hard to believe so many whales just don't believe in it and dump their shares as soon as volumes picks up. Anyway, BTS can't get any much lower, I would be really surprised to see it go back down to the 8.5M$ marketcap as it happened this spring. But it could happen anyway, if 2.0 doesn't come out this fall.
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That statement has been used since last November...
Yes this is exactly why the price is down 80% and no one trusts these announcements. Going to have to put out 2.0 before Bitshares wins anyone back.
it's always tough to guess whether a major crash is part of the insolvency process, or if it's just a market swing giving an amazing investment opportunity...i'm hoping it's the latter and we'll soon see some big boys enter the market on the buy side to validate our beliefs.
and that's understandable and to those of us who believe in the enterprise, it gives a great opportunity to continue investing at depressed prices.
True! But it's nonetheless hard enough to see Bitshares being beaten down on the markets while we know there are great things coming. I find it hard to believe so many whales just don't believe in it and dump their shares as soon as volumes picks up. Anyway, BTS can't get any much lower, I would be really surprised to see it go back down to the 8.5M$ marketcap as it happened this spring. But it could happen anyway, if 2.0 doesn't come out this fall.