Open letter to the bitUSD bulls

[tonyk]

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.

[Shentist]

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.

[tonyk]

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.

[liondani]

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   

[Ander]

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?

[jsidhu]

I triangular arb bot could help start to arb away inefficiencies between the crosses.

[zerosum]

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

[zerosum]

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!

[Permie]

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

[mf-tzo]

all clear again  ..thanks!

[xeroc]

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 ..

[mf-tzo]

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...

[xeroc]

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!!!

[abit]

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).

[fav]

yep, what's needed is a nice pictured guide with easy explanations on how to use/make money in bitshares eco.