Author Topic: Different fees for different short holding periods  (Read 4039 times)

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Offline nomoreheroes7

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I would say I'm taking a fairly big risk right now as it is. I have no guarantee that BTSX will be as successful as I think it will, and also no guarantee the price won't dip below the margin call before it rises greatly. Also by keeping my BTSX tied as collateral for the shorts, I'm risking opportunity cost from being able to trade elsewhere and in other coins. Based on that, I definitely wouldn't call a long-term short a "free lunch".

Offline starspirit

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I expected the price to rise sometime in probably the next few months, not necessarily real soon...
the goal of the proposal is to avoid such free lunch an incentive traders to make more short/medium term predictions.

what is the "free lunch" here? long term risk for long term potential gain as well as potential loss.
an efficient market needs a cross-section of traders, from short to medium term, trend vs value etc. homogeneity means no need for the market, no trading.

Offline nomoreheroes7

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I expected the price to rise sometime in probably the next few months, not necessarily real soon...
the goal of the proposal is to avoid such free lunch an incentive traders to make more short/medium term predictions.

Almost feels like there should be a "grandfathering" clause or something then, I would've never opened the shorts if I would have known that. I've already lost some BTSX getting margin called in the BitCNY market (due to the low liquidity, not the actual price on the exchange) and I wouldn't have risked more of my balance if I didn't think I could hold it until BTSX really took off.

 :(

Offline santaclause102

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I expected the price to rise sometime in probably the next few months, not necessarily real soon...
the goal of the proposal is to avoid such free lunch an incentive traders to make more short/medium term predictions.

Offline nomoreheroes7

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Really? Not sure I like the idea of having to cover once a month...I have a bunch of shorts open now, because I expected the price to rise sometime in probably the next few months, not necessarily real soon...

Offline santaclause102

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Doesn't necessarily have to be paid by market makers.

Couldn't we say the longer you want to reserve the right to not redeem your collateral the more collateral you have to put up? And the short position would have to choose the length of the maximum holding period when going short.

Or the shorter the 'maximum short holding period' the more yield will the the long position get that takes the other side of your specific short position? That would make it more of a market and might regulate the liquidity better but I would imagine that it would get complicated since we then have different BitUSDs with different yields...

Overall the imbalance of short and long liquidity seems to be the biggest issue and would profit from more incentives and market mechanics to help balance the two sides.
« Last Edit: September 26, 2014, 11:01:13 pm by delulo »

Offline bytemaster

Don't want to add costs to market makers. 
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Offline santaclause102

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I relistened to todays mumble session. BM said that all shorts will have to redeem their collateral at least once a month which will help make the market more liquid.

So I though: Why not make it more costly (how?) to keep your short position for long. The longer you want to keep it the more costly it is.

Questions: What types of costs could apply ? And would the period be determined at the beginning of going short or when redeeming the collateral?