9 ms·
Who’s Afraid of Bitcoin? The Futures Traders Going Short
- thisisit 9y agoThere is another story behind this too: https://finance.yahoo.com/news/interactive-brokers-launches-bitcoin-futures-162800693.html https://finance.yahoo.com/news/interactive-brokers-launches-... This particular broker IB has accounted for nearly 50% of the traded contracts. But, they are not allowing any shorts at all. They wont even allow market orders Due to the extreme volatility of cryptocurrencies, clients will be unable to assume a short position. In addition, only limit orders will be accepted.
- ISL 9y agoNot allowing market orders can be reasonable. Trading with market orders is generally like playing with fire. If you're comfortable with the current market price, just place a limit order at or slightly above market price, and it will usually fill. Telling the market: "I want to trade now, and price is completely irrelevant" can be a recipe for a bad time.
- thisisit 9y ago> Not allowing market orders can be reasonable. How do you figure? People in cryptocurrency are already not afraid of the rampant volatility so this move seems to protect the broker and not market participant. This also raises another question - whether these guys have stop orders? Because stop orders actually become market orders once triggered and help people get out at whatever price possible. Turn this into stop limit and it tries to find the "best" price possible and many people left holding the bag if things go south.
- pikchurn 9y agoSo set a limit order at half the current price, or whatever. Placing a market order is equivalent to saying "I'll accept $0 for this asset, so long as that was the best price available." Only most people assume it means "I'll pay the number shown, or something close to it" which is only true of relatively stable assets on markets with plenty of liquidity. Making only limit orders available forces the market participant to choose what range of prices they would find acceptable.
- bryanbuckley 9y agoI rarely trade but have enough times to learn the various types of orders one might place, order books, spread, and a few other things. Why doesn't an order type exist like: > "I'll pay the number shown, or something close to it" ? Like: acquire/lock all units to fulfill me market trade and if it is less/more than what i expect, cancel.
- pikchurn 9y agoA limit order. Specifically a fill-or-kill limit order for the cancellation part. Most people don't realize a limit order isn't "buy at this price" but rather "buy at the best price in my favor, but don't spend more than this much." Fill-or-kill means don't put it on the books, just get it now or cancel. You can also typically specify whether it is a partial fill-or-kill too (get it all or none at all).
- bryanbuckley 9y agoTIL! Much thanks. Are you sure this (buy at best price in my favor) is how it is implemented commonly (e.g. the limit order is not just rejected for being an invalid liquidity maker order?)? I guess it is the Fill-or-Kill that is key; I suppose you can add an additional factor to that limit order to give yourself a range of acceptable prices (obviously you could program it, but is it a common order type on something like E-Trade?)?
- pikchurn 9y ago"In your favor" is how it is required to be implemented by law. You get the absolute best price on the books at the time it hits the exchange. Of course that doesn't stop low-latency firms exploiting information differentials to get their bids in before your order makes it to the exchange, a process called front-running. It would be illegal for your own brokerage to frontrun you, but pretty much all discount brokerages sell information to third parties, which enables those third parties to front-run. Ever wonder why your Robinhood trades are free?
- 9y ago
- SilasX 9y agoI've tried doing that -- even with large spreads, the market moves before I can input something within the spread. (Speaking mainly of Gemini.)
- matwood 9y agoThey are also requiring 40-50% margin per contract (1 contract == 1 BTC).
- wehadfun 9y agoI respect wsj paywall so did not read article. I was reading that the fees to short it are really high.
- MandieD 9y agoAs Keynes might or might not have said, “the market can remain irrational longer than you can remain solvent.”
- ringaroundthetx 9y agoand it can be rational
- ktta 9y agoThe weird thing here is, Bitcoin is clearly a shitshow. There's not much debate about it. It has no redeeming qualities compared to other coins except the global hashrate. And it is worse off on so many aspects.
- sp821543 9y agoHow many times has bitcoin hard-forked because of the protocol being compromised? How much daily volume is it currently supporting? How does the velocity of the codebase compare to other coins?
- ktta 9y ago>How many times has bitcoin hard-forked because of the protocol being compromised? Looks like there were some. https://news.ycombinator.com/item?id=15907735 https://news.ycombinator.com/item?id=15907735 >How much daily volume is it currently supporting? Doesn't matter. Any other coin can support the same daily volume (and many others usually do) >How does the velocity of the codebase compare to other coins? Terrible. Constant in-fighting. This is what is hurting bitcoin right now. Edit: added hard forks link.
- igorgue 9y agoLitecoin actually did last night, more volume than Bitcoin, the fees were almost nothing! I actually did send an LTC transaction last night, so much fun not to be stupid and take advantage of this revolution instead of just sitting around like a troll calling it a bubble :D https://coinmarketcap.com/exchanges/gdax/ https://coinmarketcap.com/exchanges/gdax/
- aviv 9y agoLitecoin is the new Bitcoin. People are realizing there is nothing special about Bitcoin, and I'm saying this as a HODLer. Stores of value will come and go. Bitcoin will eventually lose its supremacy. It's not like people use it as a currency at this point. And if they did - Litecoin is far more efficient.
- stale2002 9y agoI'm surprised that of all the Altcoins that you could have picked, you chose litecoin as the one that is better than Bitcoin. Litecoin has never been about actual utility or usage. It has always just been about being a store of value, and just copying every development from Bitcoin. There are definitely altcoin that are different and interesting in meaningful ways. But not litecoin.
- matte_black 9y agoPeople don’t want a different or meaningful coin. They just want a better Bitcoin.
- FreeCrypto 9y agoPeople want a coin that can give them 1000x gains, the next iteration of "buying btc in 2010." Far < 1% of those people has ever used a cryptocurrency to make a purchase. Related, but not directed at prev comment... If anyone actually cares about sound, uncensorable money, then they should look to the $300B network that has been battle tested and withstands constant attack. BTC has prioritized stability and security, and done very well in that regard. I understand that btc businesses, and the small minority that purchase from them, are frustrated that the digit cash use-case is more difficult right now. From my perspective though, the proven stability and security is far more valuable in the long run, and is something that other coins only talk about. I think btc has to go through a full financialization to complete its price discovery (eliminate the massive volatility) before any mass adoption of a cash use-case is practical. Luckily, futures and ETFs are incoming, and lightning network is testing on mainnet.
- 9y ago
- h43z 9y agothe article is pay walled
- nerfhammer 9y agoWall Street being able to buy Bitcoin might increase demand, but they might also do things that would at least at times amplify sell pressure like panic selling, shorting it, leveraged shorting, margin calls
- westurner 9y agoShark futures traders here to save the mf'in day!
- sillysaurus3 9y agoNon-paywalled: http://archive.is/aCcos http://archive.is/aCcos
- meritt 9y agoShorting futures does not necessarily mean there's negative sentiment. There's a large arbitrage opportunity right now. Futures are going for about $1,000 more than BTC itself right now and you can make risk-free* (assuming you know how to securely store your private key) profit. Doing so requires selling a future. https://www.bloomberg.com/view/articles/2017-12-12/bitcoin-arbitrage-and-tax-math https://www.bloomberg.com/view/articles/2017-12-12/bitcoin-a... * edit: See option_greek's excellent comment below.
- deleted 9y ago[deleted]
- option_greek 9y agoUsually there isn't any risk in this scenario but thanks to cboe rules that cap volatility at 20%, there is quite a bit of risk hidden here. Say, you buy btc and short the future. If btc drops by 30% in a day, future trading will be halted at 20% which means that you can lose money if it is an expiry day. Also, CBOE and your btc exchange aren't linked. So you will have to put up additional margin when btc goes up and your future is losing money.
- meritt 9y agoExpiry day is going to be very interesting then. I had no idea their volatility rules would apply to expiring contracts too, that's insane. Why would anyone want to trade that instrument?
- option_greek 9y agoI wish I know :). Its not really a derivative if volatility is capped while the underlying is free to move around.
- snowAbstraction 9y agoJust some kind of capped option.