Quote:
Originally Posted by donkology101
Ok I have lots of btc a friend of mine turned $5k in btc into $240k in 5 years. Since this is the guy i sell my coins to at face value to cash out of btc poker sites he has no incentive to teach me how to leverage. Right now btc is going to stay under 4 figures i want to short it but don't know how the hell u make money predicting that btc will stay low.
I am bearish as well but I wouldn't go wild at these prices. Not because I don't think it is going down. But because you want to sell rallies not dips.
Quote:
Originally Posted by donkology101
In the meantime im supposed to buy when btc hits that low number.... So what?? How is that any different from waiting for it to drop and buying low to later sell high??
The main difference is time. If it is going down
today you can make money by selling today. If all you can do is understand long exposure you have to wait until
tomorrow.
Quote:
Originally Posted by donkology101
This coupled with episodes of billions where they shorted the Nira have made me realize my parents are probably cousins cuz i can't understand this.
I actually like this show and normally don't like shows / movies on this subject.
Quote:
Originally Posted by donkology101
Where does the extra buying power come from the exchange it sounds like free $ how can they afford to do that??
I don't think they ever (at least not yet) get into the details how the trade is structured.
Traditional currency markets are levered. So you trade on a margin. This basically means you have to cover the
change in the price of the asset but not the entire notional value of the asset.
For a lot of reasons options are typically used in combination with a trade in the underlying. If the trade is exclusively options you don't need buying power (for the underlying). You need to be able to afford the price of the option if you are long or post margin to cover a loss if you are short.*
Quote:
Originally Posted by donkology101
Also in the case of billions say the Nigerian currency crashed HOW DOES HE MAKE $$. WHO PAYS HIM?? WHAT IF EVERYONE TAKES THE SAME POSITION?? PLEASE PLEASE HELP ME I AM TRULY ******ED AND MIGHT EVEN PAY FOR COACHING.
In trading there several key institutions / players:
(Central Banks in the case of currency)
Clearing Houses
Market Makers
Brokers
Traders
**
In some cases he gets paid when he makes the trade, like if he sells calls. In other cases he gets paid when he closes out the trade, like if he buys puts or short sells.
If he sells calls he takes in a
credit when he opens the trade, the options have a certain value at the time of sale. He can then buy them back at a lower price (he pockets the difference) or he can hope they expire worthless (pockets the entire price of the sale).
In this case other traders / market makers would be indirectly paying him. This means someone takes the other side of the trade, they pay their broker who tells a clearing house. Some matching / cancelling happens and the position is assigned.
If he bought a put he paid some money upfront for the right to option. If at the time he closes out the trade the option has appreciated in price he can sell it and pocket the difference (or execute it and force someone else to buy the underlying from him at the contractual price listed in the option).
* You can be long or short a call or long or short a put. Long a call in someways is similar to being short a put for example (though there are important differences).
**The ordering in the middle is debatable. It is not a clearly linear hierarchical structure.
BTW, I would be happy to coach you, PM and we can talk further.