Silk Road forums

Discussion => Newbie discussion => Topic started by: HeraclesKnows on April 11, 2013, 01:57 pm

Title: Hedging for Dummies.
Post by: HeraclesKnows on April 11, 2013, 01:57 pm
Posted this as a reply in another topic but I figured this may be useful to somebody.

This is an explanation of how the Hedging system works when you make an order on Silk Road.
This is all to the best of my knowledge, if I'm mistaken please correct me.

Let's say you spend 100 BTC @ $10 each (worth $1000).
Your order is unhedged and the Mt. Gox Weighted avg drops to $5.
Your order gets cancelled.
You will receive 100 BTC back (now only worth $500).

Now, if your order was hedged;
You spend 100BTC @ $10 each (worth $1000).
Your order is hedged and the Mt. Gox Weighted avg drops to $5.
Your order gets cancelled.
You will receive 200 BTC back (now worth $1000).
Title: Re: Hedging for Dummies.
Post by: HELPdruggy on April 11, 2013, 02:01 pm
Yes but if it's a hedged sale you also need to take in to account SR fees (4%) so you will get your BTC less 4% back. Also if the value of BTC goes up you may only get 50 BTC back and that is why most people with cancelled orders complain as they think the vendor is ripping them off.
Title: Re: Hedging for Dummies.
Post by: HeraclesKnows on April 11, 2013, 02:28 pm
Two very good points there, thanks!!
Title: Re: Hedging for Dummies.
Post by: NW Nugz on April 18, 2013, 12:28 pm
Thanks for explaining :-)

I do wonder who,  if anyone, gets charged the 4% if a hedged order gets canceled before it is marked as shipped.
Title: Re: Hedging for Dummies.
Post by: mickymisseri on April 18, 2013, 12:31 pm
thanks for the pot
Title: Re: Hedging for Dummies.
Post by: pakchoi23 on April 18, 2013, 12:37 pm
Posted this as a reply in another topic but I figured this may be useful to somebody.

This is an explanation of how the Hedging system works when you make an order on Silk Road.
This is all to the best of my knowledge, if I'm mistaken please correct me.

Let's say you spend 100 BTC @ $10 each (worth $1000).
Your order is unhedged and the Mt. Gox Weighted avg drops to $5.
Your order gets cancelled.
You will receive 100 BTC back (now only worth $500).

Now, if your order was hedged;
You spend 100BTC @ $10 each (worth $1000).
Your order is hedged and the Mt. Gox Weighted avg drops to $5.
Your order gets cancelled.
You will receive 200 BTC back (now worth $1000).

Nice clear explanation. If you get lucky and stay smart there is a lot of money to be made here!
Title: Re: Hedging for Dummies.
Post by: ciaobingo on April 18, 2013, 09:56 pm
I fell into this once, luckily the vendor was nice enough to compensate me the SR fees, back when btc was $10 and not all this madness going around lately.

Hopefully more people see this and stay informed.
Title: Re: Hedging for Dummies.
Post by: ExtantLiterature on April 18, 2013, 10:45 pm
thanks
Title: Re: Hedging for Dummies.
Post by: Tripazoid on April 18, 2013, 11:39 pm
Thanks for the info :)

Seems to me that the biggest problem with bitcoins is the wild price fluctuations. Hope the currency settles down eventually.
Title: Re: Hedging for Dummies.
Post by: jamseyboy1 on April 21, 2013, 01:28 am
nice basic explanation thanks