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Gosens

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1 hour ago, Member278576 said:

A humble thank you from an amateur in this space. 

We are all amateurs in this space with the exception of those few, like Gosens,  who bring their wealth of professional experience.  I too am very grateful that he and the others with professional inputs are so willing to share with us.  Thanks guys and girls.

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9 hours ago, Tinyaccount said:

Any comments welcome.  

I think you make a complicated matter unnecessarily more complicated :) 

Go back to my first post in this thread and really understand how an exchange works. The whole process describing supply & demand has to hold if we look at a single exchange. (We can extend to multiple exchanges in the future). This gives us some rules / boundaries of things that happen or can't happen E.g. the price cannot exceed $0.60 if there's a surplus of sellers at $0.60. There cannot be a postive demand and supply at a certain price, because they will trade and you're left with a surplus on one side. You can argue that supply & demand is not a nice metric, maybe you just want to see it as 'demand' at price P. Demand > 0 when there is a surplus of buyers at that level and demand < 0 when there is a surplus of sellers at P. In any case, I think it's key to be able to visualize  what happens when we say "the price is going up".

How fancy, complicated and sophisticated xRapid might be, it's just an exchange. Sure, us mortals can't access it. It's implemented that it scales, etc, etc. However, all the rules of supply & demand still hold there. Same if we talk about market-participants. All participants go through the exchange. Whether market taker or market maker, the rules still apply. As such, we can simplify and treat all participants equally. Sure, Ripple as participant or you or a market maker all have different reasons of trading on the exchange. As such, the actions they take are different, but again, the same rules of gravity apply for each participant.

If we're talking about sending USD to MXN. This basically means we're selling USD and buying MXN. This changes supply/demand and thus the price in USDMXN.

9 hours ago, Tinyaccount said:

So to look at USD to Mexico.   Fi uses MM to provide XRP.  So the first buy is USD to XRP supplied by MM.  So no market pressure there.  The FI / MM sale is OTC and creates no pressure.  

There is market pressure. It being OTC doesn't matter. XRPUSD goes up.

9 hours ago, Tinyaccount said:

Xrapid moves XRP to Mexican Exchange.  No price pressure.

Not sure what you mean by this to be honest. I imagine MXN to be traded through xRapid. If you meant he moves XRP into MXN on xRapid, then you have it wrong. You can't turn lead into gold. You also can't turn XRP into MXN. Neither can xRapid. You will have to buy MXN using XRP on some exchange (xRapid).

9 hours ago, Tinyaccount said:

The XRP to Pesos sale on exchange puts down pressure on price since it was an ‘at market’ sale.  But it is a small transaction size.  

Selling in general creates downward pressure. Not only 'at market' sells. 

9 hours ago, Tinyaccount said:

The MM is now needing to buy XRP.  This is the critical bit...   I think how this happens in practice is what will determine these XRapid effect on price in these early days.  

If it is direct from Ripple then alas XRapid has a negative effect on price.  If it is as a bulk buy (even as a limit order) it will trend price upward by supplying price support at the very least.

The MM doesn't need to buy XRP. He sold XRP getting USD. He gets the same amount of XRP to sell MXN. He has 0 XRP. He has a position in USD and MXN though.

 

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On 5/26/2018 at 8:55 PM, Benchmark said:

Which cryptocoins do you hodl? :popcorn1:

XRP, Ether and a little bit of ADA, but as I said in previous posts I'm as misinformed as the next guy.

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On 5/27/2018 at 9:14 AM, LiquidGoat said:

Hey Gosens, welcome.

Whats your take on TA in the crypto space vs traditional markets? 

I think 98.5% of people talking TA have no actual clue of what's really happening. I think in the cryptospace that percentage is around 99.4%

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58 minutes ago, Gosens said:

Not sure what you mean by this to be honest. I imagine MXN to be traded through xRapid. If you meant he moves XRP into MXN on xRapid

xRapid is not itself an exchange, it's a piece of software that coordinates moves between and on participating exchanges. It buys XRP for you on one exchange, moves them into the wallet of an exchange that operates in the destination country, Bitso in the MXN example, and exchanges them for pesos.

He probably meant the middle part of that operation, the 3 seconds where the magic happens. 

58 minutes ago, Gosens said:
  10 hours ago, Tinyaccount said:

So to look at USD to Mexico.   Fi uses MM to provide XRP.  So the first buy is USD to XRP supplied by MM.  So no market pressure there.  The FI / MM sale is OTC and creates no pressure

The standard way Ripple pitches the role of MMs in xRapid is to post bids and asks on the public exchanges, not trade OTC. Ripple operates a large MM that way through its subsidiary XRP II. Not saying there can't be exceptions. But public exchanges would be the first choice for end users due to having the tightest spreads.

Miguel has said that in order to kickstart the whole thing, they're willing to cover their customers' slippage losses when liquidity isn't sufficient. 

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Posted (edited)
14 minutes ago, jcdenton said:

xRapid is not itself an exchange, it's a piece of software that coordinates moves between and on participating exchanges.

Spot on. xRapid is closer to FX aggregators (https://en.m.wikipedia.org/wiki/Foreign_exchange_aggregator). Of course it does more than just aggregation but in terms of liquidity it is a simple aggregation of different exchanges.

I participated in few projects which were building FX aggregators 10 years ago and I must say that even though aggregators themselves did not provide additional liquidity, it was an important step for the global FX market. 

Edited by Lamberth

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Posted (edited)

Thanks for your input @jcdenton and @Lamberth! It doesn't make a difference whether xRapid is an actual exchange or passes on the flow to an exchange for my post though.

56 minutes ago, jcdenton said:

@Gosens, can you explain more about how OTC markets influence price? It's a frequent hot topic. 

Sure thing. Important step in understanding what's happening is identifying the market participants. 

Usually, there's 1 side who has an actual intention. E.g. FI who wants to buy XRPUSD. The other side is there to facilitate and willing to do the trade at certain premium. In this example some MM willing to sell XRPUSD to the FI. The goal of FI is to get long XRPUSD, because FI believes XRP price will increase in the future. The goal of the MM is to make money on that trade, hence the premium. Important to realize, the MM makes money because of constantly selling at a premium or buying at a discount. not because of directional speculation.* Once the OTC is done and the MM sold XRPUSD to the FI, they actually have an exposure. They're short XRPUSD. So they're going to buy back the XRPUSD they're short. Before they commit to the OTC they estimate the impact of buying that amount of XRP and include that in their OTC price. 

OTC trading influences the price in a similar manner as trades on an exchange, because the MM forwards the flow to exchanges. I think @Lamberth made some really good points regarding exchange aggregation. Basically, because of MM being connected to multiple exchanges, you will see their OTC volume indirectly flow into all these exchanges. And since they do this in a 'smart' way, they will get better executions than if the FI would buy the whole chunk in 1 go on 1 exchange. Note though, that the demand/supply-change is the same if you do it in 1 chunk or spread out. The end-point is the same, the way how you get there is different.

*It's a bit of a simplification. There are participants for sure who do both. Trade at premium/discounts while having directional view on asset price as well. It doesn't change the overal concept explained though.

Edited by Gosens

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Thanks for replying Gosens.  Some of what I said wasn't very clear because you may have misunderstood it.

2 hours ago, Gosens said:

I think you make a complicated matter unnecessarily more complicated :) 

That's not the first time I've done that....   :) 

2 hours ago, Gosens said:

How fancy, complicated and sophisticated xRapid might be, it's just an exchange.

If I have understood what David Schwatze has said,  in fact XRapid can be thought of as a automation of exactly the same steps we would take manually to achieve a USD to MXN cross border movement using XRP.  So the process is a buy of XRP on an exchange in country of origin, transfer of XRP on XRPLedger to exchange in destination country then sell of that XRP for target currency then transfer currency to recipient.

So when you said it's just an exchange I think it's actually more complicated than just an exchange.  Hence my wanting to look at each step.  If it's viewed from a high enough level then it's simply a wash and we all should sell because there is no net price pressure.

It is only if there are differences in pressures at some steps that we will see a net upward pressure.  Or perhaps I'm wrong there....  does purely a high volume also equal upward price pressure?  I think only if supply is short which isn't the case here.  A crash for instance has high volume but price dropping....  although that is not a equilibrium situation like XRapid in volume will be.

Perhaps Gosens you might know of a market where the volume massively increased but supply was plentiful and so not the price? I'm ignorant in general of markets and so have no idea.  ( I believe supply will tighten if this gets going strong but we are a long way from that in the early stages.)

2 hours ago, Gosens said:

Not sure what you mean by this to be honest.

 

1 hour ago, jcdenton said:

He probably meant the middle part of that operation, the 3 seconds where the magic happens. 

Yes...  the XRP movement from one exchange to the other via XRPLedger.  It causes no price pressure.

1 hour ago, jcdenton said:

The standard way Ripple pitches the role of MMs in xRapid is to post bids and asks on the public exchanges, not trade OTC. Ripple operates a large MM that way through its subsidiary XRP II. 

Yes you are right and I was forgetting that to some extent...  So at least initially it is likely all XRapid will be done with XRP bought and sold at market...  not some buys at OTC like I suggested.  That's a plus in the up pressure column....

 

48 minutes ago, Gosens said:

OTC trading influences the price in a similar manner as trades on an exchange, because the MM forwards the flow to exchanges

That's interesting.  I thought they would be largely disconnected in terms of price pressures.  Can you elaborate more if you have time please?

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1 hour ago, Gosens said:

The goal of the MM is to make money on that trade, hence the premium. Important to realize, the MM makes money because of constantly selling at a premium or buying at a discount. not because of directional speculation. Once the OTC is done and the MM sold XRPUSD to the FI, they actually have an exposure. They're short XRPUSD. So they're going to buy back the XRPUSD they're short. Before they commit to the OTC they estimate the impact of buying that amount of XRP and include that in their OTC price. 

What’s you opinion, whether (or rather when) some big MM / broker steps in? I had a number of chats with ex-colleagues (ICAP/NEX level) few months back but did not get a straight yes or no from any of them. Surprisingly all of them knew Ripple. I figured they are still evaluating the setup. 

All the recent Ripple partners are exciting and all but for me the “game over”moment will be the announcement of one of the major FX brokers.

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7 hours ago, Tinyaccount said:

Thanks for replying Gosens.  Some of what I said wasn't very clear because you may have misunderstood it.

That's not the first time I've done that....   :) 

If I have understood what David Schwatze has said,  in fact XRapid can be thought of as a automation of exactly the same steps we would take manually to achieve a USD to MXN cross border movement using XRP.  So the process is a buy of XRP on an exchange in country of origin, transfer of XRP on XRPLedger to exchange in destination country then sell of that XRP for target currency then transfer currency to recipient.

So when you said it's just an exchange I think it's actually more complicated than just an exchange.  Hence my wanting to look at each step.  If it's viewed from a high enough level then it's simply a wash and we all should sell because there is no net price pressure.

I was incorrect in saying xrapid was an exchange. And yes, to understand it, you should dissect it in all the individual steps. Still, I would say, go back to the earlier posts. I feel most is said there explaining the processes of the individual flows. 

Higher volumes does not equal higher prices. Higher volume indicates something's going on. Some news of sorts. News is perceived as good or bad. If it was neutral, it wouldn't trigger an increase of volume. So sure there's often a direction associated with higher volumes. Not necessarily up. 

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7 hours ago, Lamberth said:

What’s you opinion, whether (or rather when) some big MM / broker steps in? I had a number of chats with ex-colleagues (ICAP/NEX level) few months back but did not get a straight yes or no from any of them. Surprisingly all of them knew Ripple. I figured they are still evaluating the setup. 

All the recent Ripple partners are exciting and all but for me the “game over”moment will be the announcement of one of the major FX brokers.

Agreed that it's a matter of when not if. There's a lot of hurdles though. Current crypto exchanges are not the most reliable. I can imagine clearing / risk / compliance / etc to pose some questions. That said, I saw e.g. LMAX involved in crypto nowadays. 

It might also be the case the MM / broker are waiting for the interest of their clients / counterparties. That they haven't setup yet, since there's no inflow anyway. 

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