Subject: RE: Holdings page?
From: Peter C. McCluskey (pcm@rahul.net)
Date: Fri Mar 10 2000 - 11:35:07 PST
erikd@cometsystems.com (Erik Diehn) writes:
>So why do my cash holdings seem so low? Did I have to buy 4 yes/no pairs of
>GDP4h at $20 (maximum possible value)?
Yes.
>If so, the system needs to be adjusted.
I just made an adjustment to the rule about how many contracts are needed
to open trading in claims. Instead of requiring 10 contract no each side,
it now requires 10 contracts divided by the maximum legal value.
Also, the list of claims awaiting orders now shows fractional values of
contracts needed to open trading when the maximum legal value is over 10,
which should help somewhat in making it clear that orders for fractional
contracts are legal and sometimes appropriate.
I'm sure that I still need to make it easier to understand how the system
works, but are there any other changes to the functionality that you think
are needed?
>In FX, it's easy to do YES/NO pairs because the value of a no
>holding will ALWAYS be 1- {value of YES}. Your system allows arbitrarily
>large claim values, which could lead to some pretty expensive -- or
>inappropriately priced -- "pair" values. This makes NO positions in claims
>like GDP4h quite expensive, vis-a-vis other investment opportunities.
The appropriate number of contracts to trade will vary by contract type.
Since I want to put more emphasis than FX does on making prices valuable
to casual surfers (as with IEM), and less emphasis on making this into a
game, so I'm reluctant to do much scaling of ranges.
>How exactly are you determing the amount of credit players have available?
>It clearly isn't based on what they've spent.
Cash + margin credit.
For long positions above the minimum probable value, margin credit is
0.5 * (bid price - minimum probable price) + 0.9 * (minimum probable price -
minimum legal price).
For short positions below the maximum probable value, margin credit is
0.5 * (margin probable price - ask price) + 0.9 * (maximum legal price -
maximum probable price).
I hope to change the rules at some point to better reflect the historical
volatility of each claim (the way commodity futures exchanges do).
-- ------------------------------------------------------------------------ Peter McCluskey | Boycott Amazon.com until they stop suing http://www.rahul.net/pcm | companies that support 1-click shopping.
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