Quote from: Zetacoin Express on July 08, 2015, 02:57:14 AM

Quote from: Erdogan on June 30, 2015, 09:29:09 PM

Another plan using forwards.

Get 20 coins
Buy close to 40 forwards.
When bitcoin appreciates, you get the apprecition for 60 coins, not 20, the gain is transformed to coins.
On a doubling in value, sell a percentage of the gain, accumulating the rest.

You can spend as you go, and still have more coins in the future.

This plan resemles rpietilas SSS.

NB. risk of loss of coins. Works only while bitcoin appreciates at large.

Can someone please explain to me what a forwards is?

It is one of the simplest financial instruments imaginable. You make a deal with someone to buy (or sell) a bitcoin for delivery some time in the future. Nothing is paid initially. As time goes, you can sell the contract to the original partner, or someone else, on the market, thus clearing the deal.

It resembles when you go to a store, to buy a car in the future (may be because the car factory produces cars in just-in-time fashion). You write a contract to buy the specific car, and the dealer commits to a certain price. If the price of the car changes in the mean time, due to foreign exchange or whatever, the value of the contract also changes (but in the case of the car, you do not normally resell the contract).

If you want to lock a bitcoin to a certain dollar amount (maybe because you sold something for a future bitcoin payment and want to avoid losing dollars before you get the bitcoin), you sell a forward. When you get your coin, it may have lost value, but your forward has gained value, the value gained is about the same as the value lost.If it appreciates, you lose the appreciation. but the point in this case was to lock in the price.

If you believe bitcoin appreciates, but have no more dollars, you can buy a forward, and sell the contract when it has risen. In this case, you risk to lose value if it falls, corresponding to the price agreed for the contract minus the current forward price. In this case you represent the insurance for the one who wants to lock in. (you can also sell forwards to speculate in a fall in bitcoin price).

Since there is a risk of loss, you have to place some collateral in the form of bitcoins at the site. There are also trading fees.

The difference to an option, is that there is no strike price, so you either win or lose depending on the price fluctuations. (The lock in in the example results from the sum of buying back the forward and selling a coin).

Anyway, you can go to cryptofacilities.com and read the help pages. It is probably explained even better. I am sure other sites have something like it.