jooray / margin-trade

see liquidation price on bitmex and get notified, perform simple trades

margin-trade

Trade Bitcoin derivatives on Deribit and Bitmex.

See liquidation on Bitmex futures and get notified before margin calls (Deribit notifications not implemented yet).

Note: As Bitmex is introducing KYC, this repository is switching to Deribit, as have I.

Motivation

Sometimes you want to keep USD value of your Bitcoin, for example if you know you will have future expenses with known USD value. If you don't want to go to Ethereum-land for this purpose and want to stay within the BTC ecosystem, you could use Deribit's perpetual swap or expiring futures for this purpose.

Deribit is a well-known centralized exchange. In order to minimize counterparty risk (hacking, owners of Deribit just running away with your crypto), you can enter hedging positions, but keep most of your coins outside of Deribit (for example on your hardware wallet).

In order to do all of this, I decided to write a few scripts.

The first one checks if my margin balance on the exchange is high enough in order for the positions not to get liquidated. If the margin is approaching lower values, I get an encrypted notification via Signal. (Unfortunately, I don't have Deribit version yet, only Bitmex).

The second script allows me to quickly hedge positions of BTC I received or unhedge if I spend them.

This allows me to hedge Bitcoin price risk, earn funding rate on Deribit, but my position won't get liquidated.

A concrete example

I received 100 USD in BTC as a payment for a project. I know I have to cover my costs of Internet connection, which is 39 USD and it is due next week. I also know I want to have a dinner today which is 21 USD.

Because I have the BTC, I need to quickly hedge 39+21=60 USD in BTC. I have an account on Deribit with a sufficient margin. I need to sell 60 units of XBTUSD contract:

# node trade.js market deribit sell 60

In the evening, I pay 21 USD for dinner and because I live in a country where I can pay with BTC in restaurants, I have spent 21 USD worth of BTC for dinner. In order not to leave the position, I need to buy 21 units of XBTUSD contract on Deribit:

# node trade.js market deribit buy 21

The rest of the position is still hedged.

After three days, Bitcoin goes up a bit and my position would get liquidated soon, if I do not fund my Deribit. Then I have to pay my Internet connection. I pay with BTC using Lamium and I need to exit the rest of the position.

# node trade.js market deribit buy 39

During the time of the hedging, my 60 USD (and then 39 USD after I ate dinner) were safely hedged, so even a drop of 50% would not hurt me. In addition, I earned funding rate for the duration of my position (could be easily 10% p.a., check Deribit's current funding rate).

Well, the banks are so last century, which bank pays you 10% p.a. on your USD balance? :)

Of course, you could do all of this in a web interface. Set up liquidation price notifications in your crypto tracking app, update it with trades and sell and buy XBTUSD contract on Deribit.

Installation

npm install

Optionally, install signal-cli for example if you have homebrew:

brew install signal-cli

Then create API keys on bitmex. If you only want notification (and no trading, it is enough to create read-only API key). Copy .env.example to .env, edit and paste the API id and secret. If you want trading, you can optionally allow trading (no warranty or responsibility whatsoever, audit the code!).

When you have your API keys set up, it's time to play

Usage

margin-bitmex.js

This program is used to check the liquidation price of future/perpetual swap positions. You can use these to fix your Bitcoin's USD value (short) or do collateralized loan (long).

When we get the position's liquidation price from the exchange, we check the difference between the last price and liquidation price.

# node margin-bitmex.js
Balance: 0.001
Symbol: XBTU20
Last price: 6309.57
Liquidation price: 4548
Margin of safety: 38.73%
Symbol: XBTUSD
Last price: 6368.65
Liquidation price: 100000000
Margin of safety: 99.99%

If you want to get a warning, you can parameter -w, which will create a warning if 30% movement from last price would cause liquidation.

# node margin-bitmex.js -w 30
Balance: 0.001
Symbol: XBTU20
Last price: 6310.81
Liquidation price: 4548
Margin of safety: 38.76%
This position is below threshold
Symbol: XBTUSD
Last price: 6369.92
Liquidation price: 100000000
Margin of safety: 99.99%
This position is below threshold
Our liquidation margin is below threshold on at least one position!
Deposit to: "3LGdXkqYCMPC2S3rJELPjxoK4G7Ao9Qa1s"

(The deposit address is my donation address, but if you run it, it will be your account's funding address - but it is safer if you just have your address on file somewhere safe).

The price ratio is based on the ratio of price movement, not on your margin/wallet balance.

check-margin.sh

First copy check-margin.sh.example to check-margin.sh. Copy the repository to ~/.bitmex-checker. Setup and register signal-cli change your phone numbers in check-margin.sh (sending and receiving number). Alternatively, you can use other notification method (e-mail, etc.).

What the script does is that there are two thresholds. One is 1.2 by default and the second one is 1.1. If the first one is reached, you get a notification every two hours (unless there is a deposit that will change the liquidation price or the price returns to normal values).

The second one is more urgent and you will have a more frequent notifications if this level is reached, everytime the script is launched.

Launching the script from cron

Use crontab -e and add something similar to this:

0,30 * * * * (/home/username/.bitmex-checker/check-margin.sh ) > /home/username/.bitmex-checker.log 2>&1

This will run the checker every thirty minutes. This is also the interval in which you would get the more urgent notifications.

trade.js

This script allows to perform quick trades from the command-line without login and see your position and other parameters.

# node trade.js help
trade <cmd> [args]

Commands:
  trade market <exchange> <side> <amount>   submit a market order
  [symbol]
  trade position <exchange> [symbol]        show current position
  trade fundingrate <exchange> [symbol]     show funding rate
  trade price <exchange> [symbol]           show price of crypto currency in
                                            fiat
  trade deposit_address <exchange>          get your deposit address from
                                            exchange
  trade account_info <exchange>             get account information from
                                            exchange

Options:
  --version  Show version number                                       [boolean]
  --help     Show help                                                 [boolean]

Command-line trading

If I want to fix USD value of my BTC, I do market sell order, for example in this case fixing 10 USD:

# node trade.js market deribit sell 10
Submitting a sell order for 10 on XBTUSD
Order status Filled average price 9283.5
Order ID: [CENSORED]

Of course I should have received/saved 10 USD worth of BTC in order for this to stabilize and not short BTC - you should do this when you receive BTC that has some value and you want to keep the USD value of received BTC.

Please note that Deribit accepts orders only in multiplies of 10 USD (so you cannot hedge 5 USD, only 10 USD, 20 USD, etc.).

If you are spending from the account, you are buying XBTUSD (yes, it is counterintuitive, but you are buying back BTC, so lowering your position), so you would do:

# node trade.js market deribit buy 10

You can also buy/sell on other markets, that's the last parameter, it just defaults to XBTUSD.

Checking your position

In order to see your current (dollar) positions run:

# node trade.js position deribit
XBTU20 20 USD
XBTUSD -60 USD

Because we are short 60 USD (-60 means short 60) on XBTUSD, it means that along with original Bitcoin worth 60 USD at the time when we entered the position and the current balance, we have hedged 60 USD value in BTC.

This is something like USD balance of this strategy.

There is another future position where we are long 20 USD shown.

Funding rate

We would also like to know the current interest rate (called funding rate). Shorts earn this funding rate if it is positive (longs pay shorts). If it is negative (it happens sometimes), shorts pay longs.

# node trade.js fundingrate deribit
Instrument XBTUSD funding rate 0.0001 which is approx 10.95% p.a.

Please note that the funding rate changes all the time.

Open instruments overview

You can also get overview of currently traded instruments. For expiring futures, you also see premium and annualized premium. If premium is negative, longs get a discount on (future) asset.

# node trade.js instrument deribit
Instrument XBTUSD price 6377.92 settle price 6380.59 premium -0.04%
Instrument ETHUSD price 132.39 settle price 132.38 premium 0.01%
Instrument XBTM20 price 6320.74 settle price 6380.59 premium -0.94% (-4.00% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument XRPUSD price 0.1734 settle price 0.1734 premium 0.00%
Instrument XBTU20 price 6318.85 settle price 6380.59 premium -0.97% (-2.00% p.a.) expiry 2020-09-25T12:00:00.000Z
Instrument ETHM20 price 0.0206 settle price 0.02075 premium -0.72% (-3.08% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument LTCM20 price 0.005907 settle price 0.00602 premium -1.88% (-8.00% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument XRPM20 price 0.0000271 settle price 0.00002716 premium -0.22% (-0.94% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument BCHM20 price 0.03395 settle price 0.03435 premium -1.16% (-4.97% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument ADAM20 price 0.00000475 settle price 0.00000474 premium 0.21% (0.90% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument EOSM20 price 0.0003416 settle price 0.0003457 premium -1.19% (-5.06% p.a.) expiry 2020-06-26T12:00:00.000Z
Instrument TRXM20 price 0.00000178 settle price 0.00000178 premium 0.00% (0.00% p.a.) expiry 2020-06-26T12:00:00.000Z

Donate and more information about the crypto lifestyle

If you like these scripts, I'd be happy if you donated Bitcoin via my donate page.

This script is inspired by my own check-cdp script (well, I can be my own inspiration sometimes:).

You can also use my referral links to register for the services that allow you to use Bitcoin better:

• Deribit - a derivatives exchange that this project is all about

• Lamium - a service to pay your standard invoices in Europe (SEPA) area using Bitcoin

• Purse - a service that allows you to do up to 33% discounted shopping on Amazon

• Bitmex

If you want to learn more about using cryptocurrencies and why it is good, check out my upcoming book Financial Surveillance and Crypto Utopias and see the talk from Hackers Congress Paralelní Polis where I go through the main topics of the first part.

I started an Option Plus podcast and a website for freedom-minded crypto lifestyle Hack Yourself.

Gratitude

I would like to thank Tomas Kanocz that ported the initial Bitmex scripts to Deribit.