Margin trading poloniex tutorial
I personally mostly use margin trading to open short positions and barely ever open any long positions. For this you will have to find a token that is overvalued at the moment and you think that price of it is going to fall. You will make your profits as the price is falling. Bigger the fall — bigger the profits. For example, I think the Ethereum has grown enough after the recent downfall and I decide that I want to open short position. I go to sell Ethereum in the Margin Trading section.
I know it sounds complicated, but I assure it's not. What is actually happening when you do this? You take a loan with as much Ethereum as you sold and you actually sell it. And when you close your position you buy the same amount Ethereum and return to the lender with interest. But you don't have to worry about any of this, because it is all automated and you just have to open and close your position.
When we sold Ethereum we opened our short position. The price of Ethereum has dropped and I want to take my profits now. How do we close it now? This box appears as soon as you opened any position long or short. And all you have to do, is close it to take your profits. You are going to need a cryptocurrency that is expected grow.
More price goes up — bigger the profits. Let's continue working with the same Ethereum example. But instead of selling we are gonna buy Ethereum. That way we open our long position in margin trading.
You also take a loan only this time it's not Ethereum that you are loaning but Bitcoin. And when you close your position, you sell Ethereum that you bought and return the Bitcoin loan to the lender. But keep in mind whether you are placing short or long position, don't use maximum avaliable funds in your Margin Trading account. Because your predictions won't always be spot on and instead of expected price drop it can suddenly start rising. Or the price of currency that you used as colleteral is significantly droping.
You can follow the numbers in this box. Also I have to mention the loan rate of Bitcoin is much higher than any other cryptocurrency. This can be hundreds and even thousands of percent difference. For this reason short positions are used much more and brings more profits. You can check the rates for individual currencies in the Lending section.
If you are enjoying my content! Don't forget to upvote, resteem, comment and follow me eviljedi. Question, say I take a short position on a coin, and I want to close my position once I get x amount of profit. I haven't tried these things on Polo. But I would think that placing buy order would just open long position and wouldn't close your short.
And if there wouldn't be enough collateral left, you couldn't even open another position. Anyway better to test out with small amount of coins. Just wanted to share that for anyone wanting to try this, don't deposit your SBD into polo just yet. They're still having issues with their wallet. My deposit from earlier today is still missing. You can just buy Ethereum if you think that it is going to go up.
As we mentioned at the beginning, in Margin Trading we work at 2. But where do these extra currencies come from? Well, in the Lending section we can borrow or lend our funds we will see this in depth later. Now, when creating an order from Margin Trading, the platform will automatically take a loan depending on the percentage amount we are willing to pay for it. We are going to create a new order, in our case of purchase, and for that we are going to go to the box of purchase "Buy" and we are going to fill the following data.
These operations have a cost between 0. Before creating the order we have to remember that the minimum amount to create an order in this trading mode is 0. As we can see, a bar or a "position" is opened in the Open Position section, which we will study in detail. Once the order is finished we can click on Action, which will close the order, that is, in case of purchase it will liquidate the funds we buy, selling them, and otherwise it will only close the order normally.
There is another section to which we must pay attention, and this is the Margin Account, where we will be informed of the details of our Margin account. The good use of this section requires a lot of practice, so it is advisable to start with a good basic Exchange practice first before moving on to this level. There is a way in the Poloniex platform where we can easily take out dividends by just lending our money, and this is Lending, an option that we will find in the top menu.
From this section we will be able to lend or borrow to work in Margin Trading our cryptocurrencies. To begin we need to first transfer from Balance Balances as we did in the previous section, to our Lending section.
Once transferred, it's time to get down to work. At the top of each table we will see the total cryptocurrency that are currently on loan. Once the data is filled, we will click on the offer loan button that will generate the new order list, and it will be reflected in the table below.
It should be remembered that the minimum offer for a loan is 0. The tools we saw in this advanced tutorial are much more powerful than the basic tools we saw earlier. With Stop Limit we can increase profits or reduce losses if we use it wisely, but in the same way you must be careful since the risk of losses can be high; perhaps not so much in Lending, since the system is responsible for protecting our money by liquidating the user in case of a price fall, but in Margin Trading because we can make very good profits, but we can see ourselves wrapped up in trouble if We do not do a good market study and we force the platform to give us a forced liquidation that is the same as leaving us without funds.
So you must be very careful when experimenting with this section. It remains for us to take great advantage of this platform and always remember the maxim of "practice makes perfect". That is why we recommend practicing first in basic Exchange before moving to this level. MARGIN TRADING In the basic exchange, we will risk and generate profits from our own funds, but with this section we can generate even more profits "Asking for a loan" this means that other users will lend us their funds so that we can market them and pay them a percentage for the time we have used these funds.
With this balance in Margin Trading we can start this type of exchange. As it happened in the Exchange the data are: To create it, we will click on Margin Buy, and automatically the following will be generated. LENDING There is a way in the Poloniex platform where we can easily take out dividends by just lending our money, and this is Lending, an option that we will find in the top menu. The first thing we will find when we open the Lending window will be the following. Here we will see: