Bitcoin Forum

http://finance.yahoo.com/news/kraken-bitcoin-exchange-launches-margin-131500929.html;_ylt=AwrBT7u64HNVkAwAZG9XNyoA;_ylu=X3oDMTByMjB0aG5zBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzYw-- (http://finance.yahoo.com/news/kraken-bitcoin-exchange-launches-margin-131500929.html;_ylt=AwrBT7u64HNVkAwAZG9XNyoA;_ylu=X3oDMTByMjB0aG5zBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzYw--)

Kraken, a San Francisco-based Bitcoin exchange, is pleased to announce the launch of margin trading. Margin is an exciting instrument that allows clients to amplify their trading profits and gain in both up and down markets.

Kraken is now one of the few exchanges allowing clients to trade bitcoins on margin. Within the next few weeks, Kraken will be offering up to 20x leverage.

There's alot of ways for the price of bitcoin to explode - one is for speculators to be able to buy it on margin. Think about it, the price is driven by supply and demand. Margin increases demand instantaneously. The downside of margin is that the people that use it can end up upside down, broke, in a very short period of time if they make the wrong position.

so they raised it at the end, because x3 was really low, it seems that they raised it after my concern on it

https://bitcointalk.org/index.php?topic=290799.msg11514080#msg11514080

The price is driven by suppy, demands and also manipulation from the traders


Margin increases demand but also that each time a trader buy then that means that there will be a time that he will need to sell it shortly which makes them neutral and wont affect the market at all. It is not like someone is holding after using this, someone is planning on short term which involve buying and selling simultaneously


It is a double edge sword if you dont know how this things work, in the end most people actually broke themselves with this if they are not accustomed to the way of how daily trading is. It is not about buying and holding, it is about buying and selling it back for either profit or loss at X percentage

I don't follow your thinking here - do you mean sell short or sell the bitcoin soon after buying it on margin?

Buying stock/bitcoin on margin does not mean there has to be an equal short trade opposite that buy transaction. Margin and shorting aren't equal things, or opposite. Margin is buying (or selling) on loan. Shorting is take a position on the stock/bitcoin that benefits me if the price of that stock/bitcoin goes down. I can short a stock/bitcoin while owning it or while borrowing (on margin) that stock/bitcoin.

Additionally, just because I buy stock/bitcoin on margin doesn't mean I'm only looking for a short term hodl. The margin function allows me to buy more than I could today and I can pay back the loan (or cover the margin) without having to sell my position. But if majority of people using margin are using it to facilitate quick swings in the price, then this would mute long term swings in the price. It's a question of how many traders are using margin for short term transactions vs. long term transactions, or being able to finance hodl positions.

Of course you dont, you are not a typical day trader type it seems


I know what it is.


It is not But If but it is the truth of people are doing with it and that is what I meant. Seriously why would someone even hold something for a long term which he get it from a loan? people are not doing this to be honest especially when there is a significant gain in the quick swing especially in this volatile moment.


That would be a question for you, basically Im standing with that there will be more people that use it for quick swing instead. No one is holding things that they obtain via loan, the risk is far greater than expected profit.

First, I think you should think about what you're writing a little bit longer. Second, I know plenty about day trading. And I know plenty about investing on margin. Margin is not required to be a day trader and day trading does not require margin...this is an important point that I feel you're missing.

People hold things (investments) obtained via loan all the time, ever heard of a mortgage? 99% of homeowners obtain their home with a loan. I realize investing has higher potential returns in a shorter amount of time than real estate, but that doesn't mean that all users of margin for stock/btc purchases are looking for a 48 hour return.

More importantly, it's naive to think that giving greater access to supply (i.e., increasing the margin % available to investors) will have no effect on the price volatility simply because "what's bought must eventually be sold".

Good thing that you know stuff about daily trading and I was a daily trader before so I know what most daily traders are thinking



Actually you are wrong on this, Im saying that it have no effect on the demands and not on the price volatility

As for the mortgage stuff I was forgetting about mortgage anyway, thanks for pointing me to that but as a matter of fact I do think people are mortgaging because they need a house not because they are getting a loan for future investment or so ( I may be wrong on this)

I am not convinced that this will have a large impact on the price of bitcoins.  Also margin trading is dangerous.  I never do it because I am not confidant enough in my abilities to not get called.  Maybe some day!

if many unexperience players start to do it, they will only burn themselves, and we would get a new line up of people with high debit, and the very nature of leverage is encouragin those that can't cover their asses, because for the others, there is no need for it, they can burrow from themselves

I'm not super experiences trader or something but margin trading on bitcoin seems like total danger madness for me..and for sure nothing, what can somehow boost the market..

any trading is dangerous. Some play on big but rare profits other play on constant but small profits. You can lose your bitcoins one way or another.

I remember reading somewhere that the rich get rich investing other people's money. Trading on margin is the same thing. If you've got a strategy that is working for you, being able to add 20x leverage to that allows you to grow your holdings that much more. Then when you pay it back, your profits are greater.

10% of 1BTC is cool.
10% of 20BTC is better.
10% of 200BTC is even better.

I don't get it ... Say that leverage is 10x and I deposited €200 , and bought 10 bitcoins using 10x leverage, and I withdrew those bitcoins, what will happen?  ::) ::)  ;D

Or, you are just buying BTC/EUR pair like in a Forex bucket shop, no physical delivery of either euro or bitcoin  ???

well margin trades loan happened at first on poloniex ,they allow you to get a loan and those btc can only be spent on the exchange cant cashout it... and yes always a concern since btc can easy go down soo they set from 2 to 60 days max lending time and the person who gets the loan can repay as cancel it anytime paying the fee from the loan.About bitcoin here at margin well can be a lost from both sides but can easy turns into a way to both profit as some experts traders can get in and make it sucess

Once you sell the BTC (or at some defined time after you've taken the loan) you have to pay it back. So the principal of your original trade (minus what you deposited) goes back to the bank/firm. You pay a small fee and then keep the gains off all that you borrowed + deposited. You're getting most of the return off someone elses money.

Physical delivery or not is dependent on how you or the firm you work with structures the trade, but it could be either.

It's great when the trade goes in your favor. If the trade doesn't go in your favor you can blow yourself up pretty quickly.

But if I have deposited €200 and withdrew 10 bitcoin, I might never come back to this exchange, so I guess they have to limit the amount of withdraw to be less than my deposit, e.g. I could withdraw maximum 1 bitcoin in this case, the rest 9 stays in their database, waiting to be wiped out by a margin call

I would be weird if you could withdraw more then you actually funded your account for, so should be somewhere like the way you explained.

I quess you cannot withdraw untill you paid of your margin part, so you might not even be able to withdraw the one bitcoin you funded untill your margin call is wiped out and youre back to zero on that.

So it is only a number game in the platform to wipe out users more quickly, like those Forex bucket shop. Gamblers like it

it's nothing more than a secure loan, that exchange give to you, then you use it to make more profit, but if the price don't move you simply give back that loan, so with a 200 deposit and x10 leverage, if the price remain 200, you will end with zero profit

but if the price will raise to 210 you will get +100 usd(10 x 10) plus another $10 from your 200 deposit, so 310(200 from your deposit with a net profit of 110) in the end

essentially a thing like this aims to encourage trading

So if the price drops 10 with 10x leverage you got 90 of your deposit left and lost 110. The profits are bigger and so are the loses.

If the value of bitcoin carries on like this +5-10 till -5-10 this is going to be an awesome way to make a bit more with day trading.

The losses are definitely bigger. You're borrowing bitcoin to trade. Therefore, if the bitcoin goes down, you need to dip into your pocket to buy back the bitcoin so you can return it.

Yep, you can end up owing money to he exchange (the money the exchange gave you to do the leverage).

This is in my opinion nuts unless you want to take a big risk. Poloniex also got margin trading recently (and as a result got kicked by the Fincen to have more a restrict withdrawing policy).

yeah there big gain but also big loss, but if you're a good traders and really confidant with your moves on the market, you should definitely go for it

also something like this comes in handy when the stability is greatly increased like now, where the price fluctuate between two close numbers and you need big money to gain something weighty

I wouldn't say it's the biggest risk, but if you are good at working at tracking trends in trading, you can definitely make a considerable amount of money. Being able to grow your holdings by 10x or 20x means you can really do some great work after a year or two.

that in terms of economy its not very good and not goona happen thers corrections soo the more capital in number of BTC makers the rarety go lower and the power of btc not rise much but the mining diff make rarity goes a bit higher soo the btc value may come to a big point now and the need for btc its becoming big and this pormotion of tthe coin makes it goo even higher thits its just a spark on btc but may rise a bit im not just hoping am getting every day  more sure the btc its not gonna explode the price but porgrssivly goe higher into value relativity in FIAT

As the aspects of obviously not being a daytrader comment, I think thats almost everyone.

I say a good majority arent doing this based on the ability to abritrage nor its really good to daytrade since its a higher form of gambling. You can have TA but no one can read the future of a price point.

But who is going to use it then? And what will it do to the market.. More panic sells?

Well actually my point is that im basically stating than margin trading wont affect or boost any "real" demands for BTC as per he stated because I do understand that this is risky and mostly daytrader use it to get a quickswing on profit and not to keep and hold of it. I am a daytrader months ago and I do know what most daytrader will do if they use this option



Nothing basically, it will be use as a quickswing for most trader and the exchanger will get an interest from it, nothing to shabby and it wont affect the market or increase the demands for BTC

well there is a big risk on the margin that way since as already said bitcoin can lose worth soo some peope will easy loose too many btc.... one advice be away of it forex wont make you rich and those marging leverage is the same way .... 1 proof and 1000 loose....

It is a number game in exchange's database. I have seen Kraken price lower than other exchanges from time to time, maybe a way to trigger the long orders' stop loss, but without leverage they could not wipe out traders at large scale using a margin call

guys here just thinking on profit and avoiding the loss soo before enter on this remember you can make 110 dollars profit as you can loose 90 dollars soo try to invest or trade just btc instead enter on this game that will lead several people to loose they precious money ,bitcoin.

Usually, if the price of bitcoin starts moving in the opposite direction, the exchange will make a margin call to you. If you fail to deposit money quickly, they will sell your coins. That way they don't have to worry about recovering money from you.

It is indeed not a game to begin with, it is the same as normal daytrading despite that you could take up "loan" which ofcourse will either double up your profit or double up or lose as well.
This is how most daytrader do a quickswing for profit , in which you can see that two days ago price was around $227-228 and yesterday we hit $230. Instead of 1 BTC with this you could get x10 of it and gain $20 quickswing profit. Its nothing more than a number in database and ithas no effect to the market

The only reason they call it margin trading is because Loan trading wont sell.

i keep saying is very fast way to proof as too loose our precious bitcoin.. soo stay away from it or try with small ammount test it

When you do leverage you are also always a lot more scared and prone to cut loses because you can end up owning money to the exchange. There is no middle ground. It's very tempting to do leverage and wait for the almost daily up and down of 10 USD and get a ton of money, but you never know when things can screw you up really bad.

...

Wow

I would never trade BTC on margin.  The risks are just way too high.  For me anyway.

In the 1990s, I took a shot at buying some cheap PUT options on the S&P 500 in the fall.  Betting that stocks would go down.  I did this six times.  I lost some or all of my wagers EACH TIME.  I also am not lucky in casinos, proven many times.  So, I no longer gamble.

"Someone" did a study on day-traders, and found that WAY many more lose than win.

well as i said already forex or margin trading with bitcoins will make several people to loose money only exchanges will proof with it

Cut lose is a crucial strategy to use because it is far more risky not to cut lose when the price is declining. Also that it is not like that you are losing this "game" once you have cut lose anyway because there is a chance that the  value might rally back soon. Traders spent like more than 6 hours just to trade, so cutting lose once or twice isnt really gonna affect your run on trading but it will just make it harder for you


Of course and it is a fact that whenever someone "win" on trading than there are someone who "lose" on it. Day trading alone is risky enough but if you are good at it, leverage is a great way to make a quickswing for profit

margin trades leverage wont make no one rich ,even expert traders loose some money ,and if they dont loose is because they invest on the largest leverage that will hold the money winning or loosing interest.... i saw several forex traders with 200% profit and some 10 orders that were on 45% of the total loss allowed..... soo they lost those money already.

be aware of margin call, if you can't absolve your loss when you loss much, then besides that your next deposit will be deducted if you don't pay, you can end in a legal trouble, if you default on their loan

some are doing this by defaulting on margin, and then creating another account(in that broker site) to avoid buying back they leverage

as i mentioned already isnt wise to play this game that will cost money and some will proof and thousands will loose dont support it easy as that stay away

Of course some people lose money in it. Basically Margin trade isnt a mechanism for people to make an instant quick buck and it is in nature of trading that not everyone is a winner. Some could get a quickswing of profit while someone could lose


Definitely wrong, using the largest leverage wont guarantee that you will keep on winning. Highest leverage will only bear you the maximum risk available or the highest possible profit for it, nothing more than that




It is not literally a "loan" because it is just a simple number tweak in their database

well im pretty sure most users should avoid these margin as the loss may be to high better hold the bitcoin on wallet

I am not convinced that this will have a large impact on the price of bitcoins.  Also margin trading is dangerous.  I never do it because I am not confidant enough in my abilities to not get called.  Maybe some day!