Title: Someone help us understand the economics of Margin trading, lending and .. Post by: buddhasource on July 04, 2018, 10:47:27 AM Hello guys,
I would like to learn about the economics of Margin trading, need for the lending platform ( like Bitfinex & Poloniex ) and liquidation. First the working of all this plus I have some specific questions.
Even if you can point me to some good articles that summarize the working that would be great. Title: Re: Someone help us understand the economics of Margin trading, lending and .. Post by: charlotte04 on July 04, 2018, 11:30:45 AM Hello guys, I would like to learn about the economics of Margin trading, need for the lending platform ( like Bitfinex & Poloniex ) and liquidation. First the working of all this plus I have some specific questions.
Even if you can point me to some good articles that summarize the working that would be great. Firstly, you would not try to go into margin trading if you still don't know anything about trading and its basics. It is still best just to trade a normal trading style. Title: Re: Someone help us understand the economics of Margin trading, lending and .. Post by: pawel7777 on July 04, 2018, 12:01:12 PM
Nope. It depends on the model. BitMex (most popular BTC margin trading platform) don't have lending platform. They just match long and short calls. Even in Polo/Bitfinex model, they could do without lending platform, simply by using their own funds, but they chose the model when one group of users (lenders) provide funds to other group (traders). Quote
You have to have your own funds (deposit) to be able to margin trade. Liquidation will happen when your position generates a loss equal to your deposit. Simplified example: You place 1 btc (your own funds) order with x10 margin, total 10 btc, your position approaches 10% loss (so 1 btc) - you get liquidated and you lose that 1 btc (not 10 btc). Lender's funds (9 btc) are not affected. Quote
Depends on a platform (i.e. Nexybit have Futures with settlement dates). Poloniex doesn't have 'expiry' date. You can keep your position open for as long as you want, until it gets eaten by the fees. Lenders put time restriction on their loans though (they can set anything from 2 - 90 days iirc). Example: You place a margin order and you get funded by my 2-day loan, after 2 days funds are returned to me (with earned interest) and you automatically borrow from someone else. Quote
Both are used as synonyms and are interconnected. Quote Even if you can point me to some good articles that summarize the working that would be great. Most platforms have guides with explanation of how it works. Just google the one you're interested in. |