Please explain how to margin trade on bitfinex

[cyclotronmajesty]

The margin trading on bitfinex is like a put / call or short / long type stock option right?

I've never done it before and would like to try it.

Could someone explain the advantages / disadvantages to this versus just doing currency exchange trades?

Also how do you actually DO it?

Could someone provide an example?

Thanks for any explanations.

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[1715645782]

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[achow101]

I'm not entirely sure how it works, but someone made a bot that does it for you here: https://bitcointalk.org/index.php?topic=865250.0. You could look at the source code and try to figure it out, or you could just let the bot do the work for you.

[cyclotronmajesty]

Hm... i'm not comfortable yet making an API key and running any kind of software that does that. I don't have the expertise to know if that software isn't untrustworthy. I'd like to make a bot automatically sell whenever the price moves a certain % and automatically buy as well. But eh... no idea how.

Wish someone could just explain how this margin thing works. I don't want to borrow money though. I just would like to be able to profit on a falling market.

[lihuajkl]

You might be interested at reading these:
https://bitcointalk.org/index.php?topic=229438.0
https://bitcointalk.org/index.php?topic=888283.0

Margin trading

Our margin trading feature is unique in the Bitcoin world. Basically, it allows you to borrow funds from lenders (see next feature) to trade bitcoins. If you make a profit, you get the profit and pay the depositor interests. If you make a loss, you reimburse the depositors the whole borrowed amount + interests.
For example, let's say you want to open a long position for 100 bitcoins. That means you want to buy 100 bitcoins hoping to the price will go up. The system will automatically borrow for you 100 * the bitcoin price US dollars (let's say 1300 USD) from lenders, at the best rates available. Your position will have a maximum period (defined by lenders), after which you will have to reimburse the 1300 USD (close the position). Each hour you will be charged an interests rate going to your(s) lender(s). If later you want to increase your position, you can borrow more funds, which will have ther own maximum period.
At any time before the expiration date, you can close your position. This will reimburse your lender, and you will keep the profit.
The same goes for short position (selling bitcoins), where you borrow bitcoins instead of dollars.
If there is no lender available, you will not be able to open your position.
The trading wallet is used for margin trading. It does not serve the purpose of buying or selling bitcoins, it serves only as margin requirements; that is, even if you have 1000 US dollars in this wallet, if you open a 10 BTC long position, you will borrow the needed USD. Funds in this wallet are to cover for eventual losses that may occurs. When the maturated loss equals almost all your wallet balances, you may get a margin call and have your position force-closed to avoid further losses.

[SebastianJu]

You need to go into the tab margin trade. Thats whats interesting to you. There you simply can margin buy or margin sell. Positions there go against each other. Its a bit difficult since to wrap your mind around, at least for me.

But you dont need to think about anything other than buying and selling. The lending runs automatically.

[grahvity]

Here's a cool, straightforward tutorial written by @ActualAdviceBTC...
http://bitfinex101.blogspot.com/2014/02/how-to-bitfinex-101-leverage-with.html

https://twitter.com/ActualAdviceBTC