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Author Topic: Margin trading in crypto good or bad?  (Read 3692 times)
ashapasa
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June 29, 2016, 05:45:25 AM
 #1

I think margin trading is certainly bad for alt currency. crypto currency is volatile even without leverage, with the added option of leverage it makes the swing even more dramatic which makes it usability as a currency even more difficult.

when ever there is a Bitcoin or ether reversal some exchanges conveniently shut down for maintainence or the currency in question mysteriously vanishes from exchanges.

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June 29, 2016, 05:46:09 AM
 #2

Yes.
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June 29, 2016, 05:46:52 AM
 #3

Yes.

Yes??

Its not a yes or no answer!
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June 29, 2016, 06:00:40 AM
 #4

I think margin trading is certainly bad for alt currency. crypto currency in volatile even without leverage, with the added option of leverage it makes the swing even more dramatic which makes it usability as a currency even more difficult.

when ever there is a Bitcoin or ether reversal some exchanges conveniently shut down for maintainence or the currency in question mysteriously vanishes from exchanges.



Margin Trading is bad in Crypto and bad in Stocks.
You can't be a winner at Margin trading unless you have inside information , which makes it insider trading and illegal in the US.
When you Margin Trade and it goes the other way you can end up owning many times more than the Value of what you Borrowed.
That is how people lose their Homes and everything they own.



http://beginnersinvest.about.com/cs/newinvestors/a/040101a.htm
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Buying stocks on margin is one of those things that might sound appealing on the surface. The pitch usually goes something this, "If you have a few thousand dollars in your brokerage account, you might qualify to borrow money against your existing stocks at a low interest rate to buy even more stock, leveraging your returns!"  The reality is that trading on margin is an inherently speculative strategy that can transform even the safest blue chip into a risky gamble.  It allows people and institutions desiring to get really aggressive to buy more shares of a company than they could otherwise afford.  When things go south, it can get really ugly, really fast, even leading to personal or corporate bankruptcy.  

I've even used some real-life case studies to demonstrate how terrible the consequences can be.  One man, Joe Campbell, woke up to find himself $106,445.56 in debt to his stock broker due to a margin position that went against him.  Many, many other individuals lost everything when they swung for the fences, some using margin debt, buying more shares than they could afford of a company called GT Advanced Technologies, which went bankrupt.

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June 29, 2016, 06:07:05 AM
 #5

So freedom of choice is "bad" ?

Who are you to tell me what I can or can't do?

Margin trading is allowed in the free market, and you are free to hate it.

Since margin trading is a choice, it is good. People who restrict the choices and freedoms of others are "bad"

Hmm,
Where did you see any mention of removing Freedom of Choice?


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June 29, 2016, 06:07:29 AM
 #6

I still don't understand how margin trading works.  shorts?  longs?

Could someone explain all this to me like I'm five?  Every time I've asked, the descriptions were filled with words that I didn't understand/wasn't able to put in context due to lack of knowledge.  I have accounts on all major exchanges, so an example through, say, poloniex's system would be ideal.  Been trading for a while with good returns, but have never been bothered to do enough research on margin trading, how it works, etc.

Thanks in advance Smiley
ashapasa
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June 29, 2016, 06:09:40 AM
 #7

So freedom of choice is "bad" ?

Who are you to tell me what I can or can't do?

Margin trading is allowed in the free market, and you are free to hate it.

Since margin trading is a choice, it is good. People who restrict the choices and freedoms of others are "bad"

Is it good for crypto? Because it increases volatility and I think we all want crypto to successful right?
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June 29, 2016, 06:10:05 AM
 #8

I still don't understand how margin trading works.  shorts?  longs?

Could someone explain all this to me like I'm five?  Every time I've asked, the descriptions were filled with words that I didn't understand/wasn't able to put in context due to lack of knowledge.  I have accounts on all major exchanges, so an example through, say, poloniex's system would be ideal.  Been trading for a while with good returns, but have never been bothered to do enough research on margin trading, how it works, etc.

Thanks in advance Smiley

https://poloniex.com/support/aboutMarginTrading/

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kiklo
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June 29, 2016, 06:13:11 AM
 #9

So freedom of choice is "bad" ?

Who are you to tell me what I can or can't do?

Margin trading is allowed in the free market, and you are free to hate it.

Since margin trading is a choice, it is good. People who restrict the choices and freedoms of others are "bad"

Is it good for crypto? Because it increases volatility and I think we all want crypto to successful right?

Margin Trading won't make any difference whether Crypto succeeds or not.
It is only a way for Exchanges to steal money from the stupid.

Part of the reason for crypto is to leave our Debt Based Fiat System behind, not create a Debt based Crypto system.

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ashapasa
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June 29, 2016, 06:16:44 AM
 #10

cant deny margin trading causes higher volatility, higher volatility definitely hinders use as normal currency , so I think my point is valid  Smiley
kiklo
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June 29, 2016, 06:47:31 AM
 #11

What are you doing on an exchange if you don't want volatity?!

I live for volatility.

I want all my orders to get filled, the buys and the sells.

Anyone who hates price volatility can eliminate it completely with Smartcoins.  Everyone else is looking for it on the exchanges.

Volatility comes from the buying & selling , and that is what truly drives a market.
And when you buy or sell your coins, you are limited to that amount gained or loss.
Where as People dumb enough to Margin Trade without having insider information , can lose Many Times the amount they put up for collateral.

Mess up trading the normal way , you only lost the coins or amount invested.
Mess up with Margin Trading and Lose Everything you Own.
Your Choice.

 Cool

FYI:
At least be informed:
http://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19
Quote
His name is Joe Campbell, and he claims he went to bed Wednesday evening with some $37,000 in his trading account at E-Trade.
One notable development on the pharma front later, and Campbell woke up to a debt of $106,445.56.
 Now, he may end up liquidating his 401(k). And his wife’s.

FYI2:
https://bitsharestalk.org/index.php?topic=17141.0
Quote
Hey guys,
Just have an interesting case study of my trading experience on Poloniex last week.  I traded on Poloniex's margin trading platform and was margin called on June 15th 17:15 when the prices went from .000029 BTC per BTS to .000014 BTC per BTS back to .000028 BTC per BTS in a ten minute span. (Down 50% in less than 10 minutes!) I didn't realize the liquidity was so low on Poloniex, but it's interesting to know what can happen.  I lost a chunk of money.

I think someone or some bot just ran down the book on all the buy orders and got the price really low to trigger all the margin calls and bought back at low prices, but not sure of the exact mechanics.
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June 29, 2016, 07:03:26 AM
 #12

LOL, I remember that day too. How could I ever forget it!

My low ball buy orders were filled during a whale dump.  Happens all the time. Whales buy high too.

Or more Likely an Exchange DUMP.  Tongue


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freshman777
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June 29, 2016, 07:03:43 AM
 #13

Margin trading in anything is a tool of exchanges to rid you of your money. They can see how much you got and can force the price to go just enough to close your positions and pocket your capital. Don't do it.

ARDOR - Blockchain as a Service. Three birds with one stone. /// Do not hold NXT at exchanges, NXT wallets: core+lite, mobile Android
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June 29, 2016, 07:24:44 AM
 #14

Yes, Kiklo, you can lose a bazillioin dollars if you have no idea how to use a stop loss order.  That's why people that have no idea what they're doing shouldn't use margin.   Traders like it for a few reasons.  It allows you to use the asset itself as your core position instead of fiat for collateral, which most people say is a bad idea, but if you believe it's going to increase in value while your fiat isn't, hey, why not.  It allows you to make money when volatility is low as well.  It also gives you more margin of error to dollar cost average trades that don't go your way.

You could technically call this "throwing good money after bad", but it usually works.  I was doing some small trades in BTC earlier just scalping a few bucks.  I had one trade not go my way and put me down a few dollars.  So what do I do?  Just make my position bigger while being near the right side of the market.  Now my bigger trade on the right side has canceled out my smaller trade on the bad side and I basically break even even though my original pick wasn't correct.

Margin in altcoins is ridiculous though.  There's not enough liquidity, so people on the buy side receive no benefit from being able to place larger orders, while on the sell side, it just makes it too easy to implode markets where nobody will want to go near them.

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kiklo
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June 29, 2016, 08:18:30 AM
 #15

Yes, Kiklo, you can lose a bazillioin dollars if you have no idea how to use a stop loss order.  That's why people that have no idea what they're doing shouldn't use margin.   Traders like it for a few reasons.  It allows you to use the asset itself as your core position instead of fiat for collateral, which most people say is a bad idea, but if you believe it's going to increase in value while your fiat isn't, hey, why not.  It allows you to make money when volatility is low as well.  It also gives you more margin of error to dollar cost average trades that don't go your way.

You could technically call this "throwing good money after bad", but it usually works.  I was doing some small trades in BTC earlier just scalping a few bucks.  I had one trade not go my way and put me down a few hundred dollars.  So what do I do?  Just make my position bigger while being near the right side of the market.  Now my bigger trade on the right side has canceled out my smaller trade on the bad side and I basically break even even though my original pick wasn't correct.

Margin in altcoins is ridiculous though.  There's not enough liquidity, so people on the buy side receive no benefit from being able to place larger orders, while on the sell side, it just makes it too easy to implode markets where nobody will want to go near them.

Worshiping at the Altar of Stop Loss Orders also has issues like below.
It is still a rigged game, in favor of the exchanges.
Worst thing is people like the guy below explain why you should not use them at all, which places the original danger right back in play.
http://www.swing-trade-stocks.com/stop-loss-orders.html
Quote
Think stop loss orders will protect you? Think again. This page shows why I quit using stop loss orders after the Nasdaq changed the rules.

I used to always put in stop loss orders.

It was just part of the trade. I would enter a trade and then immediately put in a stop loss order. It was second nature. I didn't even have to think about it.

Then I noticed that I was getting stopped out more often than usual. And, I was getting very frustrated.

Well, one day I logged onto my computer to check a stock that I was in and was pleased to see that it was going in my desired direction and my stop loss order had not been hit.

At least I thought it had not been hit.

When I logged into my brokers website, I was stunned to see that my stop loss order had been triggered! I couldn't believe my eyes. How could that be? The price for the day didn't even come close to hitting the price of my stop loss order!

So, how did my stop loss order trigger?

Apparently, in 2007, the Nasdaq changed the rules. Stops can trigger at the bid or ask price! That is how my stop loss order got triggered. So, if that is the case, then what is the point of a stop loss order? Your order could get filled at just about any price!

FYI:
Unless you are Hillary Clinton with insider info, expect to Lose:
http://community.seattletimes.nwsource.com/archive/?date=19940330&slug=1902853
Quote
Hillary Clinton Invested $1,000, Netted $100,000 Through Trading
r0ach
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June 29, 2016, 08:36:42 AM
 #16

Worshiping at the Altar of Stop Loss Orders also has issues like below.

I don't use them for longs, but shorts is a different story.

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Wilhelmer
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June 29, 2016, 08:41:24 AM
 #17

Got my butt handed to me on margin trading. So it's a no go for me.

kiklo
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June 29, 2016, 08:48:58 AM
 #18

Duh.  Who is a bigger whale than the exchange?

Yep a whale that also know your exact Margin Trading details and can move the market whenever they like to grab your collateral.
I am sure they are glad that does not bother you.

Say, saw your Mom's was a Pole Dancer (according to your Post)
Wasn't in Georgia late 80s to mid 90s was it and how old are you again?

So I know if I need to say:


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Whew Never Mind, No Worries, Just Remembered I had my Shields Up.
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October 05, 2016, 05:51:14 AM
 #19

I think margin trading is certainly bad for alt currency. crypto currency is volatile even without leverage, with the added option of leverage it makes the swing even more dramatic which makes it usability as a currency even more difficult.

when ever there is a Bitcoin or ether reversal some exchanges conveniently shut down for maintainence or the currency in question mysteriously vanishes from exchanges.



Invest what you can afford to lose, i.e 500 bucks, and try to turn it into 50k.  Don't take 50k turn it into 500.  Margin trading isn't bad.  When people tell me it is I don't listen to what they're saying, I listen to why they are saying it.  Life is a soccer game with defenders.  If you listened to someone everytime they tell you it can't be done you'll never make any $.
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October 05, 2016, 06:52:23 AM
 #20

@Jjtjjt. I could have not said it any better myself. Margin trading is good if you know what you are doing. It is the opposite if you don't. So it would be better to stay away from it if you love your money so much. Trading cryptocoins is like betting in a casino. You will lose many times and using margin will compound this.

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