Bitcoinica - help a noob

[beep]

First of all - I hold my hands up - I know I could search and read to understand all this but I'm lazy and I know that I will learn quicker and easier by doing it.    

I like to think I'm reasonably intelligent, maths stuff is OK with me, but I have never been involved in any trading so I don't understand the jargon and principals.  

Just messing around with a couple of BTC to start with..   I've created an account and deposited 2BTC.  

Essentially I want to bet that BTC goes up vs $  


Anybody up for talking me through what I need to do or am I being too cheeky?  

[1713506346]

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[beep]

am I being too cheeky?  

I guess so then.

Trial and error is a valid way of doing this though right?   

[Stephen Gornick]

Just messing around with a couple of BTC to start with..   I've created an account and deposited 2BTC.  

Essentially I want to bet that BTC goes up vs $  

Buying on margin is risky.  Buying BTCs on margin using BTCs as collateral is extremely risky.  This is because if the price drops, the value of your collateral drops as well.

Here's the basics about how Bitcoinica works though.  When you deposit 2.0 BTC you can purchase a position of just under 5.0 BTC/USD (assuming the default 2.5:1 leverage).   You immediately will show a slight loss as you need the price to move in your favor by at least the amount of the spread to just break even.  If indeed the BTC/USD goes up by more than the spread and you sell, you will show  a profit.  The more you have leveraged, the more you gain or lose versus the amount you've invested.  1:1 (no leverage) is relatively safe but the price needs to move at least as much as the spread (e.g., 1.3%) just in order to break even.  The default is 2.5:1  leverage can be adjusted to higher amounts -- up to the insanely risky 10:1.

[beep]

That makes sense.  You make a profit on something when you sell it for more than you paid.

But I assume there is more to it than that / other ways of trading?

[beep]

I can't buy BTC on bitcoinica anyway - "no reserve"..

[beep]

Well I made 28 cents off trading with 2 BTC over a couple of days.

Peanuts I know but at least my first experiment was a success.