Margin trade on Bitrix. Margin trade on stock exchanges, how to stroll cryptocurrency. Margin trading has several important features
04.02.2018
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Margin trade in cryptocurrent uses very popular among traders, because it increases earnings at times without increasing investment. Alas, like every earnings with high potential benefits, it has quite high risks. But, if you understand it well, risks can be minimized. With these features and deal with this article!
What is margin trading on the stock exchange cryptocurrency?
Margin trade Kryptovaluoy - This is a kind of speculative operations with cryptocurrency on cryptoch.
It differs from ordinary trader games by the fact that the player speculates not only with its own assets, and and borrowed means, which takes on credit from the Exchange on the security of their assets.
Via borrowed money he can buy and sell several times more cryptocurrency than could do it using only his capital, and therefore the benefit of successful operations is also increasing proportionally - several times.
The name "Margin Trade" comes from the word "margin", which this case means rudely speaking, pledge. Marges are the player's own means, which he provides as a collateral when it takes a loan.
Works margin trading as follows.
Suppose the investor has $ 100 and confidence that some cryptocurrency, for example, will grow. He wants to buy it now, to then sell more and make a profit in the form of a difference between prices. But by $ 100, it can only buy 1 Lightcoin (even less, but for clarity, let it be 1). It is too small.
Then he goes to cryptochege with the possibility of margin trading and takes money there. In fact, it does not occupy them from the Exchange, but at another cryptoinvestor who provides loans to all those who want to certain interest.
Interest establishes mainly the lender itself, solving for himself, for which amount is willing to allow another person to use its assets. In view of this on different stock exchanges and for different cryptocurrency, interest differences.
The maximum amount that the player in need of money can occupy from the lender, determines the stock exchange. This sum is indicated by the concept of "credit shoulder" and is indicated as a coefficient.
For example, credit shoulder 1: 1 indicates that the player can take the same as much as he has on his account. In our example, this is $ 100. Leverage 1: 2 allows you to take the amount twice as much of the one that is on the account - in our case $ 200. Credit shoulder 1: 3 will allow the player from $ 100 to occupy $ 300 and so on.
On the whole borrowed amount plus your own funds player can buy litecins mentioned. That is, if $ 100 he could buy 1 Lightcoin, then $ 100 + busy $ 300 (with a credit shoulder 1: 3) it can buy 4 Lightcoin.
If the price of Lightcoin really grows, for example, by 20% and will be, therefore, $ 120, the player will sell purchased 4 coins for $ 480 and will receive a profit of $ 20 x 4, that is $ 80. These $ 80 mines the Commission of the Exchange for the transaction (0.1-0.2%), the Commission for Taking the loan (also about 0.2%) and the interest on the loan remains itself.
$ 100 - its original means - they also remain in his account, and $ 300 returns to the creditor. Net profit, therefore, will be $ 80 minus interest and commission, probably a little more than $ 75.
If the player did not use borrowed funds and traded only $ 100, he would receive a profit of $ 20 minus Commission of the Exchange.
Margin trade in cryptocurrency: features
When the player's expectations that took a loan is justified, the situation unfolds with the benefit for everyone: on the closure of a successful deal, the player returns a fund to the creditor with interest and himself remains with profit. But player expectations may not be justified.
For example, Lightcin from the above example may not grow by 20%, and fall by 20%. It turns out that the player bought 4 Lightcoin for $ 400, but it can only sell for $ 320, that is, with a loss of $ 80.
The lender naturally should not suffer from the fact that the player's forecast did not come true. Therefore, as soon as the cost of assets (and borrowed, and its own) player reaches the size of a loan with interest, that is, the amount that the player must return the creditor, the Exchange automatically closes all the positions of the player and returns his fund to the creditor.
At the same time, in the amount returned to the creditor, the margin is fully included - the player's funds that have been initially and which he provided as a collateral. In this way, he loses except busy assets, also his own.
This situation is indicated by the concept of "Martin-Call" from the English. Margin Call - "margin bell", "Message about the limit approximation". So called a phone call from the broker to the client in those times when the interaction between the participants of the exchange took place by telephone.
Martin-Call warns a player that the limit is approaching, upon reaching which funds from the account will be written off in favor of the lender.
So that this does not happen, the player can replenish his account, telling the stock exchange in this way, which is ready for a further decrease in the price (and calculates after all of the recession. Either it may not take anything and wait for the automatic closing of the position.
Also, the difference between marginal trading from the usual lies in the fact that when buying cryptocurrency without a leverage the trader becomes its owner, that is, it can take it from the account, spend and so on. When buying with a credit shoulder, he cannot withdraw it nor the margin - the stock exchange does not allow him.
Margin trade in cryptocurrency: Secrets of success
The success of margin trading depends primarily from the skills of the trader.
The strategies of speculation during marginal trading are no different from ordinary. The trader can open a short or long position, if it expects cryptocurrency will fall or grow, or go on borrowed funds, if confident in your abilities and success.
Just the risk in this case is more, because without a loan, with failure, it loses its own funds in the amount of x, and with a loan - in the amount of 2x, 3x, and so on, depending on the lending shoulder.
But to achieve maximum profit It is when marzhinal trade that it is worth considering a number of nuances and pitfalls:
- The first rule of successful margin trade - do not bring the situation to Martin-Coll.
Experienced players in the fall of the course are not waiting when their losses will be 100%. They and 50% are rarely waiting. The limit is most often exhibited by 20-30%.
This means that, as soon as the price will go to an unfavorable trader side And the loss of his account, taking into account the loan and interest, will be 20-30%, all assets acquired for credit funds will be automatically put up for sale at a market price, and a credit loan will be returned to the creditor.
Thus, the trader losses will be 20-30% instead of 100%, which will occur during Martin-Coll. Such an automatic order for sale (or purchase) an asset at a limit price is called "Stop Loss".
Sometimes a trader can be sure that after the fall, the course of the assets purchased on credit funds will grow again. Then he replenishes his account in advance, which will not allow Minin-Call to reach, for example, the entire amount of the loan taken or 50-70% of it.
So he excludes the risk of automatic loss of funds under Martin-Coll and calmly wait for cryptocurrency growth. But it should be noted that this is a risky strategy And it requires confidence in raising a course, which usually stems from a thorough mathematical analysis of the market and is rarely based on intuition.
- The second rule: Before taking a loan, you must calculatethe potential amount of deductions to the lender percentage.
The lender receives interest for every day of use of funds. The longer the player enjoys credit funds, the more he will have to pay the creditor.
If a interest rate High (happens when the lender provides rare cryptocurrency, for example), and the player uses a loan for too long, the final deductions of the creditor can achieve significant sizes.
- Third Rulelies in the fact that you need to carefully take Select cryptocurrency for speculation.
Overly dangerous for margin trading. Without a credit shoulder, they make sense to speculate, because their cost after a strong fall can also increase as sharply. With credit shoulder, their sharp drop or jump can also provoke Martin-call, and even if the player replenishes the score, the likelihood of another achievement of the limit is not excluded.
Plus, the more credit shoulder, the greater the risk. And it does not matter that after falling the currency will grow: if Martin-call will occur, the player will automatically lose money.
But currencies that almost disagree are not suitable for margin trading. If the currency is on the spot, the investor who bought it without a lending should not lose anything. And a speculator who bought it for funds employed by the lender will be forced to deduct him interest for a loan.
With a weak increase in currency, almost all profits can take interest, and sometimes the player has to pay extra own funds .
- Fourth Rule: We must not forget thatz.allogome are assets that are on the trader's account, regardless of which currency was taken by a loan.
For example, the trader may have 1 Lightcoin account, which at the time of the credit takes $ 100. The trader takes a loan in dollars, going to speculate on a third currency, for example, on. Meanwhile, Lightcoin in relation to the dollar falls, and now 1 Lightcoin on the trader's account corresponds not to $ 100, and $ 90.
As a result, the size margin automatically decreases And Martin-Call approaches, although actual losses as a result of unsuccessful trading in the trader may not be. Therefore, it is necessary to pay attention to how much the price of all assets put on bail, corresponds to the price they had at the time of the credit.
Margin trade in cryptocuroy: precommendations for beginner traders
For players who first decided to try their hand in margin trading, there are several universal recommendations.:
- Start with small loans. That is, take a loan by the ratio of not 1:10 and increase the risks at once, 10 times, and by the 1: 2 ratio, increasing the risks of all twice.
- Determine the sum, which can be lost without prejudicefor your material situation, and take loans for no more than 10-30% of this amount. That is, if the investor can afford to lose $ 1000 at the auction, then he should be credited to $ 1000 and take loans by $ 100-300.
- Install limit orders (Stop Loss) by 20-30%. Under the previous recommendation, the loss will amount to $ 20-90, which is even undesirable, but acceptable with the initial capital of $ 1000.
- Choose familiar cryptocompany. It is not worth starting with the currency, the curriculum of the exchange rate of which the trader saw for the first time. It is worth removing the currency without a credit shoulder, to understand how she leads itself in the market, which provides its value, from which factors its price depends. When regularities are determined, then it makes sense to take a loan.
- Take a loan thought. It makes sense when margin trading is much more justified than the usual one. For example, if there is a rapid increase in currency or there are obvious prerequisites for it (good news, a promising forka and so on).
Summing up, we can say that for a player who knows exactly why it takes a loan, knows how to calculate his risks and, of course, to predict the situation in the cryptocurrency market, margin trade can be a source of good income In the absence of weighty starting capital.
On the other hand, the higher the size of the loans, the higher the risks, and this rule works everywhere. Therefore, a novice player care must be taken, not to give in to emotions and remember that greed in trader games is not the best policy.
Many investors who think about alternative investment instruments, pay their attention to cryptocurrency, which are currently very popular and able to bring space profit in the shortest possible time. It is logical that first of all it is necessary to choose the stock exchange, which will allow you to earn in highly liquid cryptomones. In this article I want to provide you detailed instructions Trade on the American Stock Exchange BitTrex.com
Acquaintance with Bittrex stock exchange
The service was founded in 2015 and initially acted purely as an exchanger. Today it is a large stock exchange that allows you to trade more than 190 currency pairs, including Bitcoin and a large number of altkins. Although the platform does not have a Russian-speaking translation, she quickly won popularity in RuNet, because it makes it possible to safely and quickly exchange some currencies to others.
But this is not all the features, it is also worth noting:
- Exchange has high level Safety, as uses cold storage technology when users are assets are stored on servers disconnected from the network.
- To output funds, you must pass two-factor authentication.
- Operations are quickly, the user can always familiarize themselves with the real state of his account.
- BitTrex charges the Commission for the transaction in the amount of 0.25% of their amount.
The functionality of the site is convenient and even without understanding English in it quite easy to figure out, nevertheless I will tell you in detail how to sell and buy on BitTrex.
Personal Area
First of all, the Exchange website needs to be registered. Here everything is extremely simple and there should be no difficulties.
1. Go to the Bittrex official website and, by srolling the page, select "Get Started Now".
2. Specify the email address and password, accept the user agreement and confirm the registration with the "Sign Up" button.
3. The specified email address will receive a registration confirmation letter in which it is necessary to find a link to verify and simply go through it. After that, you can only log in to the stock exchange, specifying the mail and password that you have entered during registration.
In the Wallets section, you can view your account status - after replenishing the balance on the stock exchange or purchase / sale, you can view changes on your wallets. That is, in fact, there is a separate wallet for each coin, here you can view not only which amount of coins is available, but also how their course has changed throughout the day (as a percentage indicator).
Account replenishment on BitTrex
Replenish the stock exchange will not work - there's simply there. There is a truthful analogue - cryptodollar, but most convenient to replenish your balance by Bitcoins - today it is possible to receive bits through exchangers, and even through some payment systems. IN personal Cabinet, where all possible currency wallets are listed, you need to copy the address you need to translate - for this, press "+".
After that, the address of the wallet will be generated and it is necessary to make a translation. Just write it (copy and paste) when exchanging dollars to the bits and money will go to your account.
Markets and currency pairs on BitTrex
So, users are represented by three monetary market: Bitcoin, Ether, Cryptodollar. They are determined, based on what cryptocurrency is a means of exchange. On the example of the bitcoin market, we will analyze how the trader needs to be paid attention to. First of all, it is necessary to decide which currency pair represents interest to you - VTS-DGB, BTC-BTS, VTS-ETH, etc. (Skred is marked 1). Count Volume shows how much available means in circulation specifically for the specified pair (2). And no less important Change parameter is an indicator of the course fluctuations in this direction during the day. (3). Thus, we can track the tendency - for example, -16.4% - means a drop in the course of the specified percentage (the figures are marked in red), and 70.9% is an increase in growth (marked green).
Next column in Table - Last Price. It indicates the last cost, which was sold to the specified pair, and therefore, at the moment, this is the market price in this direction.
How to buy and sell cryptocurrency?
Buying cryptocurrency (and more precisely the exchange of bitcoins on other coins) is nothing complicated, it is necessary to simply figure out in some nuances. So, for example, I'm going to purchase Ripple. To do this, I choose the appropriate direction of exchange - PTS-XRP.
When you click on the currency pair, we go to the page with additional information. For each of the steam, a growth schedule and a course drop in certain intervals in the form of candles are provided. In the column on the right, you can find out the highest price on Ripple per day (24h High) and the lowest in the last 24 hours (24h Low).
Having dropped on the page below, we see, actually, the order for the purchase and sale, in this case we are interested in buying a coin. To do this, in the Max field, you specify the amount of XRP that you would like to buy, and in the line Price - the price for 1 XRP. After that, click the "BUY RIPPLE" button.
Do not forget that when buying and selling operations, you must take into account the service commission, otherwise it may be that you did not work at all on the deal, but even went at a loss.
Even below, we see the so-called "glass" - a list of orders for sale and purchase in this direction. Applications can be a lot, but thanks to a convenient filter you can sort them at a price: Bid Order - Sort by price reduction, order of purchase Ripple for the score; ASK ORDER - Filtration by increasing prices for the sale of Ripple.
In the event that you set the order, it will also fall into the glass, and after the operation is implemented, you will receive a Ripple coin (when purchased) or bitcoins (during sale). That's all the wisdom regarding the sequence of working with the stock exchange, but do not think that everything is so simple - buying and selling should be a result of a thorough and thorough analysis of the market situation and graphs of past courses fluctuations.
The easiest I. fast way Invest in cryptocurrency Bitcoin it is to buy futures on Bitcoin through a broker, especially since this can be done with a credit shoulder up to 1: 200. After registering in the Libertex platform, you can trade not only Bitcoin, but also other popular cryptocurrencies (Ethereum, Ripple, Dash, etc.).
All ways to buy Bitcoin
Consider all investment options in cryptocurrency Bitcoin
Method number 1. Bitcoin brokers
Here you do not buy and sell cryptocurrency as such, you are trading futures to Bitcoin, and your money all this time is on the broker's account.
Forex Club works on financial markets Since 1997, and has a bunch of customers from around the world, I think this company is quite trusted.
Pros: You can trade with a shoulder from 1: 5 to 1: 200, profitable account replenishment, all known methods of replenishment are available.
Minuses: Increased risk when trading with a big shoulder.
Method number 2. Cex.io.
You can bind your debit or credit card (Visa, MasterCard) to the CEX.IO service and buy Bitcoin and Ethereum for rubles, dollars, euro and pounds. You can also buy Bitcoin by bank transfer.
The service requires verification (you need to send them 2 calf, with your card in your hands and with a passport, or with a driver's driver and download scan cards with a document confirming a person).
Pros: Convenience, relatively not a big commission for the transaction.
Minuses: Mandatory verification, limits for input and output (depending on the level of verification).
Method number 3. Crypto Exchange
The cryptocurrency boom led to a boom of cryptocurrency exchanges and "broke" them now Nemeryano, so it makes no sense to list the entire list, BitTrex and Poloniex are the largest cryptocurrency exchanges in the volume of trades today.
Pros: A rich selection of coins for trading, a glass of prices, API for writing trading robots.
Minuses: Information about your private keys will vale owes only the exchange, and, some of these exchanges, have the property to disappear along with the money of their customers (MtGox, BTC-E have been wounded in the fly, who is next?).
Method number 4. Cold wallet
Most safe option It will generate the public and private Bitcoin keys on the Bitaddress.org service (disable the Internet before generation). Next, you save the generated keys on the flash drive and on paper, translate money to the public key address and check the balance. Remember the loss of a private key means the irrevocable loss of your funds!
To have the ability to make translations you need to download a Bitcoin-wallet from the official site of Bitcoin and generate a public key already in the client (you can import a previously generated private key). Be sure to make a WALLET.DAT file backup, as it contains information about the private key!
Pros: Security (only the owner of the private key can manage your money).
Minuses: The loss of a private key means the irrevocable loss of your money, less potential profits (compared to margin trading).
If you choose method number 3. or method number 4.You will need to use the services of exchangers.
Bestchange is the monitoring of exchangers where you can choose an exchanger with the best course.
Currently, more and more leading stock exchanges are provided to users with the possibility of using the so-called margin trading, seducing the prospects for increasing profits without additional investments in the trading process. Since the use of a margin loan is very promising in itself, has important subtleties, it will not be superfluous to get acquainted with the basic principles of the work of this tool.
What is margin trade? In fact, it is trading using funds that trader lends on a specific stock exchange, using its own deposit as a deposit (the term "margin" is synonymous with the term "pledge"). Exchange, which provides a credit trader, of course, does not forget about his own gain - for the use of a loan, interest is charged (for example, daily in the amount of 0.1% of its amount; it's not so much, and as we will see later, in margin crediting there are and more serious "pitfalls").
Margin trading has several important features:
1. Credit funds are issued to buy an asset, for example, Bitcoin, and serve as the basis for trading "with shoulder". At the same time, the method of trade, when you purchase an asset, at your disposal is not only the amount of an asset, whose purchase would be enough for your funds; You also get some additional amount of asset, the purchase of which is made at the expense of the funds that the stock exchange has taken you. Simply put, the shoulder is a target loan that temporarily increases your deposit at a certain number of times (on the shoulder coefficient).
To make it easier for you to understand how trading trading works, we will analyze it on specific examples in the next section of the article.
2. As mentioned above, with margin crediting, your own deposit acts as a collateral. At the same time, the stock exchange seeks to minimize risks for himself. If the price goes down, Exchange will not interfere in your trading for a long time; However, with a very serious price reduction (for example, double at the shoulder 1: 2), if the risk of loss is no longer personally, and borrowed funds, the stock exchange will close your position, while the loss from the decline in the price of the borrowed asset will be covered at the expense of your deposit . Such an action is known as "Margin Call" (Margin Call). We will later understand what the sizes of the drawings entail the threat of "Marin Call" and how to minimize the risk of its occurrence with some additional exchange tools.
3. From the previous point, it follows the fact that the cryptocurrency bought for borrowed funds, you will not be able to withdraw from the stock exchange as your own.
4. In the presence of an verified account on the stock exchange, the receipt itself credit funds occurs in each case, very simple and as fast as possible; To allocate a margin loan, it is not necessary to conclude some additional contracts with the stock exchange, it is enough to have a depository on your exchange account that could serve as a margin.
How exactly does margin trading bring profit?
Let's go to specific example how a credit shoulder can work during marginal trading. Let's start with the description of the work of the margin loan when opening more simple to understand the "long" stock position, in which you buy cryptocurrency, wait for its growth and sell more expensive purchase prices.
Margin loan on the growing market
Suppose that on the stock exchange offering margin lending, your deposit is 300 USD, one ETH is also worth 300 USD, and you are sure that this will rise even more. Of all the sizes of the shoulder, you choose, for example, a 1: 5 shoulder, as optimal for this situation. Commission for the use of borrowed funds to take equal to 0.1% per day (0.1% corresponds to 0.001 from the loan amount).
Thanks to the use of the shoulder, you can purchase not 1, and 5 ETH units (1 ETH is purchased for your tools, and 4 on borrowed). After that, different scenarios of price change ETH are possible - growth, decrease and flute (lack of significant changes). Consider them.
1. If course ETH For 2 days will grow to 360 USD, and you will sell ETH on this peak, your profits will be equal (minus deposit 300 USD, loan 1200 USD and percent):
| 360 * 5-300-1200 - (1200 * 0.001 * 2) \u003d 1800-300-1200-2.4 \u003d 297.6 USD |
Note that in the same trading circumstances, but without the use of the shoulder, your profits would be only 360-300 \u003d 60 USD. That is, simply speaking, the original profit, when trading with the shoulder, is multiplied by the sizes of the shoulder, after which it decreases by the amount of the Commission for using credit funds.
2. If the price of ETH starts to fall, then when it is reached by some critical point, you will lose your entire deposit because of "Marin Coll". In this case, this critical point will be on a mark a little higher than 240 USD per eth, because when the price is reduced below, this mark, even if all available ETH will be sold (for example, at a price of 235 USD), you will not fully pay off the loan amount And for the stock exchange it is unacceptable. The percentage of "Martin Coll", in this case, is not equal to exactly 240 USD, because in the amount of returning to return and interest for the use of the loan must be included; Naturally, interest will increase the amount to return the longer the longer the use of the loan.
In a more general case, the price that threaten "Martin Coll" can be calculated, multiplying current price Asset (shopping center) to the stock exchange (DB) in the assets purchased and adding interest on the loan (PC), multiplied by the current loan period (TSC) (in our example it is 0.1% for every day of the loan). Share of Exchange at the shoulder 1: 5 will be (5-1) /5\u003d0.8\u003d80%, at the shoulder 1:10 (10-1) / 10\u003d0.9\u003d90% and so on.
| TC * dB * (1+ (PC / 100 * TSK)) |
So, when buying 3 bitcoins at a price of 4000 USD and with a shoulder of 1:10, the credit funds will be paid 9/10 (90%) of the purchased asset, it means 2 days later, the critical price mark will be 0.2% above 4000 * 0.9 \u003d 3600 USD That is, it will be equal to 3600 * 1.002 \u003d 3607.2 USD per bitcoin.
3. Finally, in a situation where you were waiting for a significant increase, the so-called "Flet" can occur - the lack of essential asset prices. This price "calm" can last days or, less often, weeks (depends on the general volatility of the asset). However, even if you do not sell an asset bought with shoulder for considerable time, then in this case, most likely, interest for the use of the loan does not form large sums. Let's consider what will cost for different terms Payment of interest, using our old example C ETH (we will proceed from the fact that interest on the margin loan is simple, not complex). The amount of the loan can be estimated as 1200 USD, so interest will be equal:
In the latter case, with a constant price, the amount of interest on the loan would be equal to the mortgage funds, and the margin loan would be repaid at the expense of the collateral (although in the day before that the asset would be in stock). In practice, it would be much more likely that "Martin Call" would have worked, or the asset price would go up very much.
In addition to the overall accumulation of interest, as we have already seen on examples 1) and 2) gradually shifted down the amount of net profit, the loss increases and the price of "Marin Coll". All these negative consequences become actually significant only with very large loan delays, for example, when you did not pay it for several months. It is not recommended to still forget about the marginal loans taken and for a long time to throw trading, without closing the trading positions open to credit funds.
In a situation where the price moves down, you can either hope for the best and wait for growth, or make a decision to sell an asset before you lose the entire deposit, or if you are sure that you really defined the total price trend and consider the sidelines temporary, Top up your stock account to reliably push the point of response "Martin Coll".
In the second case, your loss (by analogy with profit, as described above) will be equal to changing the price multiplied by the shoulder size and adjusted for the size of the Commission for the use of the loan. If we return to our example with ETH, purchased at a price of 300 USD, then when selling them, two days later, at the price of 280 USD, you will help 1400 USD, but after the return of the marginal loan and interest from them only 1400-1200-2.4 \u003d 197.6 USD, this will be your left deposit.
To progress from "Marin Coll", some traders use a special variety of stock orders, known as the "Loss stop". When creating this order, it is indicated at what a price level, in the decline in price decline, the asset must be automatically sold (in order to avoid large losses in the further decline in price). On a number of stock exchanges, you can configure the distribution of so-called allets warning client about the approach to "Martin Call" and reminds you to close the position or replenish the stock exchange deposit.
Margin loan in the falling market
In the setting of a systematic decline in the price of an asset (including the margin lending that has not yet been expected) can also be used to profit. The principle of operation of the marginal loan in this case is somewhat different from what was described above.
To make a profit, you need to open the so-called "short" trading position, that is, at the time of time before the expected drop in the price of any cryptocurrency to take into debt against the stock exchange some amount of this asset and sell it; The number of asset that you can learn depends on what provision you can provide.
After that you are waiting for a price reduction, and when it occurs, buying a previously sold asset for money reversed from its sale. Since the price of the procurement of the asset is lower than the price for which you initially sold it, during the purchase you receive the same amount of the asset that you took into debt with the Exchange when opening a position for less money; After the return of the marginal loan and the percentage of excess funds remains at your disposal and forms your profits.
You can, for example, in the presence of 1050 USD, take a debt 3 eth, without shoulder, at the moment when the price of ETH will be equal to 350 USD; Having received borrowed coins, you sell them for 350 * 3 \u003d 1050 USD. If your forecasts are true, and the price of ETH will fall, for example, up to 280 USD, then you can buy off 3 Eth for 840 USD, return their stock exchange, and profit in the amount of 210 USD (more precisely, a little less due to the need to pay interest Loan). If the price of Eth will increase to the critical level, in this case, a little smaller than 700 USD, "Marin Call" will work, because with the increase in the price above the specified level it will not be possible to buy and return the employed from the ETH exchange in full, and In addition to pay interest on the loan.
When opening short positions to increase your profits, again, you can use the shoulder, according to the principle similar to those described in the previous section. Of course, the use of the shoulder still increases the risk of "Martin Coll", if the price goes up instead of the negative trend you are expected; Similarly, you can minimize the risk of "Martin Kolla" through the use of "stop loss" and alerts.
The cryptocurrency trade can bring significant profits. Many cryptocurrencies demonstrate fantastic growth for small intervals.
Having bought Bitcoin at the beginning of this year, now it would be possible to increase your capital more than 2.5 times. As of October 14, 2017, the price of Bitcoin (BTC) was at $ 5618.4. Looking at such a price, those who did not bitch Bitcoin in 2010, bite their elbows.
The cryptocurrency market grows very quickly, attracting millions of investors from all over the world. More than 1,000 different tokens are already traded and new ones appear almost weekly.
All this attracts not only investors, but also traders who want to make money on fluctuations. And the course cryptocurrency is quite volatile.
How to earn traders who have no big capital
If the trader has a big deposit, then even on small price fluctuations can be obtained good profits.
On the contrary, traders who do not have the opportunity to buy a large amount of cryptocurrencies cannot receive enough profit in the short term. After all, with a small deposit, minor price fluctuations bring an insignificant profit.
And in the long run, it is far from the fact that the selected asset repeats and grows thousands of times.
Therefore, an excellent solution for traders with small deposits is margin trading with a credit shoulder. However, as far as this solution is excellent - let's look further.
Essence of margin trading
Margin Trading - the implementation of trade speculative operations with money and / or goods received by the trader on credit secured by a certain amount (margin).
In the practice of trading, this means that a broker (or a cryptocurrency exchange in our case) takes off part of the trader's funds and provides him with a loan for opening a position. That is, the broker is essentially adding their own capital to traders.
Accordingly, the cryptocurrency trader receives the following benefit:
- Increases the volume of free funds, that is, you can buy more cryptocurrency.
- The larger transaction gives more profits.
- After closing the position, the broker takes credit funds, and all the profits received for this money remains among the trader.
Such trading is called margin or trading using a lending shoulder. At the same time, the credit shoulder indicates what amount of funds can be allocated by the Trader of the Exchange or Broker.
Credit shoulder 1 to 10 (1:10) means that the trader can operate with funds 10 times higher than its account.
Margin trade has been applied for quite a long time in financial markets (including Forex market). With the development of cryptocurrency trade, the leverage began to offer cryptocurrency brokers and exchanges, providing the opportunity to trade in digital currency.
Margin Trade allows the trader with a small capital to receive good profits using credit funds.
How it looks in practice
To better understand the principle of marzhnal trade, consider a practical example.
Transaction without a credit shoulder
Suppose you have registered on a cryptocurrency exchange and have a deposit of $ 300. You want to earn a little money and choose which cryptocurrency is better to invest.
Your choice falls on Golem cryptocurrency (GNT) at a price of $ 0.209844 and you think that it has every chance to grow soon. Therefore, you decide to purchase Golem coins on the whole deposit. For $ 300 you get 1,429.6 coins.
After some time, the GNT rate rises to 0.25. What good luck, you think, and sell all the coins. $ 0.25 * 1 429.6 \u003d $ 357.4. Your profits amounted to $ 57.4. In principle, it is not bad, but it was possible to earn more.
The same transaction with the use of credit shoulder
It turns out, Exchange provides a credit shoulder 1:10. You can open the position of the volume 10 times more than is possible with your deposit. So that's great. $ 300 * 10 \u003d $ 3000. For $ 3 thousand. You buy 14,296,3 GNT.
When the price rises to 0.25, you sell all coins. $ 0.25 * 14 296,3 \u003d $ 3 574.07. Exchange takes your credit funds - $ 2,700. You still have $ 3,574,07 - $ 2,700 \u003d $ 874.07. From this number, you will take away your initial deposit - $ 300, and we get $ 574.07 pure profits.
So, again, for clarity:
- Profit without a credit shoulder - $ 57,4
- Profit With Credit Shoulder - $ 574.07
Using margin trading, on the same price movement you can get 10 times more profit than when trading only on your own funds. The benefit is obvious!
Isn't it too easy
Too. If you thought that it could not be so smooth and simple, then you were not mistaken. Do not forget that there may be another situation in which the credit shoulder will not play your hand, but rather, very often.
Let us leave the same parameters as in the previous example, just let's see how the situation could develop differently.
You use credit shoulder 1 to 10 and buy 14,296.3 GNT coins for $ 3,000 (at $ 0,209844). But the price of cryptocurrencies begins to fall and reaches $ 0.18886. What will happen at this point? Your position will automatically close, and you will stay without money.
With such a decrease in the price, the deal loss will be $ 300, and this is exactly as much as you have own funds on the deposit. Having gave you a loan, the stock exchange does not want to risk and lose your own money. Therefore, as soon as the amount of losses becomes equal to the volume of your personal funds, the transaction will automatically close, and the exchange will return its $ 2700.
Look at what. If the deal was opened without using a leverage, your loss would be only $ 30. In this case, you could wait some time, and perhaps the price would turn around in the right direction. But even by making the decision to close the position, you would lose only $ 30 (10% of the entire deposit, and not 100%, as with the use of credit funds).
it good example The fact that the credit shoulder can cause large losses.
Where you can trade cryptocurrency with a credit shoulder
Margin trade was widespread in stock, commodity and foreign exchange markets.
Trading cryptocurrency is a relatively young look, but still a large number of stock exchanges provide the possibility of traders to trade with digital currencies using a credit shoulder.
Here are some options where marginal trade is maintained:
- Bitfinex. One of the largest cryptocurrency exchanges offers a $ 3.3 to 1 credit shoulder (3.3: 1).
- Cex.io. Exchange also has good popular among traders. To get the opportunity to trade with a credit shoulder, you need to verify verification. Shoulder size - 3: 1.
- Whaleclub. This trading platform provides the ability to trade in financial markets using cryptocurrency. Whaleclub offers quite a large leverage - 50: 1. It is for cryptocurrency, for the forex shoulder even more - 200: 1.
- GDAX.This platform provides a conservative leverage - 3: 1. To get this feature you need to go through several stages. Basically, the platform is designed for professional investors with major capital (from $ 1 million).
- Bitmex. On this exchange can be traded with a credit shoulder 100: 1.
Margin trade in the forex broker
Now the cryptocurrency can be traded not only on specialized stock exchanges, but also in some forex brokers.
And although the stock exchanges seem the best optionSince they specialize in cryptocurrencies, trading from forex brokers has several significant advantages:
- More features for analysis. On stock exchanges, it is often possible to find a fairly primitive functionality, with the help of which it is not very convenient to control the score and make transactions. Forex brokers have an advanced trade terminal MetaTrader with a large number of indicators for price analysis. In addition, you can use automatic trading with robots and advisers.
- Better liquidity. The cryptocurrency exchange, as a rule, works with its own (intracier) liquidity. Basically, the major stock exchange problems with the execution of orders are rare, but they can still be. Forex brokers use market liquidity simultaneously with several cryptocurrency exchanges. This makes it possible to buy cryptocurrency at any time at the best price.
- Forex brokers have significantly below the commission for the introduction of funds (Maybe not at all). While traditional cryptocurrency platforms can be from 1.5% to 6% of the amount of replenishment.
In the broker Gerchik & Co, you can trade Bitcoin cryptocurrency on favorable terms:
- Credit shoulder 1:10.
- Minimum transaction volume - 0.1 BTC.
- Commission - 1% of the amount of the contract.
Margin Trading Tips
As we see, trader with a small deposit can help the trader with a small deposit to get substantial profits and increase its deposit faster ("dispersed").
If a trader has a large amount of funds, the leverage will help get even more profit. Marginal trading allows you to earn money even on minor fluctuations in cryptocurrency courses. However, with the same success, you can lose quite large amounts.
Margin Trading Attracts a large number of novice traders. What is applicable to both classical financial markets (stock, forex market, etc.) and to the young cryptocurrency market.
Having learned about the possibilities that margin trading can give, many newbies begin to make calculations, pretending for how many transactions they will be able to increase their deposit at 2, 5, and even 10 times. And even in theory, such calculations are true, traders completely forget about risks.
We must not forget about risk management
One of the most important rules of trade in financial markets (and investment) is observance of managing and risk management. For a trader, this means that within one transaction he should not risk more than 5% of the total deposit.
And better if the trader risks no more than 2-3%. Of course, such a strategy may seem too conservative. Indeed, adhering to this rule is impossible to quickly get rich, especially if the deposit is small.
However, risk management protects the trader from essential awards and complete deposit loss.
If the trader makes the decision to take advantage of the credit shoulder, its risks immediately increase significantly.
Even the minimum leverage, 2: 1, already increases the risk of 2 times. If the price goes against the trader per 1 point, it will not be very tangible. But if the position is in a minus by 50-60 points, the two-time loss can be a serious problem for the deposit.
And then what to talk about big amounts of credit shoulder?
Shoulder 100: 1 tempting that with its help a trader can increase his small deposit several times in one transaction. In theory. In practice, even the right selected direction of opening position (buy or sell) will not always help.
In this case, a minor price correction, even 5-10 points, can lead to a forced closure of position due to lack of funds to maintain it.
- Do not use the large amount of credit shoulder. Start better with minimal - 2: 1 or 3: 1.
- Do not use all your funds in one transaction. If you trade with a leverage - insert only a part of the deposit into the transaction. So you will kill two hares: get profit from marginal trading and you will manage risks. In this case, even with the unfavorable situation in the market, you will lose only part of the funds, and not the whole deposit.
- If it draws to take advantage of a large credit shoulder (50: 1 or more), and you imagine what profit will be able to get, just think about what is exactly the same as much as you can lose. Most likely you will not suit the prospect of obtaining huge damages.
- When trading, cryptocurrencies need to be especially careful using the leverage. The number of digital currencies is very valid, this can be traced by the example of the same bitcoin (BTC). Yes, in the long run, Bitcoin is growing steadily, however, there are significant drawdors from time to time. And even within one trading session, the price of any cryptocurrency can be very volatile.
The unpredictability of price movements in itself is serious risks, and a large leverage multiplies them.
conclusions
Margin trading is a financial lever that helps traders to make money on short-term fluctuations in prices without major equity.
At the same time, margin trading often becomes the reason for the "plum" of deposits of a large number of novice traders. Therefore, it is necessary to approach carefully and weigly to use the leverage.
Always calculate not only possible profits, but also possible losses that can get, opening positions using credit funds of the stock exchange site or broker.
Remember, the primary goal of a novice trader is to learn not to "merge" a deposit. At first, it is impossible to expose your capital to unjustified risks.
And only when we develop trade Systemwhich brings stable profit with competent risk management, you can try more risky strategies using a leverage.
True, for such "experiments", it is better to highlight individual funds that are not sorry to lose.
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