bitfinex margin trading

Anyone here doing it already?

I've scraped my way from a $65 investment, combined that with mining, and with the market currently I have a few hundred bucks to play with.

I'm currently looking at putting about 1/3rd of my holdings into bitfinex, so that I can use some leverage and margin trade. Meanwhile, I am still depositing doge mining directly to cryptsy and selling for BTC manually, and holding some LTC at BTC-e. This accomplishes a few goals for me - taking mining income is easy, my holdings are spread out (increasing my exposure, reducing risk if a single exchange has a problem), giving me options to margin trade as well as instantly arbitrage across exchanges with held liquidity.

I am interested if anyone is margin trading on bitfinex currently? I am figuring it out, reading as much as I can, and learning how to use their tools right now. After I build confidence that my grasp is solid enough, and I like the market conditions, I will take my first margin position and let you know here how it turns out.

For anyone who doesn't understand, this is an example of how to margin trade on bitfinex: http://m.livejournal.com/read/user/cryptorally/3726

Never heard of it?

For most of the post, I was reading Bitfenix, like what the hell?

never used it personally, but it does look quite interesting, ive done this on real exchanges and it can be fun as long as you can afford it and as long as you have a stop-sale in case of something, do they offer that option btw ?

edit: read some more, sweet they do have stop sales, shorting too, nice exchange !!! Matt please do keep us (me) posted on this, I think I def want to try this

Ya, bitfinex is basically one of the big 4 basically. In my mind - Bitstamp (volume and legitimacy) -> btc-e (volume) -> bitfinex (decent volume, advanced built in trading tools). Then the 4th would be Gox, because it was the early leader and it isn't dead yet, people pay attention to it, and its still often the price reference point.

3 basic things about bitfinex:

1. You can buy/sell like on any other exchange. They do BTC/LTC, BTC/USD, and LTC/USD.

2. You can buy or sell liquidity. It allows you to buy/sell liquidity. Say you are holding BTC, LTC, or USD and you aren't doing anything with it for the next few days (you don't think the market is going to change, or you aren't day trading, or you just always hold everything you have), then you can put it out as a liquidity offer, and when someone takes it, you'd make your set amount of interest and they pay you back when they are done.

3. You can margin trade. Bitfinex allows you to borrow or loan liquidity, which allows you to trade with leverage. So for example, if you have 1BTC and you set your account for 2.5:1 leverage, you can buy liquidity and trade as though you have 2.5BTC... Which lets you gain or lose money faster. When your position closes you'll give back what you borrowed and keep the profits/losses, or if you lose hard your position will be closed for you in order to cover what you owe and you'll have nothing.

This offers big upsides. For example, with someone who wants to enhance their opportunity to profit from their trades, this is how they could lose everything. Let's hope I'm not foreshadowing myself here... Say you have .12BTC (about $100) right now, so you open a bitfinex account and set yourself to 2.5:1 leverage. You could take liquidity, then trade as though you had .3BTC (or $300). So you think Gox is going to implode tomorrow and BTC will drop, so you put in an order to short BTC using leverage (you sell .3BTC even though you only have .12BTC in your account, and you wait for the price to go down so you can buy back in after it drops). But instead of imploding, the value of bitcoin goes up by $40 and you haven't setup anything to limit your losses (you would have this setup unless you are an idiot)... The exchange will close your position once BTC goes up $40, because you are leveraged, and in order to pay back the person you took liquidity from, they'll close your position at a loss then use the remaining funds to pay back the person you took liquidity from. This leaves you with nothing, and leaves the person who made you the loan with their original funds back as well as the interest earned while you were borrowing.

For another example, if you are holding BTC, LTC, or USD, and not doing anything with it then you might as well loan it out if you aren't planning to spend it. By doing so, you'll earn interest through the loan, and bitfinex will pay you back at the end of the loan term or when the borrower closes the position. The borrower may profit or lose by borrowing your funds, but you don't take on risk and you earn a modest return instead of the currency sitting idle in your account. I don't know what situations you could lose in exactly, but the most obvious risks are these:
1. News comes out that clearly means the value of BTC will skyrocket - you've loaned out all your fiat, so you can't buy back in and ride BTC up as it increases
2. News comes out that clearly means the value of BTC will tank - you've loaned out all your BTC, so you can't sell and wait to buy back in after the drop
3. Market panics - if things go absolutely nuts, there could be a situation where the exchange isn't able to close the borrowers position in order to pay you back the interest and original loan amount

I'm sure there are other things good and bad. I'm just learning, and I am trying to do my best at explaining from what I've learned so far.

hehe, thats a very good overview Matt
btw you did open an account right ? try anything yet ? im curious how well it runs, fast/slow, rates appropriate ? also what info do they want ?

question, why do you say one of the big 4 though ? it is rather unknown compared to the other 3 and the fact that it is in HK worries me a bit, with China's unstable situation regarding btc

also, been going over their bitcointalk thread, a bit of a mess at the end there, but that guy is messed up, so still thinking

I.M.O.G. said:

Anyone here doing it already?

I've scraped my way from a $65 investment, combined that with mining, and with the market currently I have a few hundred bucks to play with.

I'm currently looking at putting about 1/3rd of my holdings into bitfinex, so that I can use some leverage and margin trade. Meanwhile, I am still depositing doge mining directly to cryptsy and selling for BTC manually, and holding some LTC at BTC-e. This accomplishes a few goals for me - taking mining income is easy, my holdings are spread out (increasing my exposure, reducing risk if a single exchange has a problem), giving me options to margin trade as well as instantly arbitrage across exchanges with held liquidity.

I am interested if anyone is margin trading on bitfinex currently? I am figuring it out, reading as much as I can, and learning how to use their tools right now. After I build confidence that my grasp is solid enough, and I like the market conditions, I will take my first margin position and let you know here how it turns out.

For anyone who doesn't understand, this is an example of how to margin trade on bitfinex: http://m.livejournal.com/read/user/cryptorally/3726

Click to expand...

I don't know if they have charting software but if they do, and you guys plan on trading coins you may want to take time to learn how to read charts, if you don't know how already. I'd bet trading these is similar to trading any currency.

ZL1 said:

never used it personally, but it does look quite interesting, ive done this on real exchanges and it can be fun as long as you can afford it and as long as you have a stop-sale in case of something, do they offer that option btw ?

edit: read some more, sweet they do have stop sales, shorting too, nice exchange !!! Matt please do keep us (me) posted on this, I think I def want to try this

Click to expand...

Ya, it lets you put in limit orders (normal), stop (stop loss), market (dunno, maybe this buys or sells at whatever the market rate is), trailing stop (not sure), and fill/kill (not sure).

Those let you do different things that aren't available on some other popular exchanges. I'm not sure how I'm going to make my first trade there yet, but for now I'm just working on getting the funds transferred over there and learning before I take a position. I will start conservatively though, by setting up a trade for at worst almost no loss, then once I'm sure I understand it right and the tools, I may get more aggressive.

more i read their thread, the more doubts .. btw did you know btc-e has metatrader and margin ? i may give that a try, i do trust btc-e, they held my original btc for nearly a year and all was perfectly good
and ... after reading their feedback, seems that ones a mess too lol, guess the market is just not there yet

Matt, if you do try bitfinex live, do let us know how well it works

I did this back in the days of bitcoinity and zhoutong. I did not come out ahead trading. I slowly lost a little coin at a time. I lost about 3 btc when the site was hacked/shutdown.

I think that I can read the market a little better now days, but, unless you have time to constantly watch it and actively work on it, trading isn't worth it to me.

Who's matt?

Anyway, let us know how it goes I.M.O.G, I like the idea of earning interest.

matt= IMOG

ZL1 said:

question, why do you say one of the big 4 though ? it is rather unknown compared to the other 3 and the fact that it is in HK worries me a bit, with China's unstable situation regarding btc

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Mainly volume.

Mandrake4565 said:

I don't know if they have charting software but if they do, and you guys plan on trading coins you may want to take time to learn how to read charts, if you don't know how already. I'd bet trading these is similar to trading any currency.

Click to expand...

http://bitcoinwisdom.com/markets/bitfinex/btcusd

xsuperbgx said:

matt= IMOG

Click to expand...

Oh!

Thanks. Now I suppose Joe=EarthDog??

btw opened an account for the hek of it, did you notice how their margin is handled ? very cute id say, you have to go buy swaps first, then you can use them as margin, pay individual interest on them and they also expire .. wonder what happens to your position if the swap expires before your willing to close the position
many loose ends still on this site

http://bitcoinwisdom.com/markets/bitfinex/btcusd

Click to expand...

Perfect, Candlestick charts are fairly easy to read if you know what to look for. Getting a good book and reading about chart formations, Elliot waves and such can be helpful in reading them.

I think that I can read the market a little better now days, but, unless you have time to constantly watch it and actively work on it, trading isn't worth it to me.

Click to expand...

This quote by superbg is very true though. If you don't have the time to spend following the market on a daily basis be very careful with what you do. There are plenty of people out there that will feed off of you. That said I've never traded Bitcoins but this is what I do for a living, I've been trading the equities market and have been for 16 years. I can't see it being much different.

Thanks for the insight mandrake. Seems like most people are similar to my shoes and dont know much about trading. Virtual currency has gotten me to learn a lot though.

There is a lot of talk about technical analysis with bitcoin and alts, however, its mostly smoke and mirrors. A lot of people drawing lines on charts and applying good theory, but very often failing to mention its meaningless due to the nature of the market. Regular rules don't apply because there is no restriction to rampant manipulation, and speculation is overwhelming which makes the markets erratic regardless of fundamentals or news at times.

I am probably pretty wrong, because what do I know. But most people who are consistently right like to lay claim to it... I have only seen one site that is sharing historical positions with consistently beating the market. I think most people try to apply TA, however it just doesn't work in young markets that don't have any strong ties to real goods or services.

That reminds me of this chart:


I used to watch the charts pretty closely. There were quite often really amusing charts posted.

While I am posting btc charts, i may as well post this one. It is in every thread in the speculation area of bitcointalk, but I have never seen it on our forums. I guess I will be the first!!




Bubble!Bubble! BUBBLEEEEEEEE!!!!!!!!!!!


ahhhh, that reminds me of the old days.......

LOL best charts I've seen in a while!

On a related note, I just made $1.50 trading in the past half hour.

Bought doge on cryptsy with all the BTC I had there... Only .02959BTC. Got in at .00000147, as doge just started rising. It faltered at .00000159, so I got my exit ready, and got out at .00000155. Not a huge win as I had no funds there, but it was a solid 5%+ gain.

Its situations like that where I want to use bitfinex leverage. When I see a clear immediate trend, and I can capitalize on relatively safe positions... Get in after a clear rise is demonstrated, ride it up, get out when it falters. With enough funds there is big money to be made on far less than a 5% change in value, but with low funds you can't gain much.

Honestly, I think doge is going to be up even more in the morning so I could have held thru the night... But that isn't the way I trade. Sure things, or the closest to them as possible.

If I have any words of advice for you Matt, it's know where you're out point is before you even get in and stick to it. I've seen more people get hurt trading the markets by saying "oh it's fallen too much to sell now so I'll just hold or buy more."