Tfw leanrt how to use leverage

>tfw leanrt how to use leverage
>up 2 btc since yesterday

>tfw learnt how to use leverage
>liquidated the next day
>oops

How does it even work and give me an example, I don't feel like researching senpai :3

more like
>in debt the next day

Might as well just go to the casino desu

*notices firearms in the mirror*
fuck cars; motorcycles and guns is where it's at

You trade with other people's cash. What you own is only used to settle debts.

Say you have 1 BTC. You take a loan of 5 BTC from someone else and buy ETH with it (only the 5 BTC)
In return for the loan, the person wants 5% of the profit you make with that trade.

If the price of ETH goes down 20% so that your ETH is now worth ~4 BTC, you get forced liquidation
i.e. the exchange sells the ETH, takes the remaining 4 BTCand 1 BTC(from you) and gives it back to the person that gave you the loan.
Tough luck, you lost everything you had.

If the price of ETH goes up 20% so that your ETH is now worth ~6 BTC, you execute a sell yourself.
You give the original 5 BTC back + 5% of your profit. Your total profit is 0.95 BTC, which is much more then you could have made with just your 1 BTC.

tl;dr - it's high risk, high reward trading

Can ruin your life if you use it in highly volatile markets.

yeah it's so good when the "bubble is bursting" and you short BTC then laugh straight to the bank whilst everyone else was screaming

>started using leverage yesterday
>£100 in the hole
How'd you do it senpai

Got it, thanks!

Did anyone here short ETH or BTC during the recent but relatively short-lived crash?

?

I thought all that happened was you lost whatever you put in.

Why would you sell during a crash?

Yeah, I think he meant until the debt is settled, ie the position is closed

What happens if you don't have enough crypto to pay off the liquidation?? Soz dumb question

You're in debt nigger

>What happens if you don't have enough crypto to pay off the liquidation?
The whole point of "forced liquidation" is to prevent that from happening.
It's done before you reach that point.

can't happen (on polo atleast). the amount you can borrow is limited by the funds you are able to put up as security. it's still quite risky of course but you won't have to change your name and leave the country to become a venezuelan potatoe farmer.

gotta ask something myself: when you margin trade, how is the lenght you can borrow funds determined? surely given enough time many trades that otherwise wouldn't be, can turn profitable, no?

It's set by the person that gives the loan.
The default on polo is 2 days i believe.

As long as loans are available your loan will be refreshed by polo when required. If you borrow from someone and after 2 days they don't extend the loan, Polo will choose another loan to replace it. However this replacement loan will be at the lowest interest rate available at the time which can quite often be well above the limit you originally set.

Short answer: As long as the loans are available.

sweet, thanks. maybe it's time for me to start getting my feet wet at the big boys pool of margin traders.

Its a really great way to lose money fast if you don't know what you're doing. i would suggest watching the market for a significant amount of time first or only trade very small amounts

Protip: only use amounts of money that you wouldn't mind dumping into the sewer.

Iktf.
More like
>liquidated next hour