Tutorial: Advanced Trading with Poloniex (Stop Limit, Margin Trading, Lending)


The previous tutorial we learned how to use Poloniex in basic form, but it is time to raise the level. We previously mentioned that this platform goes much further than the basic purchase / sale of crypto-assets, offering us advantages like  Stop Limit orders , which allow us to increase profits or reduce losses depending on how we implement it or work in the format of Margin Tranding , which is basically working with borrowed money.

Remember that if you have not read the first tutorial we recommend you do this link  so you know the basics before moving on to this second step.
Let's start.

CREATING STOP LIMIT ORDERS

If we noticed in the previous tutorial, between the boxes of purchase and sale of the exchange is a box called " Stop Limit ". But what does he do? Well, in a basic way, it is used to buy and sell, but in a more intelligent way.
To explain it better remember that the market for cryptomonedas works 24 hours a day and has no holidays, that is; never stops. This means that we can not always be aware of changing markets , in which we miss generating juicy profits or avoiding many losses. To do this, enter Stop Limit.
In the previous tutorial we learned how to create normal orders, which at the time of purchase set a price and a quantity, and executed the order when someone seemed right our price; but what if we buy many crypto-currencies and the price goes down? or if a criptomoneda is having a significant rise and we want to enter, but all this happens when we are not? Let's play a little with Stop limit.
Stop Limit are orders that allow you to set a "limit" to generate a new order, that is, the purchase order is not going to be performed until certain requirements that we set will be met . Some of these are  the Stop or virtual limit for generating the order, and the Limit, which is the price that will be placed in the order after the limit is exceeded. To see this in more detail we will see the Stop Limit box.




Corresponding tables for generating orders in the Exchange section


In the middle box we see the section of  Stop Limit,  which exists for each of the crypto-currencies that are traded in PoloniexWe will understand it little by little, before generating an order.
  • Stop : refers to the virtual limit that we are going to paste, that is, when the price of the crypto-currency touches this limit will execute the order according to the price we place.
  • Limit : refers to the price of the order that will be generated once the Stop has been exceeded.
  • Amount : here will be placed the amount of CryptoDivisas that you want to buy or sell on the order.
  • Total : is the total price of the transaction.
To generate a Stop Limit type order, you only have to enter the corresponding data in each box, and click Buy or Sell,  depending on the order that we want to generate. When you create these orders, you can display them either in the table at the bottom of the My Open Orders page or in the top menu, clicking on Orders and then in My open orders .
Poloniex offers a quick guide to what Stop Limit is all about. You can view it here .

MARGIN TRADING

In the basic exchange, we will risk and generate profits from our own funds, but with this section we can generate even more profits by asking for a loan , this means that other users will lend us their funds so that we can trade with them and pay them a percentage by the time we have used these funds.
That is why Margin Trading becomes a very attractive option, since obviously more funds are greater profits, but beware, also may be greater losses, so before moving on to this section we recommend that you have good practice in the basic exchange.
Similarly, something to take into consideration is that we are not going to work with 100% of the money borrowed, since we are going to work leveraged to 2.5,  which means that of 100% of the money in Margin Trading, 40% of that money must be from our personal funds. This is to protect the loans in case someone does not want to respond.
But before starting with Margin Trading we will take a little detour and learn about the section of Transfer Balances . To go to this section we will click on the top menu in Balances,  and then on Transfer Balances .




Balance table between sections of the Poloniex platform


Here we are going to find the different balances of each section of Poloniex, that is to say, the balances that we have currently in the section Exchange . In order to transfer them, we will go to the box above the table that is on screen and in the text box ( Amount ) we will place the amount that we wish to transfer.
Then we will select the unit ( BTC , ETH, XMR, ETC) to then select the destination and the origin of the transaction, which in our case would be from Exchange to Margin Tranding . Once this is done, we will click on the Transfer button  and we will have transferred our funds. These operations can be done as many times as we like, since no commission is charged. At the end we can see our funds as shown below.




It may seem strange to see so few cryptones available for transfer between the different sections (Exchange, Margin Trading, Lending) but here is one of the disadvantages of both  Margin Trading  and  Lending,  because you can only work with these few crypto-currencies; contrary to  Exchange, which does possess a much greater amount than these two.
Already with balance in Margin Trading we can start this type of exchange.
Let's go to the section by clicking on the top menu, in Margin Trading. Once here we will see something very similar to  Exchange, but with a particularity: at the top of the Buy, Stop Limit and Sell boxes  is a section called  Open Position,  where we will see our open order with a series of data that we will analyze later.
As we mentioned at the beginning, in Margin Trading  we work at 2.5, that is, the total number of coins we have in this section will multiply by 2.5, which will give us the total currencies we will have available. But where do these extra currencies come from? Well, in the section  Lending we can borrow or lend our funds (later we will see in depth this). Now, when creating an order from Margin Trading, the platform will automatically take a loan depending on the percentage amount that we are willing to pay for it.
We will create a new order, in our case of purchase, and for this we will go to the purchase box " Buy " and we will fill in the following information.


Box to generate a purchase order

As in the  Exchange the data are:
  • Price: is the price we want to pay per unit
  • Amount: amount we want to buy from the cryptonnet
  • Loan Rate:  Refers to the maximum interest rate we are willing to pay for the loan we are going to apply for , ie if we do not currently have a Lending Loan, the system will automatically take the lowest loan, depending on of the interest rate that we place.
  • Total: is the total cost of the operation.
These operations cost between 0.15 and 0.25 depending on the volume of crypto-currencies to be moved in the transaction. Before creating the order we have to remember that the minimum amount to create an order in this trading mode is 0.02 BTC per order.
To create it, we will click on Margin  Buy,  and the following will be automatically generated.


Open position in the section Margin Trading

As we can see, a bar or a "position" is opened in the Open  Position section,  which we will study in detail.

Open position

  1. Position : refers to the position of the order, Long refers to a purchase position; Short refers to a sales position.
  2. Amount : tells us the amount of cryptones that we buy or sell in this position.
  3. Base Price : this is the price at which we make the purchase, ie the base price.
  4. Est. Liquidation Price : this column indicates the minimum price that can reach the cryptononeda before the platform gives us a  Forced Liquidation, that is to say, that we run out of funds, remembering that in Margin Trading we work with money lent to 2.5 of leverage.
  5. Unrealized P / L : shows the amount of upcoming gains or losses we generated for the order.
  6. Unrealized Lending Fees : here we will be shown the interest we must pay for the money we have borrowed for this order.
  7. Action : allows us to close the order.
Once the order is finished we can click on  Action,  which will close the order, ie in case of purchase will liquidate the funds we buy, selling them, and otherwise will only close the order normally.
There is another section to which we must pay attention, and this is the  Margin Account, where we will be given the details of our Margin account.

Total data handled in the section of Margin Trading

  1. Total Margin Value : refers to the total value of CryptoDivisas we own in our Margin Trading section.
  2. Unrealized P / L : is the sum of the profits minus the total losses in the Margin section.
  3. Unrealized Lending Fees : As in Open Position it indicates the interest still unpaid.
  4. Net Value : is the sum of Total Margin plus the sum of the gains or subtractions of the losses, subtracting the interest that we have not yet canceled.
  5. Total Borrowed Value : refers to the amount of loans we still own and have not closed.
At the bottom we see that the starting capital is 40% plus the positions that are currently open. The good use of this section requires a lot of practice, so it is advisable to first start with a good basic Exchange  practice  before moving on to this level.

LENDING

There is a way in the Poloniex platform where we can easily pay dividends by simply lending our money, and this is  Lending, an  option that we will find in the top menu. From this section we will be able to lend or borrow to work in Margin Trading our criptomonedas.
To begin we need to first transfer from  Transfer Balances as we did in the previous section, to our Lending section. Once transferred, it's time to get down to work.
The first thing that we will find when opening the Lending window will be the following.



Lending Loans Main Screen
Here we are going to see:

1

In this section we can generate new loan offers depending on our available capital.

2

In these tables we will see the current offers and demands of loans that are in the platform. At the top of each table we will see the  total number of crypto-currencies that are currently on loan.

3

At My Actives Loan we are going to see the current loan offers we own and at  My Open Loan Offers  our active loan offerings.

4

In this Balances table   we can visualize the amount of money that we have distributed between  Exchange, Margin Trading and  Lending .
To create a new offer we only have to fill in the data of the first box.



  • Rate : Let's place the interest rate we want to receive per day.
  • Amount : The loan amount is entered.
  • Duration : we will set the duration in days.
  • Auto-renew : Upon selecting this option, the loan once returned will be renewed and will automatically appear on the offer orders again.
Once the data is filled, we will click on the offer loan  button that will generate the new list order, and will be reflected in the table below. It should be remembered that the minimum bid for a loan is 0.01 BTC.

SOME RECOMMENDATIONS

The tools we saw in this advanced tutorial are far more powerful than the basic tools we saw earlier. With Stop Limit we can increase profits or decrease losses if we use it wisely, but you should also be careful because the risk of losses can be high; perhaps not so much in Lending, since the system is responsible for protecting our money by liquidating the user in case of price drop , but in Margin Trading because we can make very good profits, but we see that we can be involved in trouble if we do not do a good market study and force the platform to give us a forced liquidation that is the same to leave us without funds. So you have to be very careful when experimenting with this section.
It remains for us to take great advantage of this platform and always remember the maxim of "practice makes perfect". That's why we recommend practicing first on basic Exchange before moving on to this level.


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