1. Read the disclaimer. And remember, trading is a risk.
Using this manual you can earn your money 4 time faster if you do it smart or you can lose your money 4 times faster if you don't understand what you do.
2. Why Margin Trade is better than a regular exchange?
– If you are in BTC, you still can buy Bitcoins if you expect the price to go up
– if you are in USD, you still can sell Bitcoins if you expect the price to go down
– you can make profit on both bullish and bearish market
– you can use 2.5:1 or 4:1 leverage at Bitfinex.com
– you can use automated stop-loss orders so you can sleep well if you have an open position
3. What is the difference between Margin Trade and a regular exchange?
With Margin Trade you don't buy Bitcoins for USD you have on your balance and don't sell Bitcoins you have on your balance.
Instead you use your balance as a guarantee and you buy/sell the funds you borrow. This allows you to use a leverage.
If you expect Bitcoin price to go up, you borrow USD and buy Bitcoins. Then the price go up and you sell your Bitcoins higher and return USD you have borrowed keeping the profit.
If you expect Bitcoin price to go down, you borrow Bitcoins and sell them. Then the price go down and you buy your Bitcoins lower and return BTC you have borrowed keeping the profit.
4. Some terms
Going long – buying Bitcoins and waiting for the price to go up
Going short – selling Bitcoins and waiting for the price to go down
Opening long position = BUY
Closing long position = SELL
Opening short position = SELL
Closing short position = BUY
5. How to start? Login to Bitfinex.com, deposit some money there and go to Margin Trade page
6. Check the charts and the orderbook, decide are you expecting the price to go up (go long) or go down (go short).
7. Decide your entrance price and the margin percent you expect to get. In our example we will go long starting from 117.25 and ending at 125 with x4 leverage. To do such trade you just have to have 0.5 btc on your balance.
8. Check the maximum leverage you want to use in your account settings. As mentioned, in our example we have 0.5 btc on balance and 4:1 leverage, so we can play with 2 btc volume.
9. Check your indicative rate as shown on the screenshot. You can also limit it. If the daily indicative rate is higher than your expected daily margin than it doesn't make any sense to open a position.
10. Submit Limit Buy order (Limit means you will only purchase at the specified price) and Stop order. Stop order is important if you were wrong in your estimation of the current market conditions. It will execute once the price reaches the level you set in the Stop order. We set stop loss at 115.
11. As a result you will see your orders bellow. Wait until your limit buy order executed.
12. Once your limit buy order is executed, you will see it in your active positions. You will also see P/L and Swap. P/L is the current profit or losses of your positions. Bitfinex calculates it automatically based on the orderbook. Swap is the interest you pay for your loan.
13. Then set up your sell order at your target price
14. After this you will only see your Stop and Limit Sell order at your active orders list.
15. Wait for the price to go up as you expect for your LONG position or to go down in your SHORT position.
16. Wait more 🙂
17. And more 🙂 Here if you doubt the price will go up more you can move your Stop order higher. So if the price goes back down your Stop order will close your position with the profit. However you can close your position any time you want pressing "Close" link.
As you can see we have made $10 with only 0.5 btc! It's 20% of profit!
We wish you successful trades!
And here are some rules we use (they may be useful for you as well):
1. Open a position only if you are sure (as much as possible) the price will move as you expect. Don't buy/sell too much if you are not sure
2. Never try to go against the market
3. Don't jump in on a big green candle – wait for the correction.
4. Don't buy on a big red candle – red candles come with friends
5. Better wait while the price has already started to go up before buying in order to be sure
6. Sell when the price has already started to go down after a big growth in order to be sure
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