In the next level of complexity of using the Poloniex platform, we will learn more tools.
To take advantage of this tutorial, you need to complete the first one in the series.
We learned how to use the previous tutorial Poloniex in a basic way, but it’s time to level up. We previously mentioned that this platform goes far beyond the basic buying/selling of crypto assets, offering us advantages such as Stop Limit order typewhich means we can increase profits or decrease losses depending on how we implement it, or work in a format trade margin, which basically works with borrowed money.
It’s worth remembering that if you haven’t read the first guide, we recommend doing so from this link so you know the basic concepts before moving on to this second step.
Let’s get started.
Creating a Stop Limit order
If we noticed in the previous tutorial, between the stock market buy and sell boxes there is a box called «Stop Limit«. But do you? Well, in a basic way, it is used for buying and selling, but in a more intelligent way.
To explain it better, remember that the cryptocurrency market works 24 hours a day and there are no holidays, that is, it never stops. This means that we cannot always keep an eye on the market changes, so we miss out on generating juicy profits or avoiding many losses. That’s where Stop Limit comes in.
In the previous tutorial, we learned how to create normal orders, which specify the price and quantity when buying, and the order is executed when someone thinks our price is fair; But what happens if we buy a lot of cryptocurrencies and the price drops? Or if a cryptocurrency has a significant rise and we want to get in, but it’s all happening when we’re not there? Well, let’s play a little with the Stop Limit.
Stop limits are orders that allow you to set a “limit” for generating a new order, i.e. A buy/sell order will not be placed until certain requirements to be determined by us are met.. Some of them are Stop or virtual limit for the order that will be generated and Limit, which is the price that will be set in the order after exceeding the limit. To look at this in more detail, let’s look at the Stop Limit box.
Corresponding tables for generating orders in the Exchange section
In the central box we see a section Stop Limit, which exists for each of the cryptocurrencies traded on Poloniex. Let’s understand it bit by bit, before generating the order.
- Stop: refers to the virtual limit that we will set, that is, when the price of the cryptocurrency touches this limit, the order will be executed according to the price that we set.
- Limit: refers to the order price that will be generated after the rate is exceeded.
- Amount: Here you will set the amount of cryptocurrency you want to buy or sell in order.
- In total: is the total cost of the operation.
To generate a Stop Limit order, you only need to enter the appropriate data in each box and click on Buy Fr sell, depending on the order we want to generate. When creating these accounts, we can view them or in the table at the end of the page My open ordersor in the top menu, by clicking Commands and then inside My open orders.
Poloniex offers a quick guide on what a Stop Limit is. You can view it here.
In the basic exchange we will risk and make profit from our own funds, but with this section we can make even more profit «looking for a loan“This means that other users will lend us their funds so that we can market with them and pay them a percentage for the time we used these funds.
That’s why Margin Trading It becomes a very impressive option, because, obviously, the bigger the amount of funds, the bigger the profit, but be careful, the losses can be bigger, so before you go to this section, we recommend you to have a good practice in the basic exchange.
Also, something to consider is that we will not be operating with 100% borrowed money, as we will be operating with leverage at 2.5, which means that out of 100% of the money in Margin Trading, 40% of that money must come from our personal funds. This is for credit protection in case someone doesn’t want to answer.
But before we start with Margin Trading, let’s take a step back and We will learn about the Transfer Balance section. To go to this section, we will click on the top menu balances, and then inside Transfer Balances.
Balance table between sections of the Poloniex platform
Here we will find the different balances of each section of Poloniex, i.e. the balances we currently have in the section Exchange. To transfer them, we go to the box above the table on the screen and to the text box (Amount) we will enter the amount we want to transfer.
Later we will select the unit (BTC, ETH, XMR, ETC) and then select the destination and origin of the transaction, which in our case would be Trading Margin Exchange. Once this is set, we’ll click the button Transfer, and that’s it, we will already transfer our funds. These operations can be performed as many times as we want, because no commission is charged. Finally we can see our funds as shown below.
It may seem interesting to see so few cryptocurrencies available for transfer between different sections (exchange, margin trading, lending), but here lies one of the disadvantages of both Margin Trading like lending, Well, you can only work with these few cryptocurrencies there; otherwise exchange, which has a much larger quantity than these two.
With the balance in Margin Trading we can start this type of exchange.
Let’s go to the section by clicking on the top menu, on Margin Trading. Once here we will see something very similar exchange, but with a special feature: on top of the boxes Buy, stop limit and sell There is a section called open position, where we will see our open account 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, we will multiply the total amount of cryptocurrencies we have in this section by 2.5, which will give us the total amount of currencies we will have available. But where do these extra currencies come from? Well, in the section Lending We will be able to lend or borrow our funds (we will see this in more detail later). Now, when creating an account from Margin Trading, the platform will automatically take credit depending on the percentage of the amount we are willing to pay for it.
We will create a new order, in our case of purchase, and for that we will go to the purchase box «Buy» and we will fill in the following information.
Table for generating the purchase order
As was the case in Exchange the data are:
- Price: is the price we want to pay per unit
- Amount: The amount we want to buy from the cryptocurrency
- Loan rate: refers to the maximum interest rate that we are willing to pay for the loan that we will request.That is, if we currently do not have a credit loan, the system will automatically take the lowest loan, depending on the interest rate we set.
- Total: the total cost of the operation.
These operations cost between 0.15% and 0.25% depending on the amount of cryptocurrency to be transferred in the operation. Before creating an order, we must remember that the minimum amount for creating 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 Margin Trading section
As we can see, the bar or “position” opens in Open it position, which we will study in detail.
- Position: refers to the order position, Long refers to the buy position; Short refers to a sell position.
- Amount: tells us the amount of cryptocurrency we are buying or selling in this position.
- basic price: this is the price at which we make purchases, that is, the base price.
- East. Clearance Price: this column tells us the minimum price that the cryptocurrency can reach before the platform gives us a Compulsory liquidation, That is, we are running out of funds, remembering that in Margin Trading we work with borrowed money with a leverage of 2.5.
- Unrealized P/L: shows us the amount of upcoming losses or profits that we have made for the order.
- Unrealized loan fees: here we will be shown the interest we have to pay for the money we borrowed for this order.
- Action: allows us to close the order.
When the order is finished we can click on action, which will close the account, that is, in the case of a purchase, they will liquidate the funds we bought, sell them, and otherwise they will just close the account normally.
There is one more part that we must pay attention to, and that is the part margin account, where the details of our Margin account will be indicated.
Total data managed in the Margin Trading section
- The total value of the margin: refers to the total value of the cryptocurrencies we have in our Margin Trading section.
- Unrealized P/L: is the sum of profits minus total losses in the Margin section.
- Unrealized loan fees: just like in the open position, it indicates the interest that has not yet been paid.
- Net worth: It is the sum of the total margin plus the sum of the profit or loss deduction, minus the interest that we have not yet paid.
- Total Borrowed Value: refers to the amount of loans we still have and have not closed.
At the bottom we see that the starting capital is 40% plus the positions that are currently open. It takes a lot of practice to use this section well, so it is advisable to start with good practice first Exchange basic before moving to this level.
On the Poloniex platform, there is a way we can easily get dividends by just lending our money, and this is it lending, option that we will find in the top menu. From this section We will be able to provide or take insurance to work on Margin Trading with our cryptocurrencies.
To begin with, we must first switch from Transfer Balances as we did in the previous section, our loans section. Once they’re switched, it’s time to get to work.
The first thing we will find when we open the lending window will be the following.
The main screen of the Loans section
Here we will see:
In this section, we can generate new loan offers, depending on our available capital.
In these tables, we will see the current offers and requests for loans that are on the platform. At the top of each table we will see total cryptocurrencies who are currently on loan.
U My asset loan Let’s look at the offer of current loans that we have in iu My open loan offers our active loan offers.
In this table of Balances we will be able to visualize the amount of money we shared between Exchange, Margin Trading y Lending.
To create a new offer, you only need to fill in the data in the first field.
Box for creating a new loan offer
- Installments: we will enter the interest we want to receive per day.
- Amount: enter the loan amount.
- Duration: we will put the duration in days.
- Automatic renewal– By selecting this option, the credit once returned will be renewed and automatically reappear in the offer orders.
After the data is filled in, we will click on the button offer credit which will generate a new finished order, and will be shown in the table below. It should be noted that the minimum offer for credit is 0.01 BTC.
The tools we saw in this advanced tutorial They are much more powerful than the basic ones we saw earlier. With Stop Limit we can increase profits or reduce losses if we use it wisely, but still you have to be careful because the risk of losses can be high; maybe not so much in lending, because the system is responsible for protecting our money by liquidating users in case of a price drop, but in Margin Trading because we can make a very good profit, but at the same time we can find ourselves in trouble if we don’t do a good market study and force the platform to give us forced liquidation, which is the same as leaving us without funds. So you have to be very careful when experimenting with this section.
It remains for us to take advantage of this platform and always remember the maxim “practice makes perfect”. Therefore, we recommend that you first practice in basic Exchange before moving to this level.