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Margin Leverage trading fundamentals

提問人
cy
cyanshrimp1554f
2021.04.12 14:00

I wanted to ask a few questions regarding margin leverage trading of cryptocurrency as I could not find clear and concise answers on the website or pretty much anywhere on the internet. It's a highly risky endeavor so I want to truly understand how it works instead of just naively jumping on and hoping for the best. I find this endeavor really exciting, but immensely horrifying as I don't thoroughly understand how all of the fundamental tools work exactly. I would be really grateful if you could answer these few questions of mine:

1. Is buying/selling independent from other people and is it executed instantly? What I mean is, if for example I'm buying long for 500000 USD (or any amount) worth of a trade, but no other user is selling for that much, is it executed still (the same question about selling - if no other user is willing to buy it, am I stuck with it or does it automatically, instantly gets sold no matter what other people are willing to buy)? This is really important for me to understand because timing is everything. And if I get stuck with a trade because it's dependent on what other people want - that would become the riskiest element in this type of trading. It's not even the margins. It's not being able to execute the trade instantly when the timing is right. How quickly are the orders executed and what is the order execution failure rate if there is such?

2. Liquidation and risk management. As I understand the liquidation calculation happens in real time as the trade goes up or down. But which part of my finances within my connected wallet is calculated in the liquidation process? How does the liquidation process work exactly? If for example I’m borrowing 18000 USD worth of crypto while having 2000 USD worth of my own money and I buy long ETH/BTC at 100X for 200 USD, but it goes down to -97%. Do I get liquidated? If so, at which point and can I change manually the point at which I think I should get auto liquidated? What is the liquidation process when I don’t borrow any money into my wallet for capital, but trade just from my own money, but still utilizing the maximum leverage for margin trading that the platform can offer?

3. As far as I understand there is a possibility that the stop-limit function might fail me for some reason. Is it due to slippage? What causes it? If it is due to slippage, is it possible to modify the slippage tolerance? Because such a failure in execution might be absolutely catastrophic. If I can't trust the tools, I want to know what causes them to fail.

4. If I am making a profit from a successful trade\, who is paying me the money? Is it the trading platform? Because if I am winning, someone has to be losing. Can a centralized trading platform manipulate the charts of a specific market to its own advantage when trading orders of massive value are taking place even though those charts do not match the official global chart values? Or can DeFi trading platforms do the same?

5. Is there a practice demo trading mode for margin and leverage trading?

I really appreciate you taking the time to answer these questions.

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