Can an NFT degen become a perps trader?
Absolutely, if you are stubborn!
I'm back with another thread about my experience on @HyperliquidX
If you are an experienced trader then skip this, if you, like me, are new to trading then maybe you will learn something useful.
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I opened a trade at what turned out to be the local top, and immediately starting losing.
This didn't invalidate my thesis, so I decided that I wanted to stay in the trade, try to keep the trade open until it came back into profit, and hopefully collect funding too.
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In hindsight of course it would have been great to close the trade and open a short, but I am not a genius trader and do not have a crystal ball.
To keep the trade open, you have to make sure you have enough margin ($USDC) available in your account.
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There are two types of margin:
1. Cross margin
2. Isolated margin
Cross margin is more capital efficient, which means you can open more trades with the same pool of funds.
Collateral is shared across positions.
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Cross can become a bit tricky though, as if you had several trades on cross margin and one coin went rapidly downwards, your cross margin ratio could tend towards 100% and liquidate all of your open positions.
You can avoid that with sensible stop loss orders.
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Isolated margin will keep the funds allocated only to that trade.
This means if you open a trade on isolated margin, then if you get liquidated on this one, your other cross or isolated margin trades are not affected.
An example of a coin with isolated margin is $RLB.
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In my trade, I was in a cross position.
To maintain my trade, I closed my isolated trades, and this freed those funds back for the cross positions, reducing my liq price.
I then just watched the market, and as the spot price approached my liq price, I deposited more $USDC.
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This is not a very capital efficient trading method, but it is well know to us NFT degens.
Essentially I became a trade community member, and bagheld while the floor price was under mint price 🤣
This is a bit risky, as those added funds were at risk of liquidation too.
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While the price was going down, other traders were shorting whilst I was still in the long. This meant that if the funding rate turned negative, then I would be collecting funds.
This worked out, but not as much as I hoped.
I earned about 10% of the size during this trade.
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Overall this was a super cautious approach at a risky trade and has worked out okay.
It worked for a long as we are maybe starting a bull trend, it would also work for a short in a bear trend.
Thanks for reading!
I'll be back soon with a thread about Hyperps.
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