Just have an interesting case study of my trading experience on Poloniex last week. I traded on Poloniex's margin trading platform and was margin called on June 15th 17:15 when the prices went from .000029 BTC per BTS to .000014 BTC per BTS back to .000028 BTC per BTS in a ten minute span. (Down 50% in less than 10 minutes!) I didn't realize the liquidity was so low on Poloniex, but it's interesting to know what can happen. I lost a chunk of money.
I think someone or some bot just ran down the book on all the buy orders and got the price really low to trigger all the margin calls and bought back at low prices, but not sure of the exact mechanics. Is anyone on this forum running a bot there? Lol.
Does anyone have an alternate or better explanation of what happened? The bigger issue is trying to understand the trading mechanics of price 'manipulation' techniques to trigger margin calls. On low liquidity days it seems like a viable strategy and that's precisely why I do not like any kind of forced settlement. The price seems too easy to manipulate. Also when liquidity is very low it seems like walking the book on margin call settlement can cause cascading margin calls. I'm hoping liquidity will solve most of these problems, but interested to know everyone's thoughts.
Can someone explain how this compares with SmartCoins?
I've been too busy to analyze this and didn't notice I was margin called until a few days after it happened. Hopefully we can use this as a case study so we can all learn. Let me know if you guys have questions.
BTW are you devs running Monte Carlo simulations on varying trading patterns and liquidity? It would be interesting to stress test various trading scenarios to see what happens...