I look at leverage trading with GMX much like a trip to the casino. I’m going to use this analogy to guide the article and breakdown generally how investing can work within the protocol.
GMX is a governance token, it is speculative and is paid out to users who participate in GLP and GMX staking. These payouts are typically done in a derivative of GMX called esGMX. This esGMX is locked in escrow and must be vested for one year.
GMX has two strategies, stake on GMX.io and builds up an In-House position on their site. Compound this position when gas is affordable to do so. The second option is to stake GMX on Yield Yak. This auto compounds the GMX rewards into more GMX. Very simple but sustainable farm.
Investing in GMX is most equivalent to investing in the stock of the casino. GLP is the second asset offered by GMX. The GLP token represents the underlying liquidity of the leverage trading platform. The price point has remained relatively steady over the last two months.
GLP accrues the fees of the platform and pays these out as AVAX and esGMX. GLP is like providing funds for the casino to play with, but you warn a piece of the losses from users. Below are the real fees brought in by the protocol on Avalanche.
GLP has 3 strategies at the moment. The first is old reliable, a single-sided farm on Yield Yak. Stake the GLP and withdraw GLP whenever you are done.
The second option is to open a CDP on Moremoney. This allows you to deposit GLP as collateral and borrow the stablecoin MONEY against it. I utilize my GLP on Moremoney to borrow MONEY that I deposit into iMONEY. I utilize a mixed strategy of Looping and Bulking to achieve my optimal LTV.
Part of this above strategy can be used in part with an iMONEY play as seen below. In real use, I split my Bulk strategy borrow at 70% iMONEY and 30% looped.
The third option for GLP is to stake it in the GMX site. Here you accrue interest and fees in AVAX and esGMX. I used to do this when I wanted to accumulate AVAX rather than more GLP. The rewarded esGMX would begin vesting as soon as I could.
Lastly, how I leverage trade is not super aggressive. To begin with, I am not an expert trader. I am not an expert analyst. I am not a financial advisor. This is my “going to the casino”. I spend money here I can only afford to lose.
I personally play the game of weekend pumps and dumps. I don’t play the long-term options game. My positions will be open for a couple of days maximum. I utilize high leverage, and low collateral position and mostly watch the 4h, 1h, 15min, and 5 min charts.
I never short the Red Koin because AVAX is the chosen one. I short the big orange using BTC.b and I short “ultrasound money” Ethereum using wETH.e. I typically take payment in native USDC as a personal preference. I typically take profit after 30-40% depending on how the graphs look. I set a trigger close as specific price points so that even if my target price hits while I’m sleeping or working, it will close the position and cash me out.
Rumor is @ChrisFusillo broke GMX one day after trying to use MIM as the cash-out currency on a Whiskey Wednesday.
Remember leverage trading is risky, so never deposit more than you can spare to lose. If you plan to short, have an exit plan as well as your entrance plan mapped. You don't have to do fancy technical analysis too long or short well. Set a mental stop loss and a physical trigger close and all will hopefully bode well.
One of the best strategies I have is to trade with friends. It makes losses more bearable and wins that much more enjoyable. If you each do market research separately and devise plans before conversing, you can gauge sentiment and strategy. Don’t discount the moon traders, they average too well to be dismissed.