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BitShares is a modern, fully decentralized, DEX. It houses many assets and *SmartCoins* that can be traded and borrowed. 

One of the more advanced features is borrowing a **SmartCoin** with BTS as collateral, also called Margin Trading. In this post, we will briefly go into details of what happens in the background and what terms like Settlement and Margin Call Price means.

##### *Remember to never trade for more than you can afford to lose. These posts are not meant to be buying recommendations nor am I responsible for any missinformation. You should always do your research.*

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###### <center> Note that at present time, there are more than the above bitAssets that goes by these principles</center>



# <center>SmartCoins and bitAssets</center>


Below is the chart for bitCNY as it is today. Take notice on the yellow price on the selling side of the price, set at 0.32677 and the same colored section on the graph.

The yellow selling bid is, in fact, a Forced Settlement generated by the network. Someone had a loan of bitCNY, but when the settlement of BTS could no longer cover the minimum 1.75 collateral ratio, the system used those to create a selling order. 

The owner of this Forced Settlement can raise their collateral ratio with more BTS to cover the limit, or let the network settle the order on the market. 

https://steemitimages.com/DQmYZmXboP599WtAmF27Tj6R27xpLV9Z7QZfhYKbmNWxRc3/image.png


### These are the numbers we will look at today
https://steemitimages.com/DQmYHU5hSzwEN2bNkHE4f3HxBvKxJ1QH9X95PtrGtxGT46e/image.png

## Settlement / Settlement Price
This variable indicates the current price where orders will settle. For bitCNY, this is currently 175% of the current outside market price provided by witnesses.

To borrow one bitCNY, with a price of 0.293 you will require settling a minimum of 0.513 BTS (175%). At this level, the network will take the settled BTS and sell them for a discount on the system.

## Margin Call Price 

The forced settlement is not the setter of the price, and should thus never settle at a higher rate than the current market price. If the network creates a forced settlement with a higher rate, the order will not settle until it hits the Margin Call Price.

Once the current BitShares market goes below the Margin Call Limit line, the market will start to fill bid orders in turn.

# <center>Profiting by Margin Calls</center>

It's entirely possible to make a good profit by the networks margin calls. When a market has a significant settlement order in, and the base price is low enough to make it fill bids, you can [sell your borrowed bitAsset](https://steemit.com/bitshares/@sc-steemit/bitshares-on-the-rise-how-to-enjoy-the-ride-and-still-cash-out-if-you-need) at a 10% premium, which is there to make the new borrower a reason to sell and cover the shorted order.

Once your bitAsset has sold for BTS, you can create a new buy order to buy back at a lower price to settle the margin again.

### <center>[Join the Decentralized Trading, join the BitShares DEX today!](https://wallet.bitshares.org/?r=sc-ol)</center>

##### More Sources on this topic <br /> [BitShares.org - Price-Stable Cryptocurrencies](https://bitshares.org/technology/price-stable-cryptocurrencies/) <br /> [BitSharesTalk - Smart Coins & Forced Settlement](https://bitsharestalk.org/index.php?topic=20356.0)

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# <center>Vote for me as Witness</center>

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Enjoy what I contribute to the community? Consider voting for my Witness on Steemit or BitShares. You can also vote for me as a [Steemit Proxy Voter](https://steemit.com/witness-category/@sc-steemit/the-difference-of-votes-and-witness-votes-don-t-waste-your-witness-votes-on-dead-witnesses).

By voting for me as a witness, you will support an active witness on Steem and BitShares. I believe a witness should keep up-to-date on current happenings and be a conduit between the many users and the system.

**Read my Witness Posts:** [BitShares](https://steemit.com/bitshares/@sc-steemit/joining-in-as-bitshares-witness), [Steemit](https://steemit.com/witness/@sc-steemit/intent-to-become-a-witness-of-steemit)

**Support my Projects:** [Gridcoinstats.eu](https://www.gridcoinstats.eu), [Crypto.fans](https://www.crypto.fans)

**Available on:** [BTS Discord](https://discord.gg/RPJEsGp), Gridcoin Slack and [Gridcoin Telegram](https://t.me/gridcoin)

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<b>Vote for `sc-steemit` on Steemit</b><br /><a href='https://steemit.com/~witnesses'><img src='https://steemitimages.com/DQmNMUctDGwFLodWPEhtsNNqX49czWPTPffReVEeWcHRwmt/vote_witness_scsteemit.PNG'></a><br /><b>Vote for `sc-ol` on BitShares</b><br /><a href='http://cryptofresh.com/u/sc-ol'><img src='https://steemitimages.com/DQmZu3oUhQRQUN6VsFMuWeyPHW8Dd5es49ZCLyvdXM9jLmq/vote_witness_scol_white_2.PNG'></a><br /><h4>**Proud Supporter of <a href='http://www.gridcoin.us'>Gridcoin</a> and <a href='https://wallet.bitshares.org/?r=sc-ol'>BitShares</a>**</h4>

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