Could you please explain, if you know this, how margin trading works on poloniex? If I short sell like 10k clams and price is stagnating and I decide to close that short will that appear as a buy in market?
I think it works like this:
When you short sell 10k CLAMs, you borrow the 10k CLAMs from a lender and immediately sell them on the market.
Later when you close your position, you buy the (10k plus interest) CLAMs back on the market and repay your loan.
So your trade causes a 10k sell when you open it, and a 10k+ buy when you close it.
It won't appear as a buy order in the market. Your buy will execute as a market order, consuming existing sell orders rather than creating a new buy order.
The small purchases are made to cover loses incurred by the short-selling (if price goes up after a short-sale, the portfolio has lost 'value', and must purchase CLAM to cover that loss).
At least, that is my understanding of it.
Small price changes normally wouldn't cause margin calls. You have to lose enough to drop below the minimum required equity first. Of course that depends how leveraged you are. Poloniex allows something like 4:1 leverage I believe, though some of the BTC margin exchanges allow some really crazy stuff like 50:1 or maybe even 100:1
Conceptually that is correct though, right?
I'm not sure what you're getting at with "the small purchases". There aren't any small purchases.
If the price goes up high enough that you're getting close to being unable to afford to buy back the CLAMs you sold then you will be margin called, and the BTC you used as collateral plus the BTC you made by selling the borrowed CLAM will be used to buy the CLAM back so you can make the lender whole.