If you have ever wanted to short or long Bitcoin utilizing leverage, you’d probably heard about BitMEX.
The market was established in 2015, considered the first of its type in the Bitcoin margin trading area. BitMEX is now the major exchange by way of trading volume. It allows leverage of up to 100X.
BitMEX Exchange Video Tutorial
The largest benefit of margin trading is you can leverage a position without holding the related bitcoin or crypto assets. From the crypto world, it’s not wise to hold a massive number of bitcoins on a market. Better to put them in cold storage.
Another benefit is that the exchange enables one to create short trades, making profit when Bitcoin’s cost goes down.
It is important to remember that margin, or leveraged, trading is considered very risky and insecure, and that means you need to trade with caution. Always trade amounts you can manage to fully lose.
The BitMEX Main Screen
On the right side, we see the past transactions made. In the center, we have our graph. The left pane is truly the interesting one; that is where we open our rankings.
Amount = The position size in US dollars.
Limit Cost = The price we set in order to start a position.
Price = The entire cost of our position.
Purchase Value = The complete value of this position (if the leverage is set to 1, then it is equal to the price minus fees).
Available Balance = Our Bitcoin equilibrium
Before starting a position, we’ll define the leverage. If this is the first trade, I would suggest leaving it — that is, with no leverage in any way.
Leverage means the position cost divided by the same ratio. By way of instance, if we place the leverage to x5, then we would expect the expense of the place to be decreased by exactly the exact same ratio — divided by 5. That means it will be decreased by five. This essentially allows us to trade on bitcoins we borrow from the market. Bear in mind that the greater the leverage, the more we might need to borrow from BitMEX, and for that reason the higher our fees.
Another thing that you will need to know about is the liquidation cost. This is the value where BitMEX will close or liquidate the position. BitMEX can not afford to lose, and so as to not lose the money we borrowed for the position, the position will automatically close once we reduce the quantity of bitcoins that belongs to us.
The way to trade on BitMEX exchange?
Set a purchase order, or long standing, when you think that the worth of Bitcoin will increase, or put a market order (short position) when you hope to profit from Bitcoin’s worth decreasing.
We will set our purchasing price to be greater than the market price if we need the place to open instantly (buy from the sellers), or lower than the market cost if we would like to join the purchase wall and await a seller.
We will have to verify our position on the pop-up display. Notice that we can observe when BitMEX is estimated to liquidate the position.
We could see our position: the entrance cost, the unrealized PNL (the estimated gain, calculated in line with the mark cost ) and the true liquidation price. If we close a part of the position, we’ll observe the profit or loss on the Realized PNL tab.
The way to close a position on BitMEX exchange?
The first is by placing a Sell command: if we want the place to close at $4,200, we’ll make an inverse control to our initial position with the identical quantity.
Or if we would like to close the place immediately, we will press the red Marketplace button. The purchase will be released into the marketplace and will close at the best available price. BitMEX has more advanced options like stop-limit orders.