Based on Finder.com materials
Read our guide on how to trade Bitcoin and other cryptocurrencies with leverage of up to 100:1.
Bitcoin and many other cryptocurrencies are famous for the volatility that sees their prices fluctuate substantially in a short period of time. If you’d like to turn a bear (falling) market into the opportunity to make a profit, you may want to consider leverage trading.
BitMEX is a popular cryptocurrency exchange that allows its users to trade with leverage of up to 100:1, providing traders the opportunity to amplify their gains, as well as potential losses.
If you want to know how to trade cryptocurrencies using leverage on BitMEX, read on for a step-by-step guide.
What is leverage trading?
Sometimes referred to as margin trading (the two are often used interchangeably), leverage trading involves borrowing funds to amplify potential returns when buying and selling cryptocurrency. When you leverage trade, you can access increased buying power and may open positions that are much larger than your actual account balance.
For example, if you have an account balance of 5 BTC and you want to place a trade with leverage of 10:1, you can open a position worth 50 BTC. This means that if the market moves in your favor, you’ll be able to access 10 times the profits; however, it also has the effect of magnifying losses when the market moves against you.
How does it work?
Different exchanges impose different limits on the amount of leverage available, and BitMEX offers leverage of up to 100:1 on some contracts. However, the amount of leverage you can access also depends on the initial margin (the amount of BTC you must deposit to open a position) and the maintenance margin (the amount of BTC you must hold in your account to keep a position open).
When leverage trading cryptocurrencies you have two options:
Going long. Opening a long position involves buying a contract because you believe it will increase in value.
Going short. Shorting is when you sell a contract because you think its price will go down, and then you can buy it back at a reduced price at a later date.
When you open a position, a portion of your account balance is held as collateral for the funds you borrow from the exchange. If your trade is successful and you close the position at a profit, your collateral is returned to you along with those profits minus any fees. However, if the market moves against you and you’re in loss, your trade will automatically be closed and your collateral liquidated when the market reaches a certain price — this is known as the liquidation price.
How to leverage trade on BitMEX
How can you trade using leverage on BitMEX? Follow these simple steps:
Step 1. Register for a BitMEX account
Click through to the BitMEX website and register for an account by providing your email address and creating a password in the box at the right of screen. You’ll then be emailed a link which you’ll need to click on to verify your email address. Once that’s done, make sure you enable 2-factor authentication to provide an increased level of security for your account.
Step 2. Deposit funds into your account
Click on the “Account” tab at the top of the screen to be taken to your wallet. Click the green “Deposit” button and scan the QR code or copy your wallet address. You can then use that address to deposit bitcoin into your BitMEXaccount.
Step 3. Navigate to the trading screen
Click the “Trade” link at the top of the screen. You’ll be taken to the trading screen where you can click the tab of the crypto you want to buy or sell — Bitcoin, Cardano, Bitcoin Cash, Ether, Litecoin, EOS, Tron, and Ripple are all available.
Step 4. Enter the details of your position
In the Order box on the left of the screen, select the type of order you want to place. For this example, we’ll be using a Market Order. Enter the quantity of your trade, that is the amount you want to buy or sell in US dollars (USD).
Step 5. Set your leverage
Use the slider below the Order box to set the desired level of leverage for your position.
Step 6. Review the details of your transaction
Take a moment to review the full details of your transaction. The “Quantity” field shows the value of your position, but because you’re trading with leverage, the money you’re putting at risk is less than this. The “Cost” field details the maximum amount you can lose on the position if the market moves against you. “Order Value” shows the value of your position in XBT.
Step 7. Open your position
If you think the price will rise and you’re going long, click on “Buy Market”. If you’re shorting because you think the market will fall, click on “Sell Market”. An order confirmation screen will appear and contains information such as the level of leverage, order value, cost and the estimated liquidation price. Review all details carefully before clicking on “Buy” or “Sell” to confirm your order.
How To Open A BitMEX Account?
Use the following link to open the BitMEX account https://www.bitmex.com/register/Q1nfNX
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