Based on Aaron Kent Materials
Bitcoin Mercantile Exchange (BitMEX) is the biggest online trading platform that provides its users with the opportunity to trade Bitcoin with 100x leverage. There are various types of contracts that are offered by BitMEX. We will take a closer look on this in our BitMEX trading guide. Out of all platforms that offer cryptocurrency trading, BitMEX is the only one that provides users with a “Perpetual P2P Swap, which is a contract that is traded like a future, with the only difference that it has not expiry date. The platformhas seen exponential growth since its establishment, an aspect that could be partly attributed to their capacity to provide traders with access to derivative markets and their ability to command loyalty among its users through their user-friendly yet highly advanced platform, increased security, open communication, and transparency.
Getting Started on BitMEX
The first step towards using BitMEX involves creating an account with the platform by filling the registration form provided on their signup page. The company asks for basic information that would allow one to login into their account and to create a trader profile. Individuals are not required to go through any submission of KYC/AML documents. All individuals need to do is to sign up and they can immediately start trading. After setting up an account, it should be funded with the amount that one wishes top trade with.
Securing Your BitMEX Account
After successfully setting up an account, it is important to take all necessary measures to ensure that the account is safe. Such security starts with keeping one’s login credentials confidential. Hackers increasingly attempt to gain access of user accounts and defraud them. Nevertheless, there are various measures that could be upheld to prevent such hackers from breaching one’s account:
BitMEX provides users with an option for two-factor authentication, which they can enable on the exchange account to prevent hackers from accessing one’s account, even in the event that they get access to one’s login credentials. 2FA allows users to add an extra layer on the process of authentication by requiring them to either use email authentication or SMS authentication upon an attempt to log in. the use of 2FA exponentially reduces the risk of one’s account being compromised.
Apart from using 2FA, it is important for users to ensure that they set strong passwords that would not be easily guessed or predicted by hackers. Such passwords should not be used on any other platform as a breach of such a platform could result in the same passwords being used to access one’s BitMEX account. Users should not use their names, date of birth, or any other personally identifiable information as a password.
Trading Bitcoin on BitMEX with up to 100:1 Leverage
Like other cryptocurrencies, Bitcoin is known for its volatility, which is informed by the substantial fluctuation in its prices over a short period. For traders who wish to turn a market that is falling into a profitable opportunity, leverage trading provides such an opportunity. BitMEX allows traders to leverage up to 100:1 in trade, providing them with the opportunity to extensively increase their gains or potential losses. This section will provide a step by step guide on how one can use leverage to trade
How Leverage Trading Works
Leverage trading uses a margin, which is a deposit, to increase a trader’s exposure to given assets. In essence, a trader only puts down a part of their trade’s full value and they receive a loan of the rest from their provider. The leverage ratio compares a trader’s total exposure to their margin. BitMEXprovides individuals with margins of up to 100:1. Nevertheless, the leveraged amount that a given trader has access to is dependent on their initial margin, which is the quantity of BTC that one has to deposit prior to opening a position, as well as their maintenance margin, which refers to the BTC quantity that they ought to hold in their account to ensure that a given position remains open. Traders who wish to leverage are presented with two options including going long and going short. In this case, going long refers to opening a long position by purchasing a contract based on the belief that its value will increase. On the other hand, going short involves selling a contract based on the belief that the price will decline, with the option of purchasing back the contract at a later date when the prices are lower.
Margin Trading on BitMEX
Step 1: Depositing funds into a BitMEX Account
After creating a BitMEX account, traders are required to deposit money in their account. This is done by clicking on the “Account” tab that is located at the top of the dashboard, which will allow one to access his or her wallet. Within the wallet is a “deposit” (green in color) button that should be clicked, followed by copying of the wallet address or a QR code scan. The address can then be used to deposit bitcoin into the user’s BitMEX account.
Step 2: Go to the trading page
The trade should then proceed to select the “Trade” tab on the dashboard, which will open the trading screen. The trader will then proceed to select a crypto that they wish to trade, which could be Bitcoin, Ripple, Litecoin, EOS, Ether, Bitcoin Cash, Cardano, and Tron, among others.
Step 3: Enter your position’s details
The left side of the trading screen has an Order box. The trader is supposed to choose the type of order they wish to place in this box. The diagram below shows the selection of a Market Order. After selecting the order type, the trader proceeds to enter the amount that they want to sell or buy in U.S. dollars, which is the quantity of trade.
Step 4: Set leverage
Users are provided with a slider in the Order box, as shown in the diagram below, that they use to set a level of margin that they desire for their position. Understanding the implications of the leverage, it is important for traders to exercise much caution when adjusting the margin.
Step 5: Review the transaction details
It is critical to take time and review the details entered for the transaction prior to proceeding with the transaction. In this case, the amount included in the “Quantity” field indicates the value of the trader’s position, including the leverage, in case the trader adjusted the leverage. As such, if the trade is using leverage, then the risked amount should be less than what is shown in the “Quantity” field. On the other hand, the “Cost” field shows the amount that a trader can lose in case the market prices drop. The “Order Value” demonstrates the position’s value in bitcoin.
Step 6: Opening of the position
In the case where the trader wishes to go long based on the belief that the market price will increase, they should select “Buy Market”. However, in a case where the trader believes that the market prices will decline and wishes to go short, they should select “Sell Market”. After making the appropriate selection, a screen will appear that requires confirmation of the order. All the details should be carefully reviewed by the trader before he or she clicks on “Sell” or “Buy” to confirm the order.
Start trading on BitMEX using the following link: https://www.bitmex.com/register/Q1nfNX
Conclusion
It is evident that BitMEX provides users with a highly interactive platform from which they can trade on all currencies, with all the payments made in Bitcoin. One of the distinctive features of the platform is leverage trading, which could prove highly beneficial for experienced traders, but a major challenge and source of magnified losses for inexperienced traders. It is important for traders to consider gaining much information about the markets prior to making leverage trades. Traders are also provided with the option of setting up limits on their trades, which minimizes the portion of their capital that they are likely to incur in terms of losses.
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