BitMEX Trading Guide 2019
Based on BestBitcoinBroker Materials
There are a lot of people that probably know and have heard about BitMEX but do not know exactly the potential of services they offer. Did you know that BitMEX handles more than $3 Billion worth of Bitcoin per day? The website is one of the best crypto trading platforms that offers an amazing array of features.
Professional Automated Order Settings
First of all, the website has a few order types that people might not yet know about. Here are BitMEX additional order types they are offering additionally to the basic limit and market buy and sell orders, for your reference.
Stop Limit / Stop Market — A stop-loss order allows you set up a price within the range that you are only willing to lose. This works as a safety net for an order that you do not want to end up hitting the ground.
Trailing Stop — This order type is pretty similar to the stop market order where the trader specifies the trailing value and once triggered the market order is placed.
Take Profit — Works like a stop loss order but works on both ways. Instead of just using as a safety net, take profit orders can also work as an entry position in the market.
Post Only — This order setting is an important one because it allows traders to influence the fees they have to pay for the trade. Post only ensures that you get the maker fee and don’t have to pay the taker fees.
Now, let’s move forward and discuss everything you need to know about the BitMEX platform.
4 Biggest Advantages of BitMEX for Pro Traders
Earlier we’ve talked about new traders that are just getting into the game. But what does the website have in store for pro traders? If you are a pro trader seeking the best Bitcoin margin trading place, then you would want to trade at BitMEX due to their low fees.
For perpetual contracts, BitMEX only charges 0.075% for Taker Fee and -0.025% for Maker Fee. The latter means that you are actually getting money in the role of the maker. The taker fees are low unless you use high leverage, this will change the calculation dramatically since the fees will get multiplied with the amount of leverage. That’s something you should take into account.
In addition, BitMEX offers a good number of order types to choose from along with a very friendly trading platform which is accompanied by a smooth website. To summarize the advantages, we have listed them below for future reference.
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Low Trading Fees
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Plenty of available order types
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User-friendly trading platform
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The website works smoothly
How Bitcoin Margin Trading Works Generally
If we were to explain how margin trading works generally then we would say that you only need to focus on long and short trades.
Long
If traders go with long trades then they are buying low and selling high; which is probably the most basic move that a trader needs to do in order to make a profit. It doesn’t require a genius to figure this out and even new traders know about how to buy low and sell high.
Short
When talking about short trades, we are just actually reversing the process of long orders. With short trades, traders need to sell the asset for a higher price and buy low and repeat the process over again.
That’s the most basic approach when it comes to margin trading. We do need to remind new traders that leverage/margin trading isn’t always something that you thought it was. Margin/Leverage trading actually means that you will be loaning money from the platform that provides margin services. The maximum leverage for BTC trading is 100:1 on BitMEX platform, which is one of the highest BTC margin levels provided today.
How Exactly Does BTC Trading Work on BitMEX?
The trader needs to deposit real BTC into their accounts in order to participate in the trades being done on the platform. Below we will be talking about perpetual contracts, futures, what they are exactly and what are the differences between these two trading strategies. We will also explain some trading terms.
Perpetual Contracts
A Perpetual Swap Contract is considered a derivative product that is very similar to a futures contract. However, they do have some significant differences. Other than a futures contract, a perpetual contract has no expiry or settlement.
Futures Contracts
A derivative product which is an agreement between the trader and the trading platform wherein the trader buys or sells a commodity/currency for a specified price and time in the future. This can go either physically settled or with cash.
Important Terms
Professional traders know trading terms by heart, which is exactly why we want to include this in this article to pass on information to the new generation of traders:
Entry = price at which your order to buy/sell is executed
Capital = account balance
Position Size = number of BitMEX contracts (1 contract = 1 USD)
Stop Loss = order that closes a losing position to cut losses short
Risk Amount = Part of your Capital you lose on the trade if stop loss gets executed e.g. if I want to risk 5% of my Capital on a trade, my Risk Amount = Capital x 0.05
Leverage = borrowing money from your broker to be able to open bigger positions
Liquidation = forcible closure of your trade (highest loss possible for a trade)
How to Open a Position
Traders can use limit, market or automated stop limit order (trigger order) to open up a position. On the other hand, to close a position these orders mentioned above can also be placed to close a position. Thus, people that want to close a position can use limit, market, and automated take profit order positions. In addition, in order to open a position in the market, you do not need to use margin trading.
Detailed Process of Trading
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Find a trade according to your strategy
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Decide Entry, Stop-Loss, and Target
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Calculate your Position Size
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Enter the Trade
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Manage the Trade
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Exit the Trade
The Principle of Successful Trading
If your trade setup is at 50:50, you need to have a risk/reward ratio better than 1:1. This means that in order to profit (which counts as a successful trade) you need to have profit every other trade. That is why the risk: reward ratio must always be known before the trade is finalized. The point is: The stop loss needs to be always closer than the target.
Tips on the Amount of Leverage
One common fatal mistake made by newbie leverage traders is making use of too high leverage. In reality, the higher the leverage is, the higher the difficulty of you getting out a profit after the fees are taken out. We strongly advise new traders to start with lower margin trades. Always keep in mind that high leverage is gambling (which is not a logical way to trade) and the more leverage you use, the closer it gets to liquidation process. Leverage, just as it was designed should only be used to pump up your funds in certain trade setups and not for a long-term strategy.
With high leverage, you might win the battle once, but you will definitely not win the war.
Pros and Cons of BitMEX Platform
Pros
· Very Flexible Leverage (up to 100:1)
· Low Fees (except for certain high leverages setups)
· Professional Order Types
· High Volume
· The Website Interface is Intuitive
· No ID Verification and no Cash out Limits
· Very Fast Sign-Up Process
Cons
· US Traders are Banned
Conclusion
To sum it all up, BitMEX is a trading platform that was designed for professional traders that know what they are doing when it comes to leveraged trading. Newer traders are welcome to try out their services but are more likely to have difficulties due to the level of skills required to harness the full potential of the platform. Overall, BitMEX is an excellent trading platform that provides everything you need for a successful margin trading.
START TRADING ON BITMEX
Open the privileged BitMEX account using the following link:
https://www.bitmex.com/register/Q1nfNX
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Check the Collection of the Best Free BitMEX Trading Guides
https://bitmex.global/BitMEX-Trading-Guides/
