Bitmex exchange for crypto margin trading
Margin trading is not suitable for beginners in trading and should be done with careful caution and attention. Someone using the information provided in this video or article, including buying or selling, does it on his or her own risk.
It is important to note that margin or leveraged trading is considered very risky and speculative, so you should trade with caution. Always trade amounts you afford to completely lose.
The biggest advantage of margin trading is that we can actually leverage a position without the need to hold the required bitcoin or crypto assets. In the crypto world, it is not recommended to hold a large amount of bitcoins on an exchange. Better to hold them only on cold storage.
Another advantage is that the exchange allows us to make short trades, it means profit when Bitcoin goes down.
The BitMEX main screen
As you can see on the right side we see the last transactions made, in the middle we have the graph, and the left pane is actually the interesting one, here we open our positions.
Quantity = position size in US dollars.
Limit Price = The price we set in order to open the position.
Cost = the total price of the position.
Order Value = The total value of the position (if the leverage is set to 1, then it’s equal to the cost minus fees).
Available Balance = Balance we have in bitcoin.
Before opening the position, we will define the leverage. If this is your first trade I would recommend leaving it on 1, that is, with no leverage at all.
Leverage means position cost divides by the same ratio. For example, if we set the leverage to be times 5, then we expect the cost of the position to be reduced by the same ratio – divided by 5. Which means it will be reduced by five times. This basically allows us to trade on bitcoins we borrow from the exchange. Keep in mind - the higher the leverage will be, the more we will have to borrow from BitMex and therefore the fees will increase.
Another thing you need to know about is the liquidation price. This is the price value at which Bitmex will close the position, or liquidate it. Bitmex can’t afford to lose, and in order not to lose the money we borrowed for the position, the position will automatically close once we lose the amount of bitcoins that belongs to us.
Placing a new position
We do it using BUY, means long position - when we believe that the value of Bitcoin will increase, or SELL – short position - when we actually benefit from the decrease of the Bitcoin’s value.
We will set the buying price to be higher than the market price because we want the position to open immediately (means buy from the sellers) or lower than the market price if we want to join the buy wall and wait for a seller.
We need to confirm the position in the popping screen - notice we can see when Bitmex is estimated to liquidate the position.
Now we see our position: we have here the entry price, Unrealized PNL is the estimated profit and it’s calculated according to this Mark Price, we also see the real Liquidation Price. In case we close part of the position, we will see the gain or loss on the Realized PNL tab.
Two ways for closing our position
The first is by setting a SELL command: suppose we want the position to close at price of 4200$, so we will create an inverse command to our original position with the same quantity.
Or if we want to close the position immediately – there is this red button here - Market. The order will be released to the market and will close at the best available price. On Bitmex there are more advanced options such as stop-limit.
The link here gives you a 10 percent discount on transaction fees for the first six months.