You spent your last weeks hunting ICOs to get some nice FLIPs, but you have to face the sad reality. Bitcoin bottoming is sad and makes everyone sad. Scams intensify and investors skip. Even pooling became insecure, which slowed down a bit the rush to presales in this steadily falling market. What can you do then? How to get some money and not being scammed? How to revive that good old x10 x20 frenzy? Answer: Margin Trading on BitMEX.

What is BitMEX?

BitMEX is an exchange on which you can trade the main crypto-assets which are Bitcoin, Ethereum, Cardano, Bitcoin Cash, EOS, Litcoin, Tron and Ripple. BitMEX’s specificity lies in its products: you can do basic trading, but you also have access to futures and margin trading. But, moreover, when exchanges like Bitfinex or Kraken usually propose x3 leverages for margin trading, BitMEX proposes x10, x25, x50 and even x100. If you’re not familiar with margin trading, “x30” doesn’t mean you have a x30 ROI, it means you can play 1 000 000 $ on the markets with only a bit more than a bitcoin. It also means that you can even make very interesting profits with not more than 0.1 Bitcoin (B). So why is BitMEX suddenly a thing? The fact that a lot of investors turned to it is most likely due to the poor recent returns of ICOs and also that there are no really other means to make money in a bear market unless you got amazing hedges.

What is Margin Trading?

Basically, margin trading refers to the act of borrowing money to buy an asset and sell it higher (LONG) or borrowing an asset to sell it and then buy it back lower (SHORT). It is like a bet, if you think the market is going higher, you long. Is it Bearish? Then you short. The leverage gives you a pretty clear idea on how much you’ll be able to borrow, and you can push it quite far on BitMEX, allowing fruitful short-term trades. This combined with the little flashing lights that twinkle around real-time indicators makes trading a quite addictive activity on this platform. And because you could lose all your money if you don’t know the basics, here is a quick guide on how to margin trade on BitMEX.

How to Margin Trade on BitMEX

First, create an account on BitMEX. We have a referral link that gives you 10% off your trading fees. We HIGHLY recommend that you use this link to register to BitMEX. Remember that 10% off 1M is 100k.

Then, you send your bitcoins there. If you don’t know how to use Bitcoin, well, you need to go to that step first. Once your deposit has been executed, you’ll need to ask yourself 3 questions: How much I put (sizing), which perspective (long or short) I choose and when do I enter & exit?

Sizing your bet

Ok so let’s say you have 2 B total. It currently represents around 13k$ but could worth way more in the future. Add to that one very important thing: when your money is on an exchange, it is not yours anymore. Your keys your bitcoins, not your keys not your bitcoins. For these reasons and thousands of others, we wouldn’t recommend that you have more than 10-15% of your entire crypto-portfolio on an exchange, even if we believe that BitMEX is safe.

Let’s consider you will then put 0.2 B (~ 1 200$ at 6100$/B) on your BtiMEX account now. This is your capital or bankroll. All the money you’ll play is here because you’re not supposed to lose everything (liquidation). Ideally, the money involved in your active orders (risk) should not exceed 10-20% of your bankroll. Because we’re wise, we will risk 0.02 B (~ 120 $). If you choose to be wild, you can go x100. So, 0.02 B x100 = 120$ x 100 = ~ 12 000$ or ~ 2 B. Playing with 2 B means that each time Bitcoin has a +/-500$ variation and if you have the right position (long/short), you will earn around 1000$ with only 120$ invested.

Put 12 000$ in and click on the direction of your choice: SHORT or LONG. A popup window should appear and invite you to choose your leverage. Here you go on x100. If you change your mind here and choose x50, it will raise your risk, which is the part of your bankroll that we initially evaluated at 0.02 B, 10% of 0.2 B. With x50 instead of x100, it will need 0.04 B for you to be able to play 12k$. Or you could reduce the number of contracts from 13k to 6.5k. Then your risk would stay the same but you can only expect half gains. So, with x100 you’re supposed to see that screen below (I chose LONG in this example).

As you can see, the liquidation price is really close to the buy price here (1.20%). If the price goes 30$ lower, you lose all your risk (0.00226 B, fees included). That’s normal because the leverage is very high, so if it goes in the wrong direction, the lost leveraged money will quickly fill your tiny risk of 0.02 B. X100 leverages are very risky because the price variations are very likely to liquidate your position. It is probably best used right after a spike to catch the rebound, but even that is risky.

If you want to have more space, and you will most often do, you shouldn’t go above x25 leverage. If we want to keep our 0.02 B risk and have a liquidation price far away from us, it may be good to use a x10 leverage. You’ll play 0.2 B or 1200$ with a liquidation difference of almost 10%. That kind of bet is better suited for middle/long-term bets, those you don’t need to monitor. It is 0.1 B earned every +/-500$, 50% of your whole bankroll!

Summary

  • Risk only a part of what you put on the exchange so you can make mistakes and have multiple tries before being positive.
  • Playing with more than x25 leverage is not recommended because your liquidation price will be to close to your entry price. Up to x10 is good for long-term positions, x25 is good for quick shots.

Take the right decision

So now you know how much you are going to play, you need to know what you are going to play. For long-term positions, you will need to “zoom-out” and look at the big picture: what is the overall tendency?

As you can see in the picture above, you can simply increase the duration of the candles to 6h in order to have a nice long-term chart. For short-term positions, candles duration of 15 to 30 minutes should be good enough.

Here we highlighted 3 short-term opportunities. The first one is a long that can be closed positive a few hours after the spike. The second is a very touchy short that you will likely close losing a bit of money because what you expected didn’t happen. However, the craziest ones (those who kept their short open) made some money by closing the following day. The third opportunity is a potential high gains opportunity for shorters.

How to enter and exit

Now you know how much and what to play, we’ll see exactly how you can simply maximize your gains and minimize your losses.

If you’re playing mid-long-term (days, weeks or even months), you should have some space between your entry price and your liquidation. You should bet at a moment when you think that it may go lower but never touch your liquidation price when the market is not too much volatile. Your liquidation will actually not be your last limit, your last limit will be the STOP-LOSS that you will set up immediately after your position is opened. This way you need to think about at least 2 losing steps. The stop-limit will be the limit where the market shouldn’t go if the trend you’re thinking about is ongoing, the liquidation limit is the limit (never attained by your failed position) that would show 1) you were maybe completely wrong and 2) you maybe have a new position opportunity.

As you can see in this example above, I started a LONG  position at 6106 $ per Bitcoin. My liquidation price is below 5600, but I put a STOP-LOSS order on 5740 because it is the lowest support we got a month ago. My theory here is common: if it touches this limit, it may break it and kill my position entirely by going to unexpected lows. Stop-loss orders are made to take the most unexpected outcomes off your bet. Also, you will keep money from your failed bet, which is not the case when you’re liquidated. You even keep a significant amount of money when setting your stop-loss just a few dollars above your liquidation price. So here is the how to.

Summary

  • Zoom-in and zoom-out, think well before choosing your entry price. Sometimes it is now, Sometimes it is good to wait.
  • Always put a STOP order to limit your loss, never let the exchange liquidate your position.

That’s it for now, should be ready to make money by trading Bitcoin for real. Remember to use our special link to register on BitMEX, you will save a lot of fees and make us happy to help you!

Questions? Join our Telegram Group for live discussions with our community.

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