Home | Guides | BitMEX Leverage Explained 2019 – Part II

BitMEX Leverage Explained 2019 – Part II

Table of Contents

bitmex website interface

If you want to take advantage of the fall in the price of a virtual coin, you can do it without holding the underlying asset. This allows you to benefit from bear markets, as we will explain in more detail in the examples below.

We normally purchase digital assets like Ethereum or Bitcoin that we believe are going to appreciate in value. When they rise in value, we sell them and pocket the difference. Say for example you buy Ethereum for 300 USD and sell for 350 USD. You pocket the $50 difference.

Sometimes, we see a digital currency, and we say to ourselves “that can’t go any higher, it has to pull back.” When we expect a price of a currency to plummet, we can reverse the process. Sell Ether for $350 and later buy it for $300. You make a $50 profit. Or, let’s say Bitcoin is $5000 today and you think it is going to go down to $4000 in two weeks. You would sell it for $5000, and then you will wait for two weeks for the price to go down. The goal is to purchase the Bitcoin back at a lower price.

This means that you can make money through short sales. You can bet on falling prices and possibly make a profit.

When Bitcoin went from about $100 to $1000 in 2013, our mainstream media fell in love with it and then it crashed. Some people said Bitcoin is overvalued. They expected the price to go down. They borrowed currencies and sold them in the expectation they can purchase back the shares at a lower price in the future. That’s basically how short-selling works.

Open a position

We do this using SELL – short position – when we think we will benefit from the decrease in the value of Bitcoin.

There are three options to open position:

Limit = set the price at which you want the position to be open

Market = open position at the current price of BTC

Stop limit = open position by setting stop loss (limit price) or take profit (stop price) in the case of BitMEX.

Quantity = the position you want to open in US dollars: so if you open $100 lever x10, you will have a position of 1000 contracts.

Then click buy market to go long and sell market to go short.

Manage your money

When it comes to shorting, risk management is vital. If you shorted $200 and you never closed, you can lose more than your account’s value. In other words, if the price goes up, your potential loss is nearly infinite. A shorted currency can continue to appreciate in value rather than depreciate in value. This means you can lose much more than the original price of the currency. And while your potential losses can be infinite, your potential profit is finite because the price cannot go negative.

So determining the size of your budget for the cryptocurrency market is very important. In the field of trading, we need exact calculations, because even a very small number, multiplied over time (i.e., long-term), can give excellent results or tragic outcomes. In this phase, you must also establish your goal or how much, according to your ability, you would like to earn. Never invest any amount that could give you sleepless nights, especially at the beginning when you are learning, and you do not have much experience.

The solution is to study the technical aspects of market conditions. Go short on cryptocurrencies believed to be at such high levels not because of any strong fundamentals but rather because of excessive demand.

Keeping abreast concerning cryptocurrency market news is a must for short selling. A detailed analysis of a coin’s quarterly results will be below expectations that acquiring a short position for that asset.

Failing is not always so bad

One of the skills that distinguish successful people from people who do not give up is the ability to react to failure. Learning to suffer and accept losses is not a sign of weakness but of great maturity, not only in life but also in the world of cryptocurrencies.

Final Thoughts

BitMEX  is an advanced trading platform. You have many options but also widgets that simplify trading. Unfortunately, BitMEX is a bit confusing, especially for newbies. It is, however, great for experienced traders. A huge advantage is leverage trading with a leverage of up to 100x. In essence, if we deposit 1 BTC – setting the value 100x – the system allows us to invest 100 BTC. This functionality allows us to multiply the gains or losses.

When using BitMEX, one must also be aware that one does not purchase an asset, but operates a pure derivative trade and speculates on the future value of the coin. If you want to buy Bitcoin and keep it for the long term, you may want to check out other platforms aside from BitMEX.

If you are familiar with trading and technical analysis or would like to gain some initial trading experience, BitMEX is probably the best place to go in the cryptocurrency market today. You can also open a demo account with BitMEX. To ensure that your capital is protected, this service offers all its customers the opportunity to operate on its platform through a demo trading account, to practice in total security.

In addition, the customer support is excellent and is always available with help and advice. We would like to emphasize once again that the trading of cryptocurrencies, especially the margin and leverage trading, carries an extremely high risk.

We are faced with a very volatile cryptocurrency market today. Just think of the recent changes in Bitcoin’s prices. By the end of 2017, it had soared in value to an all-time high of around $19000 before it plummeted to about $5000 in the first quarter of 2018.

It is often advisable to always put a plan well in mind and know how to act when certain conditions occur. Remember that the market is still in constant motion and has always had different opportunities both when it is growing and when it is in full bearish phase.

Table of Contents


Hot Stories


Unlock the Power of Crypto!

Get the most important crypto news, price predictions, and expert insights delivered to your inbox.