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BitMEX Margin Trading: How It Works And Risks Involved

Major insights-

  • The article explains how BitMEX margin trading works, where users can borrow funds to amplify their trading positions and potentially increase their profits.
  • It discusses the risks involved in margin trading, including the possibility of significant losses, liquidation of positions, and market volatility.
  • The article provides tips for managing risk, such as setting stop-loss orders and not over-leveraging and emphasizes the importance of understanding the platform's rules and limitations before engaging in margin trading on BitMEX.

Keeping up with the latest trends in the cryptocurrency market can be a full-time job, particularly for those heavily invested in the market. With prices fluctuating rapidly, it can be an exhilarating experience that sometimes causes palpitations or joy.

However, trading cryptocurrencies at the moment is not all that enjoyable since one can only buy and hold, hoping for the best. When bitcoin falls, all other altcoins follow suit, making it less thrilling. Furthermore, many exchanges offer tantalizing options to benefit from falling prices.

Nevertheless, it is still possible to profit from the bearish market through leveraged trading. Unfortunately, there are limited legitimate options available. BitMEX is one such platform that offers leveraged trading with a 100x margin for cryptocurrencies and futures.

While the allure of BitMEX is leveraged trading, where you can earn 100% of your money back at a 100x margin, it is not recommended for beginners. BitMEX is a complex platform with various trading swaps and future contracts that can result in substantial losses, particularly since it is a fast-paced method that can be challenging to keep track of.

Margin trading is the foundation of trading in the market, primarily due to market volatility and the challenges of predicting prices. Therefore, entering into leveraged trading without a thorough understanding of the fundamentals is a high risk. However, if you are willing to embrace some excitement and danger, you can start small. Before proceeding, it is important to understand what BitMEX is and the intricacies involved in trading on the platform.

What Is BitMEX?

BitMEX is a cryptocurrency exchange that was launched in 2014, providing a range of financial tools as products. Its primary focus is on offering crypto derivatives and advanced financial products to professional traders, including crypto margin trading for Bitcoin, Ethereum, and Litecoin.

How Does BitMEX Work?

The platform allows traders to profit from declining prices by offering the opportunity to trade short. BitMEX offers a range of derivative products, such as future contracts and leverage trading. Futures contracts involve an agreement to buy or sell an asset on a platform at a predetermined price in the future. Fundamental and technical analysis is required before investing in contracts, and margin levels determine liquidation points, leverage to be traded with, and the premium trading price of a contract compared to an underlying spot price.

Leverage trading provides investors with enough leverage to invest in futures contracts or other assets, with BitMEX offering leverage ranging from 2-10x to as high as 100x on some products. However, while this can result in high returns, it also poses a considerable risk.

To benefit from BitMEX's services, traders must register and make a deposit, with funds becoming available in a few hours. The trading interface is different from other exchanges and can be confusing, with the platform offering cryptocurrencies as futures contracts with specified time frames. It is crucial to read through the platform's help database to avoid confusion.

Taking The Plunge

While trading on BitMEX may seem interesting and relatively easy, it requires a great deal of experience and knowledge in dealing with leverages and futures contracts. An experienced trader knows where to avoid over-margin of the initial capital and where to set up a short and mid-risk investment with leverages. A beginner, on the other hand, risks losing all their capital if they leverage without watching out for the proper entry point for each decision made. However, everyone must start somewhere, so it is advisable to start small for better risk management practices.

It is essential to understand that leverage trading on BitMEX requires total focus, consistency, and ample planning to avoid closing out and losing too much. Trading with leverage is as short as you want it, and the charts could turn against you at any moment if you are not paying attention. Furthermore, BitMEX offers different fees on each leverage and asset being focused on, which is one of the risks of trading without understanding the workings of leverages and margin levels. For instance, BitMEX offers a 100x leverage on Bitcoin, -0.0250% maker fee, 0.0750% taker fee, and 0.05% settlement fee. When an investor loses out on operating on leverage, the exchange would be required to pay up relatively high sums depending on the asset chosen.

Despite the risks, the plus side of trading on BitMEX is that it is quite safe. Given the susceptibility of crypto exchanges to hacking and other forms of malware episodes, BitMEX boasts high-security measures that make a network breach difficult.

If you're considering taking the plunge into BitMEX, it's important to educate yourself thoroughly on leverages and futures contracts before starting. This will help you to understand the risks involved and manage them better. Additionally, starting with small amounts is advisable to avoid the risk of losing your entire investment.


While BitMEX offers a platform for lucrative trading, it is important to approach it with caution and proper knowledge of its workings.


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