Short bitcoin on bitmex

At this point, your trade is liquidated, which means that you lose the initial margin. The image below makes it easy to see how the liquidation price works. If your trade theoretically were to reach the bankruptcy price, the full position would have gone to zero. In other words, both your initial margin and the leverage used for that position would be lost.

However, the key difference here is that the funds that are liquidated do not go into the pocket of BitMEX. In this case this could trigger a huge flash crash of all these leveraged positions. If there are thousands of longs that need to be liquidated at the same time, chances are BitMEX might not be able to liquidate everyone perfectly at the correct price.

Finally, this explains why the insurance fund is crucial.

The exchange can sometimes be overloaded with orders in highly volatile moments. Now, if you are trading more long term, this might be fine. Bybit can handle more trades per second, and has a very user friendly cryptocurrency leverage exchange. Read our full Bybit tutorial here. However, in this tutorial we will be using Bitcoin as our trading example. There are several different order types on BitMEX. A market order is an order that is executed immediately at the current market price.

In other words, if you press market, BitMEX will make sure that your order gets filled by matching it directly against the order book. If you use the market order you will be guaranteed fill. However, you will not be guaranteed a price. Slippage, might happen in a very volatile price crash and basically means that your order gets filled at a price far away from where the price was when you executed the order. You want to avoid slippage if possible. Also, the trading fee of a market order is quite high.

Consequently, the only time you should use the market order on BitMEX is if you are in a hurry to enter the position. For example if you want to catch a breakout of a pattern. A limit order is the best way to trade on BitMEX.

What is Shorting?

This order type is used to control you entry price. When you submit a limit order, the order will be put in the order book and will be waiting for the Bitcoin price to reach your limit level. When the Bitcoin price moves down to to this level, you will automatically be entered into your position. The most interesting part about the limit order is that you actually get payed to enter a position with a limit order. The reason why limit orders get a rebate, and the market orders pay a fee, is because of liquidity. Basically, BitMEX want their order book to be as deep as possible, and if everyone used the market order then the order book would be empty.

Therefore, BitMEX pays people to provide liquidity to the order book by submitting their limit orders there. The stop market order is simply a market order that will be executed only when a certain price level is met. The stop market order is used to set up a stop loss.

More about stop losses further down in this BitMEX tutorial. Total balance is what you have deposited into BitMEX. Avail Balance is showing you how much of that is currently available. If you deposited 1 BTC and is currently in a trade where you used 0. Now, when your BitMEX account is funded with some Bitcoin, you are ready for your first margin trade.

Also, for the purpose of this BitMEX tutorial we will use the market order.

You can choose up to x leverage on BitMEX. This way you are guaranteed to get the maker rebate for providing liquidity in the order book. You basically get payed to submit the order.

The most important thing to be aware of is the Estimated Liquidation Price, as shown by the green the arrow in the image. Make sure that you are comfortable with this price level. This is shown in the image below by the green arrows. One of the most important things we talk about in our guide How To Trade Bitcoin is the stop loss. Enter the quantity of your current position, if you want your whole position to be stopped out. Choose a Stop Price where the position will be market executed. Bitcoin trading is one thing, but if you want even more volatility and more opportunities, you can look into altcoins.

These cryptocurrencies are marked by the green arrow in the image below. Bybit is also a leverage crypto exchange, exactly like BitMEX. Bybit is growing extremely quickly and we are happy to recommend it to our readers. The BitMEX fee structure can be complicated to understand. Therefore, we want to make it as easy as possible to understand. Click here to register on BitMEX and get the discount activated automatically.

Accordingly, this will give you a small edge over the market, which is very valuable when trading cryptocurrencies. List of Partners vendors. For those investors who believe that bitcoin is likely to crash at some point in the future, shorting the currency might be a good option. Here are some ways that you can go about doing that. One of the easiest ways to short bitcoin is through a cryptocurrency margin trading platform.

Many exchanges as well as brokerages allow this type of trading, with margin trades allowing for investors to "borrow" money from a broker in order to make a trade.

What is Shorting Bitcoin?

It's important to remember that there may be a leverage factor, which could either increase your profits or your losses. Many Bitcoin exchanges allow margin trading at this stage, with Kraken and Binance as some popular options. Bitcoin, like other assets, has a futures market. In a futures trade, a buyer agrees to purchase a security with a contract, which specifies when and at what price the security will be sold. If you buy a futures contract, you're likely to feel that the price of the security will rise; this ensures that you can get a good deal on the security later on.

However, if you sell a futures contract, it suggests a bearish mindset and a prediction that bitcoin will decline in price. According to The Merkle , "selling futures contracts is an excellent way to short bitcoin. Bitcoin futures can be purchased or traded on popular exchanges like Kraken or BitMex and can also be found at popular brokerages such as eToro and TD Ameritrade.

Call and put options also allow people to short bitcoin. If you wish to short the currency, you'd execute a put order, probably with an escrow service. This means that you would be aiming to be able to sell the currency at today's price, even if the price drops later on. Binary options are available through a number of offshore exchanges, but the costs and risks are high. Prediction markets are another way to consider shorting bitcoin.

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