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A couple of years ago I dealt with Forex for a long time, so I know the work with leverage very well. Marginal trading on the cryptocurrency exchange for me at first was not a priority. I was not credited and worked on the principle of simple exchange. Now the market situation has changed, and I began to use margin to achieve greater profits.

Margin trading on the cryptocurrency exchange is an interesting profitable topic. Let's analyze it in theory and in practice: working conditions, features and benefits, risks and money management. In the practical part, we get to the point and see how to trade on Bitmex - one of the largest platforms.

The margin is also available at other sites and at Forex brokers, but with limited capabilities and incomplete functionality. I work with them in exchange mode, and with a shoulder I prefer specialized. Bitmeks also distinguishes:

Functionality and features: all types of orders, a full set of information windows, many auxiliary tools
Convenience: informative customizable interface, position panel below the chart
Leverage from 1: 1 to 1: 100 depending on the currency pair
The minimum bid amount is $ 1, deposit 0.0001btc
Fees are lower than forex brokers
Optional verification

The theory of margin trading cryptocurrency

Margin trading on the stock exchange is trading using borrowed funds that the trader borrows from the exchange for the duration of the transaction. His deposit at the same time become a pledge. For the use of the loan a small interest is charged. Features of margin trading in the following:

Borrowed funds are issued for the purchase of an asset. The positive point is that you can buy a greater amount of an asset than you have money on your balance sheet. Simply put, leverage is a target loan that temporarily increases your deposit.
If the price goes down for a long time, there will be a risk of losing not only yours, but borrowed funds. In this case, the exchange will forcibly close the transaction, while the loss will be covered by your deposit. Such an action is called a “margin call.” Let's talk about minimizing risks and setting up orders correctly.
Cryptoactive assets purchased with credit funds cannot be withdrawn.
The loan is issued instantly in automatic mode. You determine your size yourself at the time of the transaction.
Potential profit is many times more than possible losses.

Shoulder example

Suppose that on Bitmex your entire deposit is 1000 USD, one ETH is 1000 USD, and you open a long position (for growth). Exchange commission of about 0.1% per day for the shoulder. When using a shoulder of 1:10, you can purchase not 1, but 10 ETH (1 is acquired with personal funds, 9 - with borrowed funds). Consider both positive and negative outcome of the transaction.

1. If the rate of Ethereum per day rose to 1100 USD and you sold, your profit will be equal (minus the deposit, credit and interest):

1100 * 10-1000-9000- (9000 * 0.001 * 1) = 11000-1000-9000-9 = 991 USD
Without margin trading, the profit would be only 1100-1000 = 100 USD. If the course fell to 900 you lose money. The trigger rate for a margin call is calculated simply: the asset's purchase price * share of the exchange + interest on the loan. Protection against margin call is stop loss. This is a function of closing a position before the margin calls. Allows you to minimize the loss of funds. You yourself determine the level of the foot, thereby limiting the amount of loss.

Note: there is a calculator on bitmex, which will perform calculations for you taking into account all the parameters of the planned position.

Margin trading on a cryptocurrency exchange has a leverage ratio of up to 1: 100 for bitcoin, 1:50 for ether and up to 1:20 for altcoins. For beginners, I will give the basic rules of working with leverage, allowing you to earn:

Start with small loans. Avoid maximum leverage. I do not take more than 1:25
Determine the amount you can lose. Risk per trade 2–5% of the total deposit
Profit per transaction should exceed the loss in 1,5-2 times. Limit losses, let profits grow
Always set take profit and stop loss after order triggering.
Choose familiar currency pairs that you have already watched before. About what you expect from them
It is advisable to take a loan when marginal work is more justified than ordinary

How to trade on Bitmex

Among the exchange services and forex brokers is the Bitmex trading platform. Margin trading on this exchange cryptocurrency for me is the best option. Itself earns only on commissions, and not at the sink of the deposit of traders, which is what most forex brokers sin. Detailed information about getting started, review and reviews here. And now we are registering and sorting out in practice how to trade on bitmex.

Here it’s not futures and bitcoin itself that trades, but futures. This is a derivative financial instrument. There are unlimited futures (swap) and temporary (futures). On Bitmex, transaction volumes are measured in contracts. 1 contract = $ 1 - this is the minimum position size. Replenishment of the account is possible in bitcoins by sending them from your wallet address to the stock exchange. All calculations are also carried out in relation to it.

Difference in perpetual swap and futures contracts

Perpetual swap is the most liquid instrument. Every 8 hours, there is funding between traders in long and short - you pay a commission or get it. If you are on sale, and most in the purchase - then they pay you. If you are long with the majority - you pay. The expiration date swap does not exist, the position can be held open without time limits.

Futures are marked with dates. There is no need to pay for the use of leverage, there is no funding. An additional commission of 0.05% is charged for opening a position. Futures have an expiration date when all positions are forcibly closed.

To replenish the balance in the "Account" tab, select the "Deposit" section. The platform automatically generates a Bitcoin deposit multi-destination address, personal for each user. Bitcoin futures are denoted as XBT.

Opening and closing orders on Bitmex

In the "Trade" tab, you can choose a crypto pair and enter the market. After selecting a pair, you need to decide on the type of order:

Limit We indicate the volumes of sold / purchased currency and the price at which you are ready to enter the market. When a counter offer appears on the market, the position will be opened.
Market. This is the entrance to the market immediately at the current price.
Stop Limit - Extended Limit. It also indicates the second price that activates the order.
Fill in the form “Place an order” and click on “Buy / Long” or “Sell / Short”. A window appears with all the transaction data. Pay attention to the price level of liquidation - this is the margin call. Confirm the opening position and it appears in the bottom panel.

You can close an order by:

Take Profit Limit. Closes at a profit at the desired price. Long closes the order in shorts and vice versa
Trailing stop (trailing stop). This is a stop that follows an open position and allows profits to grow.
Stop limit with the option "close trigger". Fixes the loss at the desired price level, is used as a stop loss
Note: it is preferable to work on limit orders. So you create liquidity, and the exchange pays extra 0.025% on the transaction. On the market there is an additional commission of 0.075%. Moreover, margin trading on the stock exchange cryptocurrency increases its multiple shoulder.

Source of the article: https://investment2014.ru/cryptocurrenci/margin_exchange

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