4 Beginner Bitmex Mistakes That Are Ruining Your Chances of Profits And What You Should Do Instead
1. Over Leveraged Trades
No matter how great of a trader you are or how much experience you have in technical analysis, over leveraging is a sure fire way of racking up loss after loss in BitMEX or any margin exchanges.
Bitmex allows you to borrow 100x against your deposited bitcoin.
At 100x, a small 0.5% move in price will get you liquidated. That’s right, just half a percent in price movement of the underlying asset at 100x is all you get for safety.
Example : If you 100x Long XBT at $5220, your liquidation point would be $5246. That’s only $26 worth of room.
The lower the leverage the more room you get per trade.
Guide to Success: Keep leverage low, 10x maximum but try to use up to 5x mostly. This ensures you have more room and time to become profitable and take profits.
2. Over Position Size
Everyone has done it at one point. You know the price is going to move a certain way and you want to capitalize as much as you can on the opportunity, you type in a big number and hit the long or short button. Bam! Price moves the opposite direction and you get this email: "Your Bitmex Position Has Been Liquidated"
Ouch.
Guide to Success: Use only a set percent of your total portfolio per trade. Use an amount that you wouldn’t be too worried about losing but would also get a nice return if the trade gets profitable.
This ensures all losses are manageable. It’s very critical to not to importantize one specific trade idea.
3. Lack of Patience
You haven’t traded in awhile and are itching for a position, you see no good opportunities so you look at the 15 minute chart. You enter a trade that looks great for short term profits. What luck! Your position is in profits, now it's time to exit quick before the market turns the other way. You hit the “Market” button. Uh oh! You just lost more money than you should have made. What happened here? Simple, the BitMEX trading fees are very high if you use market orders. If everyone could make easy money on BitMEX, the platform would not exist. BitMEX makes money from trading fees. When you execute market trades, you pay a hefty 0.075% fee on the total size of the position you are trying to exit. At higher leverage, you pay higher fees. This isn’t the only fee you should expect to pay BitMEX.
Guide To Success: Never use just the shorter time frame charts to trade, always look to the further out time frames to see if they all align. Use limit orders to enter/exit a trade and prevent BitMEX from taking a huge chunk of your profits
4. Emotional Trading
You finally did it. You made a bunch of money on BitMEX in one trade. You’re euphoric and ecstatic about all your winnings. Knowing you’re on a win streak you go into the market once more with a bigger position. What happens next? Splat! You are liquidated, your winning streak has ended in a bad loss. Why did this happen? One word, emotions. You believed your winning streak would last and let euphoria control your trades. The opposite can happen during a losing streak, in that case it can lead to revenge trading with high capital allocation and high leverage. Win streaks don’t last and losing streaks can last forever.
Guide to Success: Always think and be analytical. Do not let winning (greed) or losing affect how you execute your next trade.
Conclusion: Trading on BitMEX is not easy. If it was everyone would be Bitcoin millionaires. By recognizing mistakes common traders make, you can prevent yourself from making the same silly mistakes and increase your chances of making consistent profits.
Feel free to support this post written by me, Shaggad, with a like!
Thanks for reading!
-Shaggad
1. Over Leveraged Trades
No matter how great of a trader you are or how much experience you have in technical analysis, over leveraging is a sure fire way of racking up loss after loss in BitMEX or any margin exchanges.
Bitmex allows you to borrow 100x against your deposited bitcoin.
At 100x, a small 0.5% move in price will get you liquidated. That’s right, just half a percent in price movement of the underlying asset at 100x is all you get for safety.
Example : If you 100x Long XBT at $5220, your liquidation point would be $5246. That’s only $26 worth of room.
The lower the leverage the more room you get per trade.
Guide to Success: Keep leverage low, 10x maximum but try to use up to 5x mostly. This ensures you have more room and time to become profitable and take profits.
2. Over Position Size
Everyone has done it at one point. You know the price is going to move a certain way and you want to capitalize as much as you can on the opportunity, you type in a big number and hit the long or short button. Bam! Price moves the opposite direction and you get this email: "Your Bitmex Position Has Been Liquidated"
Ouch.
Guide to Success: Use only a set percent of your total portfolio per trade. Use an amount that you wouldn’t be too worried about losing but would also get a nice return if the trade gets profitable.
This ensures all losses are manageable. It’s very critical to not to importantize one specific trade idea.
3. Lack of Patience
You haven’t traded in awhile and are itching for a position, you see no good opportunities so you look at the 15 minute chart. You enter a trade that looks great for short term profits. What luck! Your position is in profits, now it's time to exit quick before the market turns the other way. You hit the “Market” button. Uh oh! You just lost more money than you should have made. What happened here? Simple, the BitMEX trading fees are very high if you use market orders. If everyone could make easy money on BitMEX, the platform would not exist. BitMEX makes money from trading fees. When you execute market trades, you pay a hefty 0.075% fee on the total size of the position you are trying to exit. At higher leverage, you pay higher fees. This isn’t the only fee you should expect to pay BitMEX.
Guide To Success: Never use just the shorter time frame charts to trade, always look to the further out time frames to see if they all align. Use limit orders to enter/exit a trade and prevent BitMEX from taking a huge chunk of your profits
4. Emotional Trading
You finally did it. You made a bunch of money on BitMEX in one trade. You’re euphoric and ecstatic about all your winnings. Knowing you’re on a win streak you go into the market once more with a bigger position. What happens next? Splat! You are liquidated, your winning streak has ended in a bad loss. Why did this happen? One word, emotions. You believed your winning streak would last and let euphoria control your trades. The opposite can happen during a losing streak, in that case it can lead to revenge trading with high capital allocation and high leverage. Win streaks don’t last and losing streaks can last forever.
Guide to Success: Always think and be analytical. Do not let winning (greed) or losing affect how you execute your next trade.
Conclusion: Trading on BitMEX is not easy. If it was everyone would be Bitcoin millionaires. By recognizing mistakes common traders make, you can prevent yourself from making the same silly mistakes and increase your chances of making consistent profits.
Feel free to support this post written by me, Shaggad, with a like!
Thanks for reading!
-Shaggad