Operating at Bitmex is like a casino gamble, moments of extreme tension, adrenaline and emotions that put you on edge! This 5 Tips give you a small idea about what is possible. For further reading we suggest the BitMEX Guide and the BitMEX Leverage Guide.
It’s a dangerous environment where we need to be careful, secure and need to know how to manage everything in the best way: capital, bankroll, emotions and – on top of that all – the tricks to succeed in the long run!
So here are our:
5 Precious Tips For Your BITMEX Operations
Market orders / Entering in the middle of a move
In the world of Bitmex, it is well known that some peculiar movements do not occur in other exchanges, some exaggerated wicks, and many false breakouts. In our conception, if you are entering a trade with a market order, it means that you are in a hurry, this hurry can affect your decision making, but we prefer to always focus on the trades previously studied, without surprises. By clicking on “Buy / Sell Market” in addition to the very high fee rates, you will be subject to high volatility of “fast” movements or flashes, taking into account that you do not want to wait for an order that you have previously defined, by not wanting to miss a specific move, or maybe, at worst, you’re already in the middle of that move. So, for example, you’re determined to go long, the order book price appears at $ 6300, and you do not want to lose it up. There is a sudden breakup, average means crossing, whatever the reason might be, then you click on “Buy Market”, and surprise, surprise, your entry price is not at $ 6300, it stands at $ 6330, or even $ 6350, $ 6380! Then you just entered an operation in an unplanned way, in addition to paying the high fees mentioned earlier, you go into a price totally out of what you had projected … This is just a basic example that can happen or much worse, getting into the middle of the moves and being subject to the “market price” you are taking an unnecessary risk, which can be lousy for your psychological state and also bring great financial damage in the medium / long term. Our tip on this topic is to opt for security and risk management, avoid entering unplanned operations with surprises, always prefer the security and mastery of the trade, avoid whenever its possible entering/exiting at market orders in Bitmex. Always try to enter orders that are posted in the order book, so you will be a “Maker”, instead of paying fees and receive surprises from the “Market Price”, you will receive payment of fees and stay in the field of negotiation.
False breakouts / Only looking at the Bitmex charts
In a brief part of the previous topic, we talked about breakups. Well, at Bitmex they are a let’s say “controversy”. There are many exaggerated wicks at Bitmex, which causes many false breakouts of supports, resistances, triangles, channels, etc… In our opinion, it is a big mistake to operate on Bitmex, looking only at their price charts, our suggestion here is that you ALWAYS use at least one exchange to confirm the information. We suggest using a Bitfinex chart, which besides being an exchange with a good market background and maturity, is known as the house of the whales, who are certainly trendsetters and operate with large volumes in this market. Run away from the risk of suspicious moves on Bitmex, use the market to your advantage.
Bitmex allows you to leverage up to 100x of your equity, this seems to be a great asset to many traders for the chance to make unimaginable profits, but for the risk management side, it is a catastrophe. If you’re not a very experienced trader and a psychological well-prepared person, high leverage can lead you to ruin! In addition to the chance to be paid quickly in 50x / 100x operations, for example, you can suffer from a stop loss not being executed. A quick search in google will show you that this is “normal” and can happen with Bitmex when the stop- loss is very close to the execution price of the order, you are subject to undergo a liquidation. When it comes to high leverage, your trigger will always be too close to the value of the stop. Avoid this headache … The so-called “short/long squeeze “occur countless times in Bitmex, as mentioned in previous topics. The wicks are often vastly greater than in other exchanges, so in high leverage, you may not even have time to act before being hit. One last point on this topic: The overloaded issue within the bitmex system, which is more common than they should be, is one more factor that should make you think hard before operating with excessive leverage. You can be denied to close or exit a market position when the volume is too high.
Hedging with a 1x Short:
If you are not a real bitcoin “Hodler” and care about your dollar value, short 1x is a great opportunity to preserve your capital in a possible downturn. We know that it is not so easy to always be working with the trend, sometimes the market becomes confused and heads into sleep mode. You can leave part of your capital in short 1x hedge, which is the equivalent of being with your dollar capital and get away from a possible problem. This is an option to use when you are uncertain, or when your emotions won’t let you short it, even when everything is pointing to a fall.
Staggered / Split orders:
The suspicious “wicks” in the Bitmex candles, or unusual movements in relation to the other exchanges, can also be used in our favor! You do not have to enter into an operation at a specific price, we have tested the entry with split / staggered orders and had impressive success, this helps you to enter into a transaction with the best possible average price, taking advantage of “false breakouts” or falls/exaggerated rises in Bitmex … For example, if you consider entering with 1 BTC in long at $ 6300, you could divide 0.33BTC at $ 6300, $ 6275 and $ 6250, with great chances of getting a better entry. Sometimes you will fail to open the position altogether because the price will not reach all orders, but most of the time you will benefit from a much better price at opening the position.
This bonus does not only apply to Bitmex only but is exceptionally important. Don’t chase losses. Never try to enter into an operation to recover the loss of another, this can have a snowballing effect, leading to a catastrophe… Once again, we reinforce, Bitmex is almost like a casino, it calls you to the game, is attractive and dangerous, controls your psychologic! We recommend reading the book Axioms of Zurich, which is a great ally for the mind of a successful trader!