This post is also available in:
Português
Operating at BitMEX is like a casino gamble: moments of extreme tension, adrenaline, and emotions that put you on edge! These 5 Tips give you a sense of what is possible. For further reading, we suggest the BitMEX Guide and the BitMEX Leverage Guide. If you want to join BitMEX, sign up here.
It’s a dangerous environment where we need to be careful, secure, and know how to manage everything in the best way: capital, bankroll, emotions. On top of that all, you have to master the tricks to succeed in the long run!
So here are our:
5 Precious Tips For Your BITMEX Operations
Market orders
In the world of BitMEX, it is well known that some peculiar movements do not occur on other exchanges. These include exaggerated wicks and many false breakouts. In our opinion, if you enter a trade with a market order, you are in a hurry. This haste can affect your decision-making.
However, we prefer to always focus on previously studied trades. Therefore, we avoid 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. You must take into account that you do not want to wait for an order that you have previously defined.
That’s because 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 is $6,300, and you do not want to lose it. There is a sudden break, an average means crossing, whatever the reason might be. Then you click on “Buy Market”. Yet, surprise, surprise, your entry price is not at $ 6,300. Instead, it stands at $6330, or even $6350, $6380! Then you just entered an operation in an unplanned way.
Entering in the middle of a move
In addition to paying the high fees mentioned earlier, you end up at a price that’s far higher than you had projected … This is just a basic example that can happen, or much worse. By getting into the middle of the moves and being subject to the “market price,” you are taking an unnecessary risk. This risk 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 prioritize security and risk management. Also, avoid entering unplanned operations with surprises. You should always prefer security and mastery of the trade. Whenever possible, avoid entering/exiting at market orders on 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. In this way, you 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, let’s say, “controversial”. There are many exaggerated wicks at BitMEX, which cause many false breakouts of support and resistance, triangles, channels, etc. In our opinion, it is a big mistake to trade on BitMEX while looking only at their price charts. Therefore, we suggest that you ALWAYS use at least one exchange to confirm the information. We suggest using a Bitfinex chart. This is an exchange with a strong market background and maturity. Also, it is known as the house of the whales, who are certainly trendsetters and trade large volumes in this market. Therefore, avoid the risk of suspicious moves on BitMEX; use the market to your advantage.
BitMEX High leveraging
BitMEX allows you to leverage up to 100x your equity; this seems like a great asset to many traders for the chance to make unimaginable profits. However, from a risk management perspective, it is a catastrophe. If you’re not a very experienced trader and a psychologically 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 Google search will show you that this is “normal” and can happen on Bitmex when the stop-loss is very close to the order’s execution price. You may be subject to 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 “occurs countless times in Bitmex, as mentioned in previous topics.
The wicks are often vastly greater than in other exchanges. As a result, 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 it should be, is one more factor that should make you think hard before operating with excessive leverage. For instance, 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 always easy to work with the trend; sometimes the market gets confused and heads into sleep mode. In that case, you can leave part of your capital in a short 1x hedge, which is equivalent to keeping your dollar capital and avoiding a potential problem. This is an option to use when you are uncertain or when your emotions won’t let you short it, even when everything points to a fall.
Staggered / Split orders:
The suspicious “wicks” in the BitMEX candles, or unusual movements relative to other exchanges, can also work 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 enter a transaction at the best possible average price. It lets you take advantage of “false breakouts” or exaggerated falls/rises on 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. Still, most of the time you will benefit from a much better price at opening the position.
Bonus Tip!
This bonus not only applies to BitMEX but is also 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 draws you into the game, is attractive and dangerous, and controls your psychology! We recommend reading the book Axioms of Zurich, which is a great ally for the mind of a successful trader!
