Swimming with the Bitmex Sharks
You want to swim with the Sharks on Bitmex… Very well, but first you better understand that they are there, circling and waiting for their opportunity to attack! So many get REKT on Bitmex that there is a twitter feed dedicated to it. Sad ain't it. More sad is the fact most people don't take the time to think of protecting themselves on Bitmex along with their trading capital. To me, the owners/operators of Bitmex are Sharks, but let's give them credit for building such a great platform.
This platform is second to none for ease of use/security and stability, they did just an amazing job! Outside of that, with their manipulative events, we see what they have done and are not amused. Though it mainly only affects the stupid and weak minded, which naturally are the first to get eaten on Bitmex. We will explore in this article some ideas to prevent you from being eaten by these Sharks and help make your beach-going experience more enjoyable. Whether you miscalculated margin on a trade, became emotional or were hit by the mAnip sharks with a crazy spike while in maintenance mode, there are simple ways to protect your capital on Bitmex.
Use only what you need to trade and keep the rest in the bank/wallet.
How original of an idea that you don't expose your capital by it simply not being there! Yes, that is right what if you did not use all of your trading capital in the Bitmex account? Most people never think of this because they are too busy dreaming of MOON LAMBO etc etc.
When I think of trading capital I think allocation. I allocate a % according to my risk/reward for different accounts. So if one has 20 BTC for trading on Bitmex they might wish to only use 10-20% of it in the actual account and keep the rest in their wallet/bank or where ever they safely store funds.
Why would one ever risk all their trading capital in one account!? This is especially true if you are a high rolling margin trader that likes the big ups and downs, this will protect you from those black swans that like to dump giant sized sh*t bombs on Bitmex, leaving many to be found on the Bitmexrekt twitter feed for the amusement of their fellow traders.
Know your LEVERAGE!
This is the key to not get eaten alive, most do not know their leverage and the % compounded of the leverage. Most also just use a single account with cross-margin and that is it. Take the time to know your leverage! Most people underestimate the leverage they use naturally because it does not jump out at them.
Simply put leverage is more then you think, and to those rock and roll traders using 25%-50% or higher leverage, do you know that it only takes a (4% move @ 25% leverage or 2% move @50% leverage to get liquidated = GONE!) BTC can move like that in the blink of an eye. Due to the sheer greed of most, they will ignore or underestimate the effects of leverage, thus will likely blow their accounts in the future to become one of the “Bitmex Rekt – Take the Quiz and See if you are at risk.”
For those who want to protect themselves, we have isolated margin on Bitmex, that is not so Isolated by the way – when Bitmex went down the isolated margin went out the window.
People ended up on the hook for more than their isolated margin settings, nice Bitmex! These are the kinds of things that will likely cause Bitmex problems in the future as the regulatory environment tightens. Though not perfect under normal market conditions you at least have the ability to fix your losses to a predetermined amount. We suggest you read “The Bitmex Calculator” in order to help manage your leverage and define your limits ahead of time.
Beware of Bitmex's Maintenance Mode!
People had days and days to avoid being in positions and still a large number of traders and even signal providers did not avoid getting REKT during this. To me, that is not the only brain dead but also 100% irresponsible. There has been a whole history of the above occurring over and over in the past, so how much of a noob or should I say how long will it take you to learn to avoid any of the downtime/scheduled events will it take for you to get it?
You think it was a coincidence that the up move happened @ the height of record number of shorts on Bitmex ahead of the maintenance mode, or the large 100mil tether print just before that. The signs were everywhere to watch out, you had plenty of time. Learn this lesson well if you were one of the unfortunates hit by this.
Look at alternatives to Bitmex…
There are new players opening up in the space, one of which has gained popular traction is Deribit, based in the Netherlands this relatively new exchange has mainly the same fee structure and margin/features as Bitmex but with some tweaks, of which you may or may not like. One main one is their use of sub-accounts to mitigate losses or if you wish to use different strategies. That one feature makes Deribit a BIG WINNER! This was a brilliant idea by them and it is not offered at Bitmex.
We for sure need more competition in this space as wonderful Bitmex is, outside of Coinbase Pro it is my favorite. Still, competition is good and Bitmex for sure needs to improve, again I will blast them for what many will see/consider manipulation, likely to end with them being attacked in court by any number of jurisdictions in the future.
Your actions have consequences, just like with leverage those actions are easy to overlook, but others are not going to be so kind. So in short keep options open for other exchanges that offer maybe better options then Bitmex, like Deribit. If nothing else it allows you to diversify your risk, which is always wise IMO…
Get EDUCATED with Signal Groups, Let the PROs show you the way!
I can't stress enough, to get educated and learn from those who do it for a living. I have seen many talented and many very reckless traders that all manage to make good BTC from trading. I might not agree with their methods or use of margin but that takes a back seat to their results.
In trading as a trader, all you have is your ROI… Your account balance is #1 did you make or lose money, pretty simple right? Well, there are many ways to calculate this and the lower your drawdown/risk vs reward the better a trader you are. Give me the pro who can risk 2-5% and make 10x returns over the guy who made 50x risking 100%..
People never think of the downside until they are staring at a near 0% balance. Most signal providers use good levels of risk-reward and are seasoned with the discipline, experience and emotional control needed to be a profitable trader, so why not gain their experience for yourself? Well, you can, check out these Signal Providers in the Bitmex arena, to not only get signals but a real understanding of how trading on Bitmex works! —> Bitmex Signal Providers <—
Just keep swimming swimming swimming…
In conclusion, I really hope you can see and build in your mind some different ways that will prevent you from being eaten alive. More important then capital appreciation is safety. Most in their eager desire to get rich quick, are just little fish that have American sized egos, which will eventually get them eaten alive *Plays Jaws theme song… So take to heart the above of which I wrote and think long and hard the next time you decide to hit the high seas of Bitmex, because nobody can save you when you are alone, miles out in the deep blue, as you see flashes of the shiny grey/white appear from below, circling you… KEEP SAFE!!!
Sharks being sued!?
Another bad sign is that Bitmex sharks have governments now hunting them :O so much for JAWS!