Tip how to avoid BitMEX Liquidations
People who like trade Bitcoin with high leverage will try or even will stay on a BitMEX trading platform.
BitMEX leverage trading is a most dangerous trading in whole cryptocurrency trading world, so be sure what are you doing before you go in.
BitMEX trading company are located in Honk Kong and community are known as a best Bitcoin leverage trading platform. You are free to use Bitcoin x100 leverage but you have to understand that it is not a trading but gambling so be prepared for a loss if you are using x100 leverage.
Leverage trading brings high risk and massive gains on a Bitcoin leverage trading.
BitMEX gives you an opportunity to trade leveraged Bitcoin that you do not hold in your account but they will take yours Bitcoins if you will fail to get gains from a leveraged trade. That is how BitMEX company earning a lot and comes one of the biggest Bitcoin leverage trading company on a world. If you are new trader or you are silly, you should avoid trading on leverage or at least do not trade with bigger than x25 Bitcoin leverage as you will lose all your deposited Bitcoins.
I do start same from leverage trading and lost all my deposits. So be sure you know what are you doing.
Via this Bitcoin leverage trading post, we will guide you to do a good decision on BitMEX trading to avoid BitMEX liquidation of your deposited and you avoid to be “Rekt”
Learn How BitMEX Margin Works
When you want to open any of leveraged trades you must give to exchange a margin same level as your risk are for this leveraged trade. It is a payment for trading platform and they will take it from you if your trade will be liquidated.
You have to hold right amount of BTC to open a leverage trade with x5 or x100 leverage. It is size that are determined by your leverage trade size, like you are using Bitcoin BitMEX leverage 1:100 and meaning of it is that you have to hold in your account 1% percent of whole leverage Bitcoin trade to be able open it.
Leverage trading on BitMEX is god because you cannot spend more than you use off your leveraged Bitcoin trade. Your losses cannot exceed the value of your initial margin.
Reason why traders use BitMEX that there are almost no limits for a gains and are strict limits for a loss. Check the picture and you will realize how Bitcoin BitMEX leverage process is working.
How come that BitMEX allow traders stay on win favourable position?
All of this is because BitMEX determine the Maintenance Margin Requirement (MMR). On other brokers when you breach your maintenance margin position thresh hold you will get a “margin call” but BitMEX use a more efficient process that is called BitMEX liquidation engine.
In all means it is an automatic system that works from a market price range and will liquidate your position if that position will come negative to a margin maintenance.
Now you should ask where is a catch?
The relationship between the MMR and the initial margin is not constant and will vary arbitrarily according to the amount of leverage that one is taking on.
BitMEX Liquidation price vs. Bankruptcy Price
There is hard to understand it you need to do more research if you want understand but yours position liquidation and bankruptcy price is slightly different.
BitMEX liquidation price will be used when yours trade position will be determined of levels your initial trade MMR. BitMEX bankruptcy price will be used when your trade position will be exhausted fully and it will be 100 % loss of your initial position size.
Liquidation price is calculated with your open position size MMR to protect BitMEX from market manipulations. When you will be doing a trade before you will putt it live BitMEX will show you an information about your position liquidation price, but there you will not see your bankruptcy price.
BitMEX is hiding this information in purpose as price between liquidation and bankruptcy is very thin. This comes live when you are using high leverages. It is the edge of trading when BitMEX dries out yours position initial margin before they liquidate it.
BitMEX Statistical Edge
Bellow you will see an examples how are calculated liquidation and bankruptcy price range. Here you can see how calculation works and you can make same calculation to arrange your position margin rates for a Bitcoin BitMEX leverage trading.
Here is shown how works BitMEX MMR on long positions and how large it is if we will compare it to a ini8tial margin.
All this information is calculated using BitMEX price are given and bankruptcy price is calculating separately, we based it on a leverage.
From these two numbers, one is able to get an idea of the initial margin as well as the MMR that is being applied to that trade. As you can see in the second last column, the MMR is larger as you take on more leverage (as would be expected).
More interesting is to see a correlation to the initial margin. It would be the last one column on a sheet. We do see there that is you open a higher leverage bitcoin BitMEX trade the MMR makes up an increasingly greater percentage of the initial margin.
Position example of a leveraged x 100 trade we see that price need to move only a $35 from your entry point into loss and you whole trading position will be liquidated. Hence, even though you have put up $70 in initial margin (price move from spot to bankruptcy), you will be liquidated when the price has only been moved to half of that ($35 MMR).
That is why we do not offer you do Bitcoin leveraged trading on BitMEX with x 100. We do offer you check how ill change price and numbers if we will open a x 10 leveraged BitMEX trade.
If your initial margin is $639 and you won’t get liquidated until the price has moved $609 away from the spot level. Hence, you are allowed to participate in a change in price that is almost 95% of your initial margin.
Put another way, the MMR of 10x leverage position is only 4.58% of the initial margin. This is more than 10 times below the 50% of initial margin MMR that is required for a 100x leveraged trade.
Statistic and my own experience say that BitMEX Bitcoin leverage trading with x 100 or x 50 is a gambling. All the time gamblers win even in casino but in a long run they all lose. Same and here, if you will win some in a long run leverage trading with x 100 or x 50 will eat all your money.
Lower BitMEX Leverage, Less BitMEX Liquidation
Do not forget you are trading your money, and trader first rule is: protect your money.
BitMEX is a hell machine to drain all money from a new traders and newbie nobs who do not understand what are they doing and how to trade BitMEX Bitcoin leverage trading.
Every risk trade that you will do will be closed as soon as price will hit liquidation mark, and believe in me it happens more often than you want to.
Their risk management protocol comes at the expense of your long-term trading profits.
I do not hold nothing versus BitMEX Bitcoin trading it is a platform that can make you rich in a couple of hours.
BitMEX must have a right number of Bitcoins to maintain leveraged trading operation. They have to make sure that they always have enough funds to cover losing trades.
BitMEX has a cold wallet with more than 12 thousand bitcoins. All these Bitcoins are hold only to fund winning traders. If you don’t want give Bitcoins to BitMEX insurance fund don’t trade at 50x or 100x leverage.
Hope it helps you a bit and will bring you big earning from leveraged Bitcoin trading.