In this thread I would like to share with you my initial experiences with Bitmex. I hope that some members of this forum might find them useful.
I didn't plan to try Bitmex at all (it looked to me too risky), but then I decided to give it a chance.
What I found out is that many people treat Bitmex like a casino, but in reality, you don't have to do that. Nobody is forcing you.
The good thing is that if you choose a reasonable leverage (10x or below), you are risking less money from your account compared to no leverage at all. But at the same time this is a bad thing in case you decide to push your leverage too high. The trade off is that the higher the leverage the higher the danger of your position being liquidated.
What people typically do is choose to go Short or Long and then, like a roulette, wait for the outcome, which can either be a win, or a liquidation. Even if you are extremely lucky and have a winning streak, just one liquidation is enough to ruin your account.
The solution to this is really easy. Always set a Stop Loss. If you go Long, go to the Stop Market tab
and set a Sell Stop somewhere bellow the Entry price. And the other way around when you go Short.
It is also important not to risk a substantial portion of your account. You can do that by adjusting your Position Size. Your stop loss should enable you to lose only a few percent at a time (in case the trade goes in the opposite direction).
Depending on your balance, your risk can be set as a percentage of your total balance. Then you can determine your desired stop price, and calculate the number of contract you should trade so that in the case of your stop loss being triggered, you lose just the risk percentage. I always risk 2% or less of my account.
Here is a good online calculator where you can do that:
https://blockchainwhispers.com/bitmex-position-calculator/Fill out the left form where it says Enter Data. Then you can check the Results. It can give you your Position Size, Risk Amount in BTC and USD, Stop Loss Price in case of Short or Long Position, Take Profit Price, and other info.
This calculator can also tell you what you maximum leverage should be so that you are stopped out, rather than liquidated. However, it may suggest too high a leverage. Rather than accepting that, I still suggest to go with a smaller leverage (up to 10).
Never ever get liquidated. Stop your trade before that happens. I know that you might still have hope of reversal, but that's pure gambling. And that's not the way to trade if you want to make consistent profit.
Go with low to moderate leverages. Never go beyond 10, unless you are very experienced trader.
Now what happens when the trade goes as planned?
- Don't be greedy. Take profit, at least some percentage of it.
- For example, take 50% profit at some point. Your trade is now officially a winning trade. And leave the rest of it to go as far as possible.
Remember out of 4 possible outcomes, 3 are acceptable, the fourth is not:
1. Small losses - Acceptable
2. Small wins - Acceptable
3. Huge wins - Acceptable
4. Huge losses - Not acceptable
Protect your account against Huge Losses.
I would appreciate your input, especially if you are an experienced Bitmex trader, and especially if you think that I've said something inaccurate.
Good luck!