With a growing emphasis on the importance of trading in the cryptocurrency sector, the way folks profit has shifted away from aggressive mining. If you're interested in making money with Bitcoin in a more mature market, though, you'll need access to an exchange platform that permits you to take short positions.
Even if you intend to go long on a position, it's beneficial to have the ability to hedge your risks with short positions that can keep you and your wallet in the game if things don't go as anticipated.
Bitmex is an exchange platform that's designed to help a trader take both short and long positions in the cryptocurrency markets. Check out our full Bitmex review here for deaper learning. The platform is very similar to what we see in more traditional currency exchanges. Bitmex offers the opportunity to buy and sell on margin, allowing them to use leverage to trade much larger amounts of cryptocurrency.
As is the case in regular currency markets, the idea behind shorting something like Bitcoin is that you're essentially making a bet that the price of the cryptocurrency is going to go down during a specified period of time. Bitmex shorting has been available since 2014. Bitmex short selling has become attractive because it allows traders to do more than cross their fingers and hope that the market goes up.
When the BTC market crashed from its highs in early 2018, it's critical to have a way to turn a profit even when the market is headed south. Thankfully, traders could use Bitmex and short Bitcoin, allowing them to stay ahead of a steep downward trend while others could only go on web forums and beg their friends to hold their positions.
It's not difficult to figure out how to short on Bitmex. You'll need to sign-up with an account and do verification through an authenticated email account.
Be aware that Bitmex does not currently accept U.S.-based users.
Once you've logged into the platform, you'll see an interface that looks a lot like a traditional trading platform. It includes options for entering everything from market to stop loss orders, allowing you to tailor your orders to your specific goals.
It's wise to remember, however, that a sort position will be closed out once the leverage for the order hits the same amount as the losses. For example, while you can use 100:1 leverage on some positions, once losses equal your principle, the position will be closed without any of your initial investment being returned.
Bitmex shorts are usually liquidated before they hit their bankruptcy point, though.
As is the case with any currency trading market, short sellers and long sellers are essentially making conflicting bets. These positions mirror each other, with Bitmex shorts vs longs pairing off for every bet.
Settlement of each contract is based on the strike price and the term of the contract, and it's a future contract that's derived from the value of whatever crypto the trader elects to bet on.
The platform does offer perpetual contracts, but there aren't true inverse derivative Bitmex shorts
You'll likely want to have some idea of what Bitmex short interest and long interest are, as this can inform you of how the market is piling on. Bitmex, however, doesn't publish data for this.
Several websites publish estimates, but these should not be seen as reliable figures for Bitmex short selling or long buying activity. This can be frustrating, as it's hard to identify when short and long rates are high.
If you want to be a Bitmex short Bitcoin player, you'll need to specifically select the cryptocurrency in the interface. A Bitmex hold short and long position can be held on a variety of different currencies, including popular alternatives like Ethereum and Litecoin. When you make any deposit, though, it has to be made in Bitcoin.
Notably, you will trade Bitcoin using the XBT symbol. This is an older one that was in use before the BTC symbol came into more common use.
You're welcome to trade on Bitmex without using margin. This isn't the best way to take advantage of the platform, especially for someone who wants to know how can you short on Bitmex. Unless you expect the market to crash by more than 50% in the period covered by your contract, you'll probably be leaving money on the table.
As long as your position holds, you should be able to profit one for one the whole way down. You may need to configure a contract for a longer term, such as a perpetual contract, to ensure you can take full advantage of a length slide.
Is Going Short on Bitmex Risky? There is a risk inherent to trading options in any market. Thanks to liquidation policies, it's a little bit easier to keep from being completely blown up while trading on Bitmex than in many other settings.
There are also anti liquidation tools available for traders who are prepared to stay in positions longer. If you're looking to mitigate your risks, stop orders function much the same in this role as they do in traditional currency trading.
Auto-deleveraging systems are built into Bitmex in order to safely address the challenges of market volatility. This also ensures that all positions close, no matter how big a downturn occurs, keeping the entire exchange more stable and liquid.
The absolute worst that a Bitmex trader can do is to have their entire position liquidated. As with other products, you should never invest more capital than you're comfortable losing.
How Big is the Bitmex Market? Since its establishment in 2014, tens of billions of dollars have been traded on the exchange.
What is the Denomination for Currency on Bitmex? Bitmex employs U.S. dollars (USD) to show the value of trades. it also displays trades in terms of Bitcoin.
Are There Any Fees? Using Bitmex itself comes with no fees. You should, however, be aware of the typical fees for transferring Bitcoin into an account and out to your wallet.
How Do You Select Leverage? The interface for Bitmex employs a slider that allows you can use to choose from 1x to 100x leverage. At higher leverage points, you'll be at greater risk of having your investment wiped out. For example, someone trading 0.01 BTC at 100x will likely be liquidated before the movement in the market on one BTC moves more than 0.01 in the opposite direction. Keep in mind that different currencies permit different amounts of leverage, so don't assume you'll always be able to leverage the whole way up to 100x.
The emergence of Bitmex is an indication that the cryptocurrency trading market has become significantly more mature. As traders settle in to handling their portfolios the same way they do dollars, pounds and Euros, it's important that they have access to the same tools that anyone would in a traditional exchange.
The arrival of Bitmex means that crypto is just something more than mindlessly holding and hoping for an upward swing. You can now profit even on days when the market is headed downward.
Another advantage of Bitmex is that margin and leveraged trading is allowed. For folks who don't have millions of dollars worth of Bitcoin to invest, this gives a chance to get in on the action. Even $1,000 in BTC will let you play with leverage at amounts up to $100,000 worth.
If you're confident in your analysis of the market, this can be a good way to get to a big payday without having to lay out a massive investment just to buy into the market.
This is great for anyone who feels like they were left behind during the crypto mining boom.
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