How to operate BitMEX leverage

Leverage trading on BitMEX, while offering profit-amping potential, demands a clear understanding of risks and a robust risk management strategy.

Nov 15, 2024 at 12:08 pm

Step 1: Understanding Leverage on BitMEX

Leverage is a tool that allows traders to amplify their trading profits. However, it is important to understand the risks associated with leverage before using it. Leverage is a double-edged sword that can amplify losses just as quickly as it amplifies profits. It is important to have a solid understanding of leverage before using it in your trading.

Step 2: Choosing the Right Leverage Amount

The amount of leverage you use should be based on your individual risk tolerance and trading strategy. If you are new to leverage or have a low risk tolerance, it is best to start with a low leverage amount, such as 2x or 5x. You can then gradually increase the amount of leverage you use as you become more comfortable with it.

Step 3: Managing Risk when Using Leverage

When using leverage, it is important to have a sound risk management strategy in place. This includes setting stop-loss orders to limit your losses and managing your position size so that you do not risk more than you can afford to lose. It is also important to be aware of the liquidation price for your position, which is the price at which your position will be closed out automatically by BitMEX if your losses reach a certain level.

Step 4: Using Leverage to Enhance Your Trading

Once you understand the risks associated with leverage and have developed a sound risk management strategy, you can start using leverage to enhance your trading. Leverage can be used to increase the potential profits of a trade, but it can also be used to reduce the risk of a trade. For example, you can use leverage to increase the potential profit of a long trade or to decrease your losses on a short trade.

Step 5: Monitoring Your Position When Using Leverage

It is important to monitor your position closely when using leverage. This includes tracking your profit and loss (P&L), as well as your liquidation price. You should also be aware of any news or events that could affect the price of the asset you are trading. If the price of the asset moves against you, you may need to adjust your position or close it out to avoid losses.

Step 6: Closing Out Your Position

When you are ready to close out your position, you can do so by clicking on the "Close Position" button in the BitMEX trading interface. You can also close out your position by placing a market order or a limit order. If you place a market order, your position will be closed out at the current market price. If you place a limit order, your position will be closed out once the price reaches your specified limit price.