How to pay margin for BitMEX contracts

With margin trading, BitMEX traders enhance their buying power by leveraging borrowed funds, but face elevated risks due to the increased leverage.

Nov 16, 2024 at 09:43 am

Step 1: Understand Margin Trading

Margin trading allows traders to borrow funds from a broker to increase their purchasing power. This can potentially magnify their profits but also exposes them to higher risks due to increased leverage. In BitMEX, margin trading is available for most perpetual contracts.

Step 2: Calculate Required Margin

The required margin for a BitMEX contract is determined by the contract's value, leverage, and maintenance margin. Leverage refers to the ratio of borrowed capital to deposited funds, while maintenance margin is the minimum account balance required to maintain an open position. BitMEX offers flexible leverage options ranging from 1x to 100x.

Step 3: Choose a Funding Method

BitMEX supports multiple funding methods for margin trading, including Bitcoin (BTC), Tether (USDT), and USD Coin (USDC). Traders can deposit funds into their BitMEX accounts through various channels such as cryptocurrency wallets or bank transfers.

Step 4: Open a Margin Position

To open a margin position on BitMEX, traders need to select the desired contract, enter the trade parameters (quantity, leverage, price), and specify the order type (limit, market, or stop-limit). Once the trade is executed, the required margin will be deducted from the trader's account balance.

Step 5: Manage Open Positions

During the lifetime of a margin position, traders need to monitor their account balance to ensure it meets the maintenance margin requirement. If the account balance falls below this level, the trader may receive a margin call and be forced to close their position at a loss. Traders can adjust their leverage or add additional funds to their account to avoid margin calls.

Step 6: Close a Margin Position

To close a margin position, traders simply need to enter an opposite order to their initial trade. For example, if a trader opened a long position, they can close it by selling an equal quantity of the same contract. The profit or loss on the trade will be credited or debited to the trader's account balance, along with the used margin.

Step 7: Withdraw Funds

After closing all margin positions, traders can withdraw their funds from BitMEX by initiating a withdrawal request. The withdrawal process may take some time to complete, depending on the withdrawal method and network conditions.

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