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5 Mistakes to Avoid While Trading on BitMEX Crypto Exchange

BitMEX is a quite complex crypto exchange and trading on it is not that simple. New traders are prone to make mistakes while trading on BitMEX which usually impacts their crypto trading portfolio badly. Moreover, the crypto exchange is quite popular and offers a verity of trading options along with a competitive fee structure. This exchange has an incredibly low barrier to entry, which means anybody with little capital, internet, and a machine can turn into a "trader".

Unfortunately, new traders often learn this aspect the hard way, when their investment portfolio is totally wiped out after making some common trading mistakes on BitMEX which is one of the best crypto exchanges.


Top Trading Mistakes on BitMEX Crypto Exchange


Here is a list of 5 mistakes that new traders do while trading crypto on BitMEX. Make sure to avoid the below listed mistakes at any cost to maintain a successful investment portfolio.


1. Neglecting Risk Management


Most importantly, while trading on this crypto coin exchange you should know how to manage risks. Sadly, many new traders haste before making an informed decision, which manifest when they neglect to accept losses (stop loss), failing to calculate their position and not hedging. Trading without opting for the stop loss feature means they won’t have any idea about their losses, which makes them stay confident that another order may end up in support of their position. New brokers should know how to tackle losses in trade on derivatives platforms like BitMEX crypto exchange so that they prevent their accounts to get liquidated all of the sudden. To avoid further losses, it is better for traders to opt for stop loss feature and try not to make hasty decisions during market fluctuations.


2. Leveraging Too High


Traders who are new to a leverage trading platform like BitMEX often make the mistake of over-leveraging, that results in massive losses. As one of the best crypto exchange BitMEXpermits users to borrow up to 100x against their deposited collateral on initial margin. Note that just a little fluctuation in the price. let say of 0.5%, can get your account liquidated. The one of the most helpful strategy is to keep leverage low, maybe 10x maximum, although it’s advisable to keep it at 5x for safe BitMEX trading.


3. Not taking liquidation price into account


BitMEX liquidation means you lost all the capital you set up on a solitary trade. Explaining it in simple words, if you trade 1 at 20x leverage (20 BTC), BitMEX will charge you a liquidation fees when you place a trade. If the trade goes wrong and you hit the liquidation value, you will lose your 1 BTC like that. That is a 100% loss. Many new trader are not aware or experienced with the liquidation value that means they fail to play it safe on this perspective. Thus, it is important to understand all about leverage trading before dipping your toe in leverage trading.


4. Not Considering the Funding Rate


Funding rate on BitMEX crypto exchange is a small fee paid by one side of the agreement to the next. For instance, Longs pay Shorts or the other way around. It is intended to empower the cost of the perpetuals futures contract to remain close to the basic spot index cost. User can calculate the funding rate by compiling revenue and the premium/discount rate. The issue with new traders on BitMEX is that they do not understand that when they sell short or leverage trade then they are acquiring some broker’s coins and they are paying interest to those brokers. Eventually, if not managed properly this funding rate can either eat into your capital/initial margin, leading to loss.

Most of the times new traders do not know that they will pay a charge like clockwork, and they likewise ignore the fact when the subsidizing round is finishing there will be positions on the opposite side prepared to take the funding.  There are also situations where the value shifts right after funding.


5. Not using all the available futures contracts


BitMEX is one of the best crypto exchange that has two primary contract alternatives: Futures contracts and Perpetual Contract. At a point when you utilize every one of the accessible futures contracts, you are guaranteed that at one specific point the agreement will be settled automatically. A futures contract for December 2021 may get valued at $14,000 when the current cost is around $5,000.00. Most new traders on BitMEX try not to go with these Futures Contracts, which opens them to losses in the perpetually unpredictable crypto prices.


Final Verdict


Crypto trading on BitMEX crypto exchange is a challenging endeavor weather you are an advanced or new trader. Without proper background knowledge and hands-on experience many traders make some common mistakes that end up getting their accounts liquidated. Keeping off these avoidable mistakes will increase your rate of success on BitMEX.

on December 31 at 11:22

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