Crypto trading has gained foothold in the digital currency world, and more people and platforms are being created to take advantage of the new trend in the financial world. Bitmex has become one of the most talked about crypto exchanges and derivative trading platforms in the recent past. However, new traders have struggled to make headways on the platform because of many reasons.

Treating Bitmex like an ordinary exchange, yet it’s not

The first thing you want to know about Bitmex is you’re trading options not actual Bitcoins or alt coins. It’s the first major derivatives market for cryptocurrency.

That means you can sell and more importantly sell short. Selling short lets you profit when Bitcoin drops like a rock.

With the crypto market still at the banana republic stage of development it’s no secret that it’s super volatile. Bitcoin, the granddaddy of crypto, hit $20,000 last year only to plunge down to $5000+ this year.

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The Perpetual Contracts never expire. They trade constantly and they come very close to the current spot price. That means you’re never getting tapped out just because you bungled the date. You might correctly predict Bitcoin is going back to $15,000 but since nobody has a crystal ball it could hit that in Dec 2018 or Dec 2019 or Dec 2025. You just don’t know. A perpetual contract lets you hold onto your options forever if you want to hold onto them.

Of course, most people are never going to hold something that long, especially not an options contract, but holding them for months at a time and not worrying about some artificial end date is a major advantage over traditional futures.

They all want you to be liquidated

There’s another aspect of Bitmex that you need to understand right now before you go any further, the liquidation price.

What’s liquidation?

Liquidation is the price where you lose 100% of what you risked on a single trade.If that strikes fear into your heart that’s good. You never want to lose 100% on a single trade if you can possibly avoid it. But it’s not all bad. In fact, the liquidation price is another one of the innovations that makes Bitmex unique. You see, Bitmex has major advantages over traditional margin accounts.

Who wants you liquidated on Bitmex?

The answer is simple , when you get liquidated the traders that are positioned in the opposite direction gain your losses. It’s also called liquidity hunt and it’s a common practice among high level traders and institutions.
Who else? Well guess what , Bitmex loves it when you get liquidated, as a matter of fact Bitmex gains whether you lose or you win BUT when you lose they get all the income streams possible for a single client. Their job is to incite you to trade more and more oftenly. Take good note of this fact as it can influence your trading decisions.

The Joy and Pain of Leverage

If you’re not an experienced trader, who’s known great suffering and great triumph and lived to tell the tale, you shouldn’t go anywhere near leverage. Just say no. Come back when you know what you’re doing. Using leverage when you’re not ready is like getting blackjacked in an alley, waking up in a cold ice bath and finding someone sliced out your organs with a dirty knife and left you to bleed out.

They don’t know how to manage risk on Bitex

How do you practice good money management?

Here’s the deal though, those strategies suffer when you start using a lot of leverage. You need to have an abacus in your head because you can quickly lose a lot more with the primary strategy I laid out there.


Bitmex is not for the faint of heart. It’s the battle ground of samurai and ninja and only the strongest still stand after the swords stop swinging and the blood and dust settle.

If you’re not an experienced trader you will get hurt on this wild and wonderful exchange. I’ve watched it happen again and again to inexperienced traders, as well as good ones that I know and love. But it is possible to win on Bitmex, if you’re careful, methodical and smart.

You need to get the math of leverage and liquidation down cold. You need a perfect risk management strategy. In short, you need to know what you’re doing.

Want to know more about Bitmex? Make sure you check our Bitmex Signals page.