0. What is BitMEX Margin Trading?

 

Hello everyone! This time, I will explain BitMEX margin trading!

 

Before we get into margin trading, let's introduce some basic terms.

What is the margin?

 

- The amount of money you want to trade on the exchange is called margin.

What is Margin?

 

- Margin is a short-term loan from an exchange based on margin.

What is margin trading?

 

- Margin trading is the act of trading based on the amount borrowed from the exchange.

 

What is leverage?

- Borrowed funds are what we know well as leverage!

 

- Leverage is a tool that acts as a leverage and exposes you to greater volatility for a relatively small amount.

 

 

 

BitMEX margin trading

- It is an act of borrowing margin based on margin and using leverage to trade virtual assets such as Bitcoin.

 

- When trading margin trading, it is a derivative product as it is not spot (SPOT) but futures (FUTURES).

 

- Margin trading allows you to bet up or down, and these are called short buys and short sells, respectively.

What are Derivative Products?

- Derivatives are products designed to track the price of an asset such as Bitcoin using financial engineering based on the spot.

 

- ETFs, as we know them well, can also be considered derivatives.

 

- The advantage of derivatives of BitMEX margin trading is that you can bet on both rises and falls,

 

- You can use the leverage as much as you want, from 1x to 100x.

 

 

 

As mentioned above, we invested 1 million won by using the exchange. Excluding a small fee on the exchange, 50% of profits were generated, and our balance reached 1.5 million won!

 

This time, we will borrow short-term funds from the exchange with our investment of 1 million won as collateral for margin trading! Based on 1 million won, you borrowed 1 million won and invested 2 million won!

Again, 50% profit excluding commissions! So, will the final balance be 300 million won?

But if we repay the 1 million won we borrowed, the final balance is 2 million won! I was able to earn more from my original 500,000 won profit to 1 million won!

 

 

But isn't it too risky to use leverage?

Spending your entire fortune and using 100x leverage is really, really, really risky and a tin can.

However, if you use 100x leverage with 1% of your assets, you can bet as much as your original investment and in the worst case you will only lose 1% of your fortune. You can use leverage wisely in a number of ways to suit your investment style and inclination.

As another example, you could expose a 120% investment position using 2x leverage with 60% of your funds and take the rest with cash. And after making a profit, you can rebalance to realize a profit and bet with a fixed rate of 60% again. The most important thing here is your investment strategy and money management technique.

If you want to know more about money management law, please click here!

레버리지는 결국 제 자산의 변동성을 증진시키는 것입니다.

 

변동성이란 비트코인의 가격이 위 또는 아래로 움직이면서 만들어진 가격의 폭입니다.

 

투자금의 비중을 조절하신다면 레버리지의 본래 목적인 변동성 증진 및 포지션 노출을 잘 활용할 수 있습니다.

What is a margin call?

 

- If you bought Bitcoin at $20,000 with 2x leverage and survived it falling to $10,000...?? It's -50%, but will it be -100%? In this case, the exchange makes a 'margin call'.

 

- A margin call is an act of forcibly closing a position at the current price before the amount invested (margin) becomes negative.

 

- The reason for the margin call is to prevent the investor's balance from becoming negative and owing to the exchange, and at the same time, to prevent losses on the exchange side.

 

- Margin trading is the risk of leverage that can make a bigger profit while also causing a bigger loss.

 

Margin trading has the great advantage of being able to use leverage, but the biggest advantage is that individuals can also take short positions in the cryptocurrency market. In other words, you can short sell. So, let's see what short selling is!

 

Short buying is the act of betting on the upside in the expectation that the price will rise in the future.

 

Short selling is the act of betting on the downside in the expectation that the price will decrease in the future.

 

 

 

 

The principle of short selling is as in the image above, when the coin is 1 million won, the coin is sold with the margin as collateral,

 

It is the principle that the borrowed coin is bought back and returned the moment it takes profit after the price falls.

 

Margin acts as a kind of credit and lends coins to the exchange.