Basics of Leverage trading on Bitmex

Bitmex stands for Bitcoin Mercantile Trading. As such, the website deals in various types of trades using Bitcoins as their currency. Bitmex allows for various types of trades. Primary trading takes the form of leverage trading and futures trading. Bitmex trade is well explained at www.smartoptions.io.

Here, we shall focus on Leverage trading.

What is Leverage trading?

Leverage trading is also known as margin trading. This type of trading implies investing money in hope to earn a leverage on the amount invested. Leverage trading enables investors to open positions that are multiple folds of their investment. If the market is favorable, profits of up to 10 times can be made.

It must be noted here, that leverage trading is a risky venture and is not for everyone.

Leverage trading

How it works?

For every contract, there is a set amount of leverage limit. This limit varies from contract to contract and from one website to another. Bitmex has a maximum of 100:1 depending on the contract type, initial margin, and maintenance margin.

The leverage trading may take one of two forms

1.Long- This entails buying of a contract whose value is projected or believed to increase.

2.Short- This entails selling a contract whose value is projected or believed to decline with the aim of repurchase at a higher price later.

What is the process?

When you start a contract, some amount of your balance is taken as collateral. A successful trade would mean closing the contract at a profit. The result would be the return of funds along with the profit. On the other hand, if there is a loss, the trade is closed and the collateral is liquidated at the liquidation price.

It is the high levels of profits that can be earned through leverage training that makes it attractive to traders. In essence, leverage trading is a high-risk trade and without experience or assistance, it is likely to result in losses. In order to gain valuable insight on leverage trading, you can visit www.smartoptions.io