Updated: Jul 15, 2020
To explain leverage on BitMEX (margin trading) we need to use several examples to make it simple. You can choose a range from 0,01X up to 100X. Leverage ratio determines your margin to trade – high leverage means low margin and more important: liquidation price is so close! Leverage on BitMEX does not have a direct influence on your profits and fees.
Profits on BitMEX are always related to quantity. And there is no fees!!
Here is a step by step guide on how to calculate all before you open a trade.
Let’s stick to this example:
You deposited on BitMEX 2BTC, trader X thinks to buy long (scenario 1)
Current BTC price is $5 000
X wants to use all deposited BTC for this trade.
And you are looking for the best strategy and you are trying to estimate risk and potential profits. Using our free BitMEX calculator you check what will happen if you simple manipulate BitMEX leverage from 0,01X up to 100X.
Let us explain you this with ABCD examples. It is not so simple. You can edit in excel blue cells.
We inserted this data into our BitMEX calculator:
Set Entry Price and Close Prices.
A example- Leverage 1:100, B- 1:33,3 C- 1:5,55 and D - 1:0,5
Quantity? Manipulate with quantity until Deposit BTC = 2BTC (about)
Page to a free download: Bitmex excel calculator to check all leverages and find quantity.
Example A – it would be almost like BitMEX suicide (leverage 100x)
A trader started checking with leverage 100X!! This the main reason he uses BitMEX! He was very excited as he noticed that with this huge monster leverage he can open 1,000,000 contracts. It means the trade value is $1,000,000. How does it work?
Read this explanation carefully:
First, he chooses leverage (2.) and then he manipulates contracts quantity (1.) to see Deposit BTC (your margin trading) exactly = 2BTC (as this is the plan)
He was more and more excited when he inserted Entry Price (3.) and Close Price (4.). If the BTC price changed $1 he earns $200 (Trade result in USD). $500 change on BTC price, means for him profit $100,000!!! What is more, if he opens and closes by the limit order he will get from Bitmex $500 rebates (Fees1).
But his enthusiasm disappeared when he the saw red cell (Estimated liquidation price). In this case it displayed $4975. It means when the Bitcoin nark price matched this price it is over. His loss would be $25 x $200 = $5000 as BTC price dropped…. And next $5000 as he didn’t close the trade before liquidation price – he would lose 10,000$ in total. What is $25 price move at Bitcoin price? Nothing!
But it is nice to dream about opening X100 leverage in the right moment. But it is almost impossible. Margin to trade finishes here so fast!
Example B – it would be quite risky to Bitmex as well (leverage 33,33)
33,33X leverage is not 100X. When he reduced leverage look what happened: