Thursday, March 9, 2017

BTC Exchange Tutorial: BitMEX Trading Platform - Beginners Guide on How to Margin Trade BTC & Altcoins Derivatives & Futures Contracts, and other Prediction Markets

BitMEX: The Next Generation of Bitcoin Derivatives
BitMEX: The Next Generation of Bitcoin Derivatives

Introduction to The Bitcoin Mercantile Exchange (BitMEX)


The Bitcoin Mercantile Exchange (BitMEX) is a leading digital currency exchange platform that offers Derivatives, Futures, and Prediction contracts and markets for margin trading cryptocurrencies.

BitMEX offers a variety of contract types, and all contracts are bought and paid out in Bitcoin. It is the only platform that offers a "Perpetual P2P Swap", a contract that trades like a future but never expires!

BitMEX touts itself to be a provider of "The Next Generation of Bitcoin Derivatives", and quite rightfully so. The platform has been able to grow significantly, no doubt partly due to their ability to open traders up to various kinds of interesting derivative markets, and keeping their customers happy with transparency, open communication, having strong security in place, and most importantly, a highly advanced yet user-friendly trading platform.

BitMEX: Perpetual P2P Swap Contracts Do Not Expire
BitMEX: Perpetual P2P Swap Contracts Do Not Expire
BitMEX offers 3 bitcoin markets, namely, Bitcoin/USD (XBT). Bitcoin/CNY (XBC), Bitcoin/JPY (XBJ), a variety of other alternative cryptocurrency markets, and even prediction markets.

Alternative cryptocurrency markets include Zcash (ZEC), Ethereum (ETH), Ethereum Classic (ETC), Monero (XMR), Ripple (XRP), Augur (REP), Litecoin (LTC), Factom (FCT), Dash (DASH), as well as other derivative prediction markets such as the likelihood of Bitcoin ETF Approval (COIN).

They also offer demo accounts for you to test trading strategies without risking any funds.

How Does Margin Trading on BitMEX Work? 

 

BitMEX: Margin Trading Bitcoin up to 100x Leverage
BitMEX: Margin Trading Bitcoin up to 100x Leverage

Margin Trading refers to borrowing from the broker (trading platform) to either buy or sell a stock.

Depending on which market, BitMEX offers a flexible leverage of up to 100x for Bitcoin markets and up to 33x for Altcoin markets. But that doesn't mean that you should use the maximum available leverage, and in fact, you shouldn't unless you really know what you are doing!

My suggestion for the new traders here is to stick to a leverage of 5x or less, before moving to 10x or higher when you are more comfortable.

Getting Started - Sign Up & Fund Your BitMEX Account

 

The need for KYC/AML only arises when you need to deposit or withdraw FIAT currency from the exchange. Example, for Bitfinex, you can trade any market using your BTC deposits and withdraw Bitcoin perfectly fine without filling up any forms. You only need to get your account approved when you want to deposit/withdraw USD or Euro etc..

For BitMEX, like most Bitcoin and cryptocurrency exchanges, there is no need to go through KYC/AML document submission and approval process, and you can start trading immediately just by signing up and funding your account!

Keep Your Account SECURE!


After you set up your account, the first thing you should do is to keep your account secure, and I can't emphasize this enough! Here are some things you should do to keep hackers at bay:
  1.  MUST DO: 2FA on both exchange and email account. Once this is done, you should not be able to get compromised, except in rare cases such as sim-jacking. Highly suggest using Google Authenticator / Authy type of 2FA, instead of SMS 2FA which is susceptible to sim-jacking with some social engineering and one lazy telco service operator customer care assistant.
  2. MUST DO: Use strong passwords; minimum 20 characters with a mix of upper- and lower-case letters, numbers, and characters.
  3. Optional: Use a separate email address for Bitcoin and cryptocurrency only.

BitMEX Trading Dashboard Walk-through


Now that we've got that out of the way, lets dive straight into navigating around the BitMEX exchange trading dashboard. Below is the landing page you'll see upon logging into your BitMEX account.

For your easy reference, I have split the interface up into three segments:
A) Market Information
B) Account Information
C) Trading Tools & Management

A) Market Information

BitMex Trading Dashboard Walkthrough: Market Information
BitMEX Trading Dashboard Walkthrough: Market Information

1. Market Overview

Right at the top, you can find the ticker symbols of all the available markets. Clicking on the symbols on the left will toggle between showing the market data of the relevant market, namely current trading price and 24h % gain/loss.


2. Market Selection

You can find a row of markets and their associated tickers in this section. Clicking on each of the markets will load the relevant market information as below.


3. Market Information

In this section, you can find the charts powered by tradingview.com, the order book, and recent trade history. The market that is shown here is the market is chosen in the "Market Selection" section.


4. Market Contract Details

Here you will be able to see information about the contract or market that is chosen in the "Market Selection" section.


B) Account Information

BitMEX Trading Dashboard Walkthrough: Account Information
BitMEX Trading Dashboard Walkthrough: Account Information
5. Dashboard Tabs

Trade, Account, Contracts, References, API


6. Balance

You can view your balance at the top right.

Alternatively, your available trading balance is also shown on the left side under the "Place Order" section.


7. Account Information & Settings

You may access your account information by clicking on your username at the top right, where you can change your currency denomination display, color theme, dashboard layout, and access other account/security and site preference settings.

Alternatively, you can also click on "Account" in the dashboard tabs section to access your account settings.


C) Trading Tools & Management

BitMEX Trading Dashboard Walkthrough: Trading Tools & Management
BitMEX Trading Dashboard Walkthrough: Trading Tools & Management

8. Place Order

This is where you place your orders by inputting the quantity, price, and other parameters where required.


9. Position Overview

Here you can see the overview of your open positions, including the number of contracts, entry price, Return on Equity (ROE), liquidation price, and leverage used. You are also able to adjust the leverage used in your open position.


10. Manage Orders & Positions

Active orders and open positions will appear in this section.

It also shows a history of your orders and fills.


BitMEX Trading Dashboard - Order Types


Now that you are familiar with how to navigate BitMEX's platform, let's move on to the various order types, placing an order, and get to the actual trading proper! Click on the image below to view it in full size.

BitMEX Trading Dashboard Order Types: Overview
BitMEX Trading Dashboard Order Types: Overview

Again, for easy reference, I have split the 7 available order types into 3 groups:
A) Market & Limit Orders
B) Stop Orders
C) Take Profit Orders

Let's go into more detail for each order type below.


A) Market & Limit Orders


Market and Limit orders are the most common types of orders used by traders to enter into a trade/position. These orders are immediately entered into the order book once opened.

1. Market Order
BitMEX Trading Dashboard Order Types: Market Order
BitMEX Trading Dashboard Order Types: Market Order
Straightforward. Buys/sells at the nearest available price.

After clicking Buy or Sell, there will be a confirmation page, where you can adjust your desired leverage for the trade.




2. Limit Order
BitMEX Trading Dashboard Order Types: Limit Order
BitMEX Trading Dashboard Order Types: Limit Order
Next most commonly used order would be the Limit Order, which basically allows you to place a buy/sell at your desired price.

Similarly, there is a confirmation page where you adjust your desired leverage for the trade.


B) Stop Orders


Stop orders, unlike market or limit orders, do not appear on the order book immediately upon opening. These orders are associated with a trigger price, or "stop price" in the case of BitMEX, whereby your order is only entered into the order book after the stop price is hit. As I shared in my last post about Bitfinex, stop orders are usually used as "stop losses" to get out of a bad trade, but are also extremely effective in buying into breakouts. To read more about how buy breakouts with stop orders and let your winners ride, check out this post about margin trading.


3. Stop Market Order
BitMEX Trading Dashboard Order Types: Stop Market Order
BitMEX Trading Dashboard Order Types: Stop Market Order
A Stop Market Order is a market order that is triggered (opens) when your stop price is hit. 

For example, if today's BTC price is $1150, and you place a stop market buy order at $1200, your position will not trigger if price trades anywhere below $1199. Once a trade occurs on the market at $1200, your stop market buy order will trigger and a market buy is made.


4. Stop Limit Order
BitMEX Trading Dashboard Order Types: Stop Limit Order
BitMEX Trading Dashboard Order Types: Stop Limit Order
In the same way that a market order differs from a limit order, a Stop Limit Order works in the same way as a Stop Market Order, except with an additional "limit price" parameter that is triggered only when your stop price is hit.

Further to the example above, if you enter $1200 as the stop price, and $1175 as the limit price, and when a trade occurs on the market at $1200, a limit order at $1175 will be placed.

Alternatively, if you enter $1200 as the stop price, and $1210 as the limit price, this will act almost like a market buy when your trade is triggered (unless there are not enough sells for your purchase quantity up to the limit price - in which case you need to increase the limit price or simply use a stop market order).


5. Trailing Stop Order
BitMEX Trading Dashboard Order Types: Trailing Stop Order
BitMEX Trading Dashboard Order Types: Trailing Stop Order
Instead of setting a stop price, a Trailing Stop Order makes use of a "Trail Value" parameter to determine when a market order gets triggered. This "Trail Value" is calculated against the market's price at which you entered the position.

For example, if BTC price is $1150 and I have an active buy position, and I open a Trailing Stop Order by entering a "Trail Value" of $5, my active buy position will close when price goes to $1145. Whereas if BTC price is $1200, opening the same trailing stop order will close my active buy position when price goes to $1195.


C) Take Profit Orders


Take Profit Orders, as the name suggests, enables you to set a target price on an existing open position to close it and "take profit". This can be done in the form of a market order or limit order.

It simply works in the same way as placing a limit order in the opposite direction of your active position (i.e. placing a limit sell order if you have an active buy position). 

Interestingly, just like using a stop to buy a breakout, this order type can also be used to set an entry point for a new position. But unlike a stop order, triggers are set in the opposite direction. To use it in this way, untick the "Close on Trigger" option as this is for closing orders only and will automatically cancel any orders if used to enter/open a position.

See below for a closer look at the Take Profit Market Order and Take Profit Limit Order.


6. Take Profit Market Order



BitMEX Trading Dashboard Order Types: Take Profit Market Order
BitMEX Trading Dashboard Order Types: Take Profit Market Order


7. Take Profit Limit Order
BitMEX Trading Dashboard Order Types: Take Profit Limit Order
BitMEX Trading Dashboard Order Types: Take Profit Limit Order


BitMEX Trading Dashboard - Manage Orders & Positions


Upon placing your order or if you have any open positions, you can view and manage them in the middle bottom section of the trading dashboard. You can also view your order history, fills, and closed positions in this section.

BitMEX Trading Dashboard Manage Orders & Positions: Positions Overview
BitMEX Trading Dashboard Manage Orders & Positions: Positions Overview


1. Active Orders


Once you place a limit order (and it doesn't immediately trigger), they will appear in this "Active Orders" tab. You can edit the quantity and price while the order is still open, although you can't change a buy into a sell.

Stop orders and take profit orders will appear in the "Stops" tab.
BitMEX Trading Dashboard Manage Orders & Positions: Active Orders
BitMEX Trading Dashboard Manage Orders & Positions: Active Orders

2. Open Positions

 

Once your active order triggers, or when you place a market order, they will appear here in "Positions". You are able to add/remove margin to your position, which changes the liquidation price of your position, as well as to easily place a limit or market order to close your position instead of having to place the order through the "Place Order" section.

BitMEX Trading Dashboard Manage Orders & Positions: Open Positions
BitMEX Trading Dashboard Manage Orders & Positions: Open Positions

If you want to change your leverage used on a particular position, you can adjust it with the slider on the left side of your dashboard, just below the "Place Order" section.

BitMEX Trading Dashboard Manage Orders & Positions: Your Position
BitMEX Trading Dashboard Manage Orders & Positions: Your Position

3. Stop Loss & Take Profit


Active stop orders and take profit orders will appear here in the "Stops" tab. You can also edit some parameters, including the quantity, stop price, and limit price, as well as cancel the order.

BitMEX Trading Dashboard Manage Orders & Positions: Stop Loss & Take Profit
BitMEX Trading Dashboard Manage Orders & Positions: Stop Loss & Take Profit

4. Order History


Lastly, you will be able to view all your order history, executed or not, in this "Order History" tab. You can then find all your filled order history in the "Fills" tab, and "Closed Positions" in the corresponding tab.

BitMEX Trading Dashboard Manage Orders & Positions: Order History
BitMEX Trading Dashboard Manage Orders & Positions: Order History

BitMEX Funding, Trading & Withdrawal Fees


Find below a snapshot of the funding, deposit, withdrawal, order execution, and swap fees. See it here: https://www.bitmex.com/app/fees.


BitMEX Funding Trading & Withdrawal Fees
BitMEX Funding Trading & Withdrawal Fees
BitMEX Funding Trading & Withdrawal Fees
BitMEX Funding Trading & Withdrawal Fees

BitMEX Security


Read about the security measures in place on BitMEX from wallet and trading engine security, to system and communication security: https://www.bitmex.com/app/security.


BitMEX API


The platform offers a fully featured REST API and a powerful streaming WebSocket API, making available all market and user data and updates in real-time: https://www.bitmex.com/app/apiOverview.


BitMEX Information Library


Bitmex has their own library of guides and tips on trading on their platform, which cover an extensive range of topics. So I tried to make this post more visual, and cover only what BitMEX themselves did not.

Take a look at these links to learn more about the BitMEX platform:



They also have in-depth information about how their platform differs from competitors, for various parameters including liquidation events, contract loss mechanisms, max leverage, initial margin, maintenance margin, settlement mechanisms, minimum contract sizes, and many more!

See the comparison here: https://www.bitmex.com/app/whatsDifferent

Conclusion

I hope that this post gives you a good overview of how to use BitMEX trading exchange platform to view markets, open orders, enter into positions, as well as teach you how to use each of the different order types.

1Broker: Trade Global Markets with Bitcoin - Forex, Stocks, Indexes, Commodities
1Broker: Trade Global Markets with Bitcoin - Forex, Stocks, Indexes, Commodities
In my next post, I will prepare a similar tutorial for using 1Broker, which offers something different from Bitfinex or BitMEX, by having global markets such as Forex, Stocks, Indexes and Commodities available to traders. In addition, I also hope to share some tips on crafting your perfect trading strategy, and the importance of risk management and position sizing management. Stay tuned!

If you have any suggestions or comments, please feel free to leave them below.

Thank you for reading, and good luck trading!

Sunday, February 26, 2017

BTC Exchange Tutorial [Updated]: Bitfinex Trading Platform - Beginners Guide on How to Margin Trade Bitcoin & Altcoins


Bitfinex - Advanced Bitcoin Trading Platform
Bitfinex - Advanced Bitcoin Trading Platform - Margin Trading

Introduction to Bitfinex


Bitfinex is an exchange platform that offers margin trading of Bitcoin and other alternative Cryptocurrency markets (altcoins). It is one of the world's leading Bitcoin USD exchanges by volume.

The platform allows trading participants to use third-party peer-to-peer financing from other participants on the platform to trade Digital Tokens. This enables users to buy or sell in a digital token market, without owning the token itself.

Bitfinex also provides a lending (funding) market with daily interest payouts, suitable for individuals who do not trade and have lower risk appetite or prefer safer investments.




The platform's UI has changed significantly since 3 years ago and it's about time I updated my old Bitfinex guide. So let's get right to it.

How does Margin Trading on Bitfinex work?


Margin Trading refers to borrowing from the broker (trading platform) to either buy or sell a stock. This is made possible on Bitfinex by their Peer-to-peer Financing mechanism, as explained here: https://www.bitfinex.com/howitworks.


Bitfinex: Peer-to-Peer Financing
Bitfinex - Peer-to-Peer Financing


Bitfinex offers 3.3x leverage, meaning that for every $1.00 you have in your account, you can margin trade up to a sum of $3.30 across all available markets. The leverage offered here is fairly conservative, with other platforms offering 10x, 25x, or even 100x and up to 500x in some cases.

By borrowing funds, you'll be subjected to interest charges which are automatically factored in when you close your position.

If you're new to margin trading in general, it is imperative that you understand some key mechanics of margin trading platforms, and to keep a lookout for these when choosing your trading platform:
1. Margin Call
2. Margin Rules - Maintenance Margin (e.g. 15%) etc.
3. Leverage
4. Commissions & Spreads - Order Execution Fees & Deposit/Withdrawal Fees (More at the end of the post)

If you are not careful (over-leveraged, position sizing too large, no stop loss, etc.) and a trade moves against your favour for too much and beyond your liquidation price, your whole account can get wiped out, or 'margin called'. Again I want to emphasize, if all this is new to you, make sure you understand the implications before getting started on margin trading.

Bitfinex - Trading Platform Dashboard
Bitfinex - Trading Platform Dashboard

Getting Started - Sign Up For Your Bitfinex Account


You'll only be able to see the above screen or landing page after logging into your account. So sign up for one, and fund your account to get started!

Bitcoin deposits do not require any personal information or KYC and AML. Only fiat currency deposits and withdrawals do.

With Bitcoin, fees and minimum withdrawals, deposits, and trades are negligible and opens up immense opportunity to trade without traditional restrictions.

By using my referral code, you get to enjoy 10% off trading fees for 30 days! So here you go, EVERYONE is a winner, here is your link: https://www.bitfinex.com/?refcode=aQBHcxVPzj.

Bitfinex - Trading Platform Dashboard Explained - Market & Account Information
Bitfinex - Trading Platform Dashboard Explained - Market & Account Information

Bitfinex Trading Dashboard Walk-through


Once logged in, you'll arrive at a neat trading dashboard that is user-friendly with easy-to-use tools to track the market, place positions, and manage those positions. You can click on the "Interface Settings" icon on the bottom left to change between Light and Dark theme.

To start off, let me walk you through the different sections of the trading dashboard, before going into trading proper.

1. Market Information


Apart from Bitcoin, Bitfinex offers a variety of alternative cryptocurrency token markets for trading.

Altcoin markets available for trading on Bitfinex today include Ethereum (ETH), Ethereum Classic (ETC), Zcash (ZEC), Litecoin (LTC), Monero (XMR), Bitfinex Token (BFX), and Recovery Right Token (RRT).

Click on the three dots on the top left to access these alternative digital token markets.

2. Trading Balance & Summary


Once you fund your account, you'll be able to view your balance here.

Bitfinex offers three types of trading, namely Exchange, Margin, and Funding. They each have separate wallets so you will need to transfer your funds to the relevant wallet by clicking on the "Transfer" button at the top right.

As you can see in the picture above, my margin buying or selling balance is 3.3x of the actual amount I have in my account (across all wallets).

3. Chart


Self-explanatory. Bitfinex's Charts are powered by the very robust TradingView engine, and offers a complete suite of tools and indicators you can tailor to your own trading needs.

4. Orderbook


Self-explanatory. Shows the live order book and trades that occur on the platform in real time. You can also view details of your recent trades by clicking on the "Mine" button at the top left of the "TRADES" box.

Bitfinex - Trading Platform Dashboard Explained - Open Orders & Position Management
Bitfinex - Trading Platform Dashboard Explained - Open Orders & Position Management

Now that you have a good idea of how to navigate the trading dashboard, let's jump straight into the actual trading!

Bitfinex Trading - Opening & Managing Orders 


5. Open Order


In the Order Form section, you can create new trades (open a new order) here.

Exchange trading refers to spot trading, where an actual transaction of BTC and USD take place and the asset in question changes hands. You can buy BTC with your USD, or you can sell your BTC into USD.

Margin trading is where you don't have to actually own BTC to sell BTC, or own USD to buy BTC. With margin trading, you can go 'long' or 'short' on any market by using your leveraged funds.


Order Types

Whether you're trading on Bitfinex's spot exchange or margin platform, the types of orders you can open remain the same. There are 7 types of orders available, namely:
  1. Limit Order
  2. Market Order
  3. Stop Order
  4. Stop Limit Order
  5. Trailing Stop Order
  6. Fill or Kill Order
  7. Advanced Orders

Bitfinex - Open Order Types
Bitfinex - Trading Platform Dashboard Explained - Open Orders Types

The most familiar ones would probably be a Market order, Limit order, and a Stop (loss) order:

  • A market order executes a buy or sell at the nearest available price.
  • A limit order is simply a buy or sell order at a price of your desire, and is usually placed under the market price for a buy and above the market price for a sell.
  • A stop order is placed when you have an active position, in order to close your position when it goes in the opposite direction of where you intended it to, so as to minimize your losses.

Read in detail about how these various order types work on Bitfinex in their FAQ.

* Take note that Market Orders have no confirmation or warning messages. Once you enter the amount and click on buy/sell, the order is immediately executed. Beware the fat finger.

The other 3 order types are rarely used, but are useful for some specific circumstances. For example, Stop Limit orders are especially useful for capitalizing on breakouts, and I will explain how we can do that later.

If you're interested to learn more about the various order types, how Stop orders compare to Stop Limit orders, or how and when to use Trailing Stop orders, here are a few links that may be useful for you:


Order Options

These additional options give you more control over your orders, by allowing you to toggle specific pre-set parameters. They are limited to the following:

1. One-Cancels-the-Other (OCO) - Allows to place both a take profit and stop loss target with cancels the other out once one is filled.
2. Hidden order aka Iceberg order - Hidden in order book, and always pay the taker fee.
3. Post Only - Ensures that your limit order does not match with an existing order, and always pay the maker fee.
4. Funding Options - Change some variables for how you borrow funds when you open margin positions, namely yes/no to including variable rate, and adjusting maximum margin rate (%/day).
Bitfinex - Open Order Options
Bitfinex - Trading Platform Dashboard Explained - Open Order Options

Advanced Order - Scaled Orders

Scaled Orders enable a user to spread 1 order over several different positions in the order book. This is used so that the trader does not stick out like a sore thumb in the order book, especially for large amounts.

For example, if a high net worth individual wanted to buy $1,000,000 worth of BTC at $1000 each, he may have to manually place 100 orders so each order is only worth a much less significant amount, in order to mask his true position from other traders. In fact, it is good practice to do this no matter how large an amount you are trading.

Scaled orders allow a user to easily place such an order, by submitting the order only once and in a rather simple manner. As Poloniex puts it: The "scaled order" tool is an algorithm for creating multiple limit orders over a given price range. This allows traders to spend less time entering orders and more time focusing on their strategy.

Bitfinex - Open Special Order - Scaled Orders
Bitfinex - Trading Platform Dashboard Explained - Open Orders Special - Scaled Orders

6. Managing Positions & Orders


Lastly, after placing an order, you will be able to view and manage them from here. This is made up of three sections, namely open orders, open positions, as well as your order history.
Bitfinex - Trading Platform Dashboard Explained - Position & Order Management
Bitfinex - Trading Platform Dashboard Explained - Position & Order Management

Position Management Options

When you open a new order and it is immediately triggered (i.e. market order, or limit order buy for above market price), they will appear in the 'POSITIONS' section. When you have an open position, you can view the pair, amount, base price, liquidation price, current Profit/Loss, funding cost, funding type, and actions you can take include toggling the funding type (daily or term only), closing the position at market, and claiming the position.

Here's a closer look at the 'POSITIONS' section.
Bitfinex - Trading Platform Dashboard Explained - Position Management
Bitfinex - Trading Platform Dashboard Explained - Position Management


Order Management Options

When you open a new order but it has not yet been triggered, they will appear in the 'ORDERS' section. When you have an open order, you can view the pair, context (exchange or margin), order type, amount, price, status, date & time placed, and actions you can take include editing the amount or price or context or hidden option, cancelling the order, and opting to receive email notifications when an order fully executes.

Here's a closer look at there 'ORDERS' section, and how it ties in with the 'ORDER FORM' section.
Bitfinex - Trading Platform Dashboard Explained - Order Management
Bitfinex - Trading Platform Dashboard Explained - Order Management

Optimizing Your Order-Entry Strategy - How & When To Use Each Trade Type


How to Use Limit Orders

Limit orders are effective for opening a position, but they’re problematic for exiting a position. For example, if you need to exit your position because the breakout has failed, you simply need to exit the position without trying to finesse the price. Failed trades recover infrequently, and they often get worse. You have no reason to be patient when things are going against you.

Read more about how to use limit, stop, and stop limit orders here: How to Devise an Effective Order-Entry Strategy in Trading.

Using a Stop Order

When placing a stop order, your limit price may be higher or lower than your trigger price. This effectively allows you to do two things; have a limit order be placed when your trigger price hits, or market buy (by placing limit order above trigger price) when your trigger price hits.

Find out more about how to effectively utilize stop and stop limit orders, and order types such as Fill or Kill, OCO, and others in this article: A Trader's Guide To Orders and Their Effective Use

Using Stop Orders to Open a Position

The first thing that comes to mind about stop orders is that it is used to 'stop out' of a losing trade when price goes against you beyond a set threshold.

Yes, Stop & Stop limit orders are especially good for exiting positions when they go against you. However, some of you may not know that stop orders can also be highly effective for opening a position, particularly to enter markets on breakouts. If you identify the stock that you want prior to an actual breakout, you can enter a buy stop at a price above the breakout point.

Although it is generally recommended that you wait a few days to confirm the breakout, using this strategy at times may be more appropriate than others.

However, you need to be much more tentative when the market is only in a bullish transition or pullback phase, or when you’re monitoring second and subsequent breakouts. When that’s the case, make sure the breakout is confirmed — that means the stock remains above its breakout price for a bullish breakout — within a few days before entering your order. If you have any doubt, wait for confirmation.

"Cut Your Losses and Let Your Winners Ride"

Have you ever heard of this phrase? This popular trading quote is best embodied by the use of a (trailing) stop loss for profit taking.

When your position is in profit, employing a trailing stop loss will allow you to ride your winner, while protecting your profits by closing your position if the market moves x pips in the opposite direction. Read more about how to use stop and trailing stop orders effectively here: Trailing-Stop/Stop-Loss Combo Leads to Winning Trades.

However, when it comes to stop losses, it is important to note that there is no guarantee you will receive the price of your stop loss order. If the stock price drops quickly, your order may not get filled at your predetermined stop price. Thus, you may be forced to sell at a lower price than you expected. This is particularly true with illiquid stocks or in fast-moving markets.

Bitfinex Deposit/Withdrawal, Funding, and Order Execution Fees

Bitfinex - Deposit & Withdrawal Fees
Bitfinex - Deposit & Withdrawal Fees

Bitfinex - Margin Funding Fees
Bitfinex - Margin Funding Fees

Bitfinex - Order Execution Fees
Bitfinex - Order Execution Fees

Bitfinex Value Added Services: Mobile App and API


Bitfinex has an iOS and Android app, giving you the option to watch markets, monitor and make trades while on the move, ensuring you never miss another Bitcoin move.

Their API also offers an easy and efficient way to build digital asset trading applications and tools, trading bots, and more!
Bitfinex - iOS / Android App & API - Seamless Trading On The Go
Bitfinex - iOS / Android App & API - Seamless Trading On The Go

If you would like to find out more, visit Bitfinex's support portal knowledge base, and reach out to their support team if you need any assistance.

Conclusion


I hope that this tutorial helps you to understand better how Margin and Leveraged Trading works, and especially how it applies on Bitfinex. It also gives you an idea of when to employ what type of order and how to execute it, and I trust that this is able to takes you one step further in developing your winning trading strategy!

If you haven't already created a Bitfinex account by now, sign up with this link and get to enjoy 10% off trading fees for the next 30 days: https://www.bitfinex.com/?refcode=aQBHcxVPzj.

In my next posts, I will be writing similar tutorials for other Bitcoin exchanges such as BitMEX and 1Broker. If you have any suggestions, feel free to leave a comment below.

Thank you for reading, and good luck trading!