How to trade profitably during the crypto bear market: Bitmex signals use case.

Tired of seeing red on daily, weekly or even monthly crypto charts? Scared of entering a trade because you feel it may go down? Feeling depressed in the ‘never-ending’ bear market? Well there is a solution – trading against the market with Bitmex signals.

This article will introduce you to ‘short trading’: a trading strategy based on betting for the market price to go down, therefore profiting in the bear market. You will find a detailed guide on what is leverage trading and how to use Bitmex exchange. Most importantly, we will demonstrate how to use Signals Hunt Premium leverage (short) Bitmex signals, to enter successful trades while the crypto market is in a downturn.

What is Bitmex and leverage trading?

Bitmex is a platform where you can trade on a leverage for both long and short trades. That means that you can trade with more money than you actually have in your wallet and profit independently on the market condition, either it’s in an uptrend or downtrend. On Bitmex you can trade up to a hundred times more leverage, however, that all comes down to a hundred times higher risk. Trading with leverage in a way means that people are loaning you money and giving you a margin for a % cut on your profits. However you have to guarantee with your own money, that you will not lose more than you have. It may sound a bit complicated, therefore we highly recommend watching this detailed and well prepared tutorial by Vin Ferretti:

If you are not sure on how to buy and transfer Bitcoin to Bitmex, this step-by-step article will show you how.

How to use Signals Hunt leverage (short) Bitmex signals?

Now that you know more about Bitmex and leverage trading, let us introduce you to Signals Hunt Bitmex signals posted on our Premium channel.  The main difference between Bitmex signals (short) and regular signals (long) is that Bitmex signals recommend you to enter the trade when the price is higher and exit when it is lower. Here is one of the examples posted on Signals Hunt Premium:

This signal was sent on 2018/11/11 and indicated to set a trade on ETH/USD using 15x leverage. The trade entry level was in between 208-209.5 USD while target levels ranged from 206.2 USD to 198.7 USD. Bear in mind that this is a ‘short’ Ethereum trade signal, therefore you profit when the price is dropping.

As mentioned in the video, the idea of shorting trades on Bitmex works like that: you borrow and sell ETH at the price of 208-209.5, then try to buy it back at lower price (targets) so you could return it to the borrower and keep the difference in USD to yourself. That’s how you make profit on short trades.

Let’s put it in practice: here’s how to use Signals Hunt Bitmex signals to place a ‘short’ trade

First of all, select an order type at the top of order panel. We always recommend choosing either ‘Stop Limit’ or ‘Take Profit Limit’ – this way you will be able to set either stop-loss or take-profit (target) levels which will automatically execute your trade when reached. Unfortunately, Bitmex does not have an option to set both stop-loss and take-profit levels. Therefore, we recommend trying – 3Commas – a trading platform that does allow such dual option as well as other useful features that can significantly simplify signal trading process. You can find more on 3Commas and other tools & strategies that may improve your trading in our free eBook.

Trades on Bitmex are based on contracts. The value of one contract differs due to coins market price and the leverage you set. You can always check the cost of a trade below the ‘Sell/Short’ button after you set all of the trade parameters.

Limit order allows you to set the coin’s price (in this example ETH/USD) at which you want to enter the trade. By setting the entry & stop prices together with the x15 leverage suggested by the signal, the cost for 1000 contracts would come up to 0.0142 XBT (which is an alternative indication of BTC). You can always change the amount of contracts you want to trade depending on the risk you want to take. Although, we would not recommend entering a single trade with more than 5% of your total portfolio.

Please note, that that BitMEX charges high fees to takers (those who use Market order option) but actually pays market-makers to trade (those who use the Limit order option). A marker-maker is defined as someone who places a Limit order and does not take the market price to open or close a trade. For all Bitcoin and Ethereum contracts:Taker fee — 0.075% of total position Maker fee — 0.025% of total position Rebate

Bitmex also have a very useful trade calculator which will allow you to estimate potential profits, losses and returns on investment. Use it to calculate risk and reward factor of each Bitmex signal you plan to trade on.

After setting all of the parameters according to the signal and deciding on the amount of contracts to buy – you are ready to enter the trade. Bear in mind that, BUY, means long position – when we believe that the value of Bitcoin will increase, and SELL – short position – when we actually benefit from the decrease of the selected coin’s value. This is how the signal looks on a 4h chart:

Blue
line indicates ‘SHORT/SELL’ or entry level.
Red
line indicates ‘Stoploss’ level.
Green
lines indicate all three target levels.

We can see that after the signal was announced, ETH value did not cross the stop-loss level and hit all of the given targets. At the last target level, the actual ETH price has dropped by just 5.26%, however the 15x leverage has significantly increased the total Return-on-Investment. Entering the trade at 208-209.5 USD when the signal was announced and holding it for 3 days would have brought at least 78.95% profit.

Manage your Risks:

You should always remember, that higher leverage equals higher risk. If you are just starting, we highly recommend you starting with a lower 2-5x leverage. Calculate your risks & returns and never go over your budget – Stop-loss is a must on every trade. Also, keep your exchange balance at the level you are not scared to lose if something goes wrong. It’s easier to deposit some more, rather then realising it’s all gone.

As always, make sure you continuously develop your skills & knowledge and look for tools that may help you in analysing charts and gathering the required data to trade confidently. We highly recommend you checking our free eBook on trading strategies and useful support tools or trying out our Premium+ subscription including 9h of professional crypto trading video courses.