Bitmex Liquidation


How does the exchange insure against loss of an amount greater than the deposit amount when using leverage? Liquidation on Bitmex is just what saves you from large-scale losses and leaving the deposit negative, it is responsible for the complete cancellation of your transaction with the irrevocable liquidation of your funds.

The liquidation price (LP) is always visible in your open position, trading in perpetual contracts, the LP is your only limiter. How far the target will be from your entry point depends on the leverage you choose. When the leverage is larger, the liquidation is closer.

  • If you trade in Cross, and the price reaches liquidation, you will lose all funds. Therefore, when you trade in Cross, open positions not for the entire deposit, but for its part, so that in case the price goes against you — you can average.
  • Isolated trading — if you select a part of the deposit for each transaction and establish a leverage independently. And when the liquidation price is reached, you will not lose all the funds, but only the part that you allocated.

How to get away from liquidation?

For isolated trading:

  • If you trade in isolation, then you can add margin to the transaction from available funds, thereby moving the liquidation price.
  • Averaging a deal. Your deposit is 0.1 XBT (approximately $ 800 at the current exchange rate), the trader entered long at around $ 8000 with the order volume of $ 100 and using x10 leverage. The liquidation level of the position will be approximately at the level of $ 7200. The price goes against the trader and drops to $ 7900, at this level the trader is averaged by the same volume of $ 100 and leverage x10, the average purchase price will be $ 7950 and the liquidation level will decrease by $ 50 lower.

For cross-trading:

  • If you trade in CROSS, you can move the liquidation price only by replenishing the deposit. You need to do this only in extreme cases, it is better to use Stop-Loss.
  • If liquidation is suitable, but there is no free money, you can sell part of the position and use it to add to the margin, the liquidation price will move automatically

Please note, if you remove part of the margin from the transaction, thereby you can bring the liquidation price closer to the current price, which is risky!