[VIDEO] Cryptocurrency Trading Primer: Not Your Typical Trading Course or Technical Analysis Introduction - Human Emotions, Market Psychology, & Risk Management

I recently had the pleasure of speaking about trading Bitcoin and Cryptocurrencies at the first CryptoSG meet-up in Singapore, alongside 6 others speakers who covered various other topics about Bitcoin, Altcoins, and Blockchain technology.

Invited to speak about Crypto Trading this Friday evening in Singapore. Feel free to join if you're available!https://t.co/YWBJzH27ZX pic.twitter.com/2TZVkuBlYx

— Alvin Lee #UASF (@onemanatatime) July 3, 2017

In this presentation, I introduced an approach to trading that (I hope) is not what your typical "trading course" or "technical analysis class" would teach, and shared a method that I believe is one of, if not the only way to be able to make sense the market with a complete picture. I shared some tips and overarching concepts that I feel are more important than just charts and indicators, and hopefully this will be able to shorten your learning curve and help you find a footing in the market without having to go through the same mistakes I made.

It summarizes my last post, An Essential Beginner's Starter-Kit for your Journey into the Cryptocurrency Jungle that is Bitcoin & Altcoins Trading, while also covering some other key concepts spread throughout my blog.

"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." pic.twitter.com/YpFXipG4bR

— Aluna Cryptocurrency (@AlunaCrypto) April 25, 2017

Why does this methodology of "market structure" and "emotional market crash cycle" work so well? If you think about it, the only common denominator between all markets is nothing other than the people trading them. Therefore I believe it stands to reason that human emotions and trader psychology play an immensely critical role in being able to understand how markets work.

I'll just leave it at that so I don't spoil the rest of the video for you. Unfortunately, the first 5 minutes or so of the live talk got cut off due to technical issues, but I also recorded it into a webinar if you're interested to watch the complete presentation. Enjoy!

CryptoSG First Meetup in Singapore (Part 6): Cryptocurrency Trading Primer by Alvin Lee

Webinar: Cryptocurreny Trading Primer - AlunaCrypto

If you just want to look at the slides, you can view or download the PDF of my presentation here.

This presentation was merely an introduction and a very brief high-level overview of how to approach trading, where I highlighted a wide range of important things to look out for, but you probably still have a ton of more specific questions such as about how to get started, what to look out for on a chart, or how you can apply market structure and the emotional crash cycle into your trading strategy.

It's impossible to condense 3-5 years of experience and knowledge into a single book or a video which you can absorb and magically become a pro trader. There's no short cut to becoming a profitable trader, except through hard work and dedication, with time and experience.

Don't be afraid of getting your hands dirty; learn by executing trades and making mistakes, because nobody ever learnt how to ride a bicycle by reading a book. With the right attitude to succeed, you too can eventually become a full-time trader and achieve your lifestyle or financial goals. However, know that it is not an easy road; never give up, keep learning and improving, and you will be rewarded in the end.

In life as in trading, many things don't go according to plan. If you fall, get back up.

Regain your balance, never give up. pic.twitter.com/ZisvJC8Igr

— Aluna Cryptocurrency (@AlunaCrypto) July 9, 2017

To supplement what I covered in the presentation in my previous blog post, spend an hour to listen to this @chatwithtraders podcast with Michele Koenig who has over 14 years of trading experience and shares very relatable information about how to approach trading and start out as a beginner.

Perfect for Beginners! @offshorehunters shares essentials to approach trading, in & outs, what & how to get started.https://t.co/8F9SwjUZDy

— Alvin Lee #UASF (@onemanatatime) July 9, 2017

Lastly, I just want to again highlight the last but most important point about trading, and that is risk management. This is probably the most undervalued component of trading especially for new traders, and is coincidentally why most people continue to blow up their accounts.

If you play Texas Hold'em, or some other form of poker, you may have heard about 'bankroll management' and this concept applies to trading perfectly. Just like how professional poker players compete at a stake where their bankroll covers at least 30-100 buy-ins, professional traders typically risk no more than 1-2% per trade.

You can have the best strategy and psychology. But without proper risk management, you'll blow your account up.

Not if, but when.

— Rayner Teo (@Rayner_Teo) July 4, 2017

One of the most common sayings on Wall Street is to let your winners run and cut your losses short. Many new traders make the mistake of being patient at the wrong time, and holding onto a losing trade longer than they should. This is caused by 2 things, firstly not having a trading plan in the first place and hence allowing emotions to eventually get the better of you, and trading without a stop loss. Stop-losses can help you to quickly cut losses when a trade goes south, as well as to protect your profits as you continue to ride the trend. Read more about how to use stop-losses effectively with these tutorials by @Rayner_Teo, an esteemed financial markets trader who's also from Singapore.

How to set a trailing stop loss to protect your profits and ride big trendshttps://t.co/6dg9pc0kU7

— Rayner Teo (@Rayner_Teo) July 5, 2017

How to place a proper trading stop loss (so you don't get stopped out prematurely)https://t.co/4AFbrLdiln

— Rayner Teo (@Rayner_Teo) July 9, 2017

With that, I hope I have opened up your mind with a unique view on how to approach the markets and changed your perception on what trading is all about, and also provided you with some practical information that can help you kick-start your trading journey.

If you have any questions or feedback, feel free to leave them in the comments section, or reach out to me on Twitter, Telegram, and join the AlunaCrypto community on Telegram to discuss Bitcoin and Altcoin markets, share price and technical analysis, and keep up to date with the cryptocurrency market.

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

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 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

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

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

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

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

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

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

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

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

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

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

7. 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

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

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

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

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

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 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 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:

• Trading Overview: https://www.bitmex.com/app/tradingOverview
• Futures Guide: https://www.bitmex.com/app/futuresGuide
• Swaps Guide: https://www.bitmex.com/app/swapsGuide
• FAQ: https://www.bitmex.com/app/faq  

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

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!