What is the process behind BitMEX contracts and how do they function?

3 answers

• Dec 18, 2021 · 3 years ago
  BitMEX contracts are derivative products that allow traders to speculate on the price movements of cryptocurrencies without actually owning the underlying assets. These contracts are designed to replicate the price of the cryptocurrency and are settled in Bitcoin. Traders can go long or short on these contracts, depending on their market expectations. The leverage offered by BitMEX allows traders to amplify their potential profits or losses. It's important to note that trading BitMEX contracts involves a high level of risk and requires a good understanding of the market dynamics.
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• Dec 18, 2021 · 3 years ago
  BitMEX contracts function based on a system of perpetual swaps. These swaps are designed to mimic a traditional futures contract, but with no expiration date. This means that traders can hold their positions indefinitely, as long as they have enough margin to cover their losses. The funding rate mechanism ensures that the price of the contract stays close to the underlying index price. When the funding rate is positive, long positions pay funding to short positions, and vice versa. This mechanism helps to prevent the contract price from deviating too much from the spot price of the cryptocurrency.
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• Dec 18, 2021 · 3 years ago
  As an expert in the field, I can tell you that BitMEX contracts have gained popularity due to their high leverage and ability to profit from both rising and falling markets. However, it's important to approach trading these contracts with caution. The high leverage can amplify both profits and losses, and the volatile nature of cryptocurrencies can lead to significant price swings. It's crucial to have a solid trading strategy, risk management plan, and a good understanding of the market before engaging in BitMEX contract trading. If you're new to BitMEX, I recommend starting with a demo account to familiarize yourself with the platform and its features before risking real funds.
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