How to Use the BitMEX Anti-Liquidation Tool: AntiLiquidation.com
A BitMEX Anti-Liquidation tool is now available at AntiLiquidation.com. It can be used to trade XBTUSD Swap and Futures, ETHUSD Swap, & ETHBTC Futures at BitMEX like a professional trader. It will improve your trading performance in these ways:
- Calculate Position Sizes that are appropriate to the size of your account and your desired risk.
- Ensure that trades that go wrong get Stopped out not Liquidated. You should never receive a Liquidation Email ever again. This means you will no longer make subsidy payments to the $84 million Insurance Fund.
- Reduce losses on trades that go wrong by up to 70%
- Enable leverage that is greater than the 100x cap at BitMEX. The tool enables Ultra-High leverage of up to 700x.
Please keep an eye on the site as more functionality will be added soon. This includes a Position Calculator for the Deribit BTCUSD Swap & Futures.
The Wrong Way to Trade at BitMEX
Most users at BitMEX trade wrong. They are persuaded by the BitMEX User Interface to set up a trade in a certain way and then they lose. It’s like lambs walking silently into a slaughterhouse. You will have no idea how much of your account is at risk in a trade, you will get liquidated on a repeated basis, you will make regular charity payments to the Insurance Fund, and sooner or later you will blow up your account (i.e. lose all your capital.) Many ‘traders’ with large sums at their disposal trade the wrong way — by getting liquidated we know they are idiots:
The BitMEX site encourages you to trade in this way:
- Input a Quantity
- Select your Entry Price
- Select Leverage on the Slider Bar. Your Leverage is limited to a maximum of 100%. (Those using the Anti-Liquidation tool can trade with up to 700x.)
- Hit the Market Buy or Sell button (and pay 0.075% fees on your leveraged position at Entry)
- Cross your fingers
- Receive Liquidation Email (and pay 0.075% fees on your liquidation, and a big fat payment to the Insurance Fund)
- Check BitMex to find out how much you lost. That much???
- You lost up to 70% more than if you had a Stop close to your Liquidation Price
The Right Way to Trade at BitMEX
HT to Cred for these definitions.
Entry = price at which your order is executed
Capital = account balance
Position Size = number of contracts/units of an instrument you trade.
Stop Loss = order to close a losing position to prevent further losses
Risk Amount = Capital you lose on the trade if your stop loss gets triggered e.g. if I want to risk 3% of my Capital on a trade, my Risk Amount = Capital x 0.03
Leverage = borrowing Capital to open bigger positions than you would otherwise be able to
Liquidation = forcible closure of your position
Structuring of Trades
The Anti-Liquidation tool encourages the correct structuring of trades. You should never enter a single, standalone trade. A good trade has three legs and it is best practice to set up all three legs of the trade when you make your Entry Trade:
- Entry Trade (Limit order)
- Stop Order (Stop-Limit, Close on Trigger, Index Trigger)
- Exit Trade (Reduce-Only)
Again HT to Crypto Cred for this Checklist:
Here is that Worked Example configured in the tool (with the numbers adapted to make sense with current Bitcoin price of $6,938):
Test the Tool for Yourself
You might like to try testing the Anti-Liquidation tool against the worked examples in Cred’s essay, Comprehensive Guide to Position Size and Leverage. This should improve your confidence in its results.
Create Ultra-High Leverage
The BitMEX UI restricts you to a 100 x leverage. Using the AntiLiquidation tool you can create ultra-high leverage. The leverage is the example below is 476 x. It is explained in my essay How to Create Synthetic High Leverage at BitMEX with Same Dollar Returns and Lower Risk than Standard 100 x . Play around with the value in the Distance to Stop cell and see how the Leverage changes. The smaller the Distance to Stop the higher the Leverage. (The leverage you select on the Slider Bar should always be lower than this.)
Advanced Trading Using Anti-Liquidation Tool
- Go to AntiLiquidation.com
- Choose your Risk Amount.
- Choose your Stop Loss. The wider the Stop, the smaller the Position Size you can afford with your chosen Risk Amount.
- Choose your Entry Price.
- Now go to BitMEX. Input the Position Size calculated at AntiLiquidation into the Quantity field. [Position Size = Risk Amount / Margin]
- Set a leverage on the Slider Bar that is less than the leverage calculated at AntiLiquidation.com. (You can set leverage at up to 700x using the AntiLiquidation site.)
- Use the BitMEX Calculator to double-check that your Stop will get hit before you get Liquidated.
- Trade with Limit order. (Get 0.025% fees rebate.)
- Set Stop Loss trade (Close on Trigger). Pros generally prefer Stop-Limit to Stop-Market to avoid getting Stopped out at a terrible price in a BitMex spike. But the trade-off is a genuine market movement can blow through your Stop-Limit without a fill and you find yourself holding a position deep underwater. Set your Stops from Index not from Last to protect against being Stopped out by nanosecond wicks in the BitMEX price where it diverges from the Index.
- Set Exit trade. Make it Reduce-Only to mitigate the situation where, when you are not at your computer, you get Stopped Out and then your (now redundant) Exit trade gets inadvertently filled.
- Await Realised Profit or get Stopped Out. If Stopped out, our loss is known. The loss is a fraction — a little as 30% — of the much greater loss from Liquidation. (The higher the leverage the greater the % saving from using a Stop.)
- Never receive a Liquidation Email ever again.
Footnote: Beware fake copies
The site AntiLiquidation.com was developed from a spreadsheet that I wrote and linked on Twitter. There is another site by a Telegram group (I will not link to it) that was built based on my spreadsheet without my permission. That site contain errors, and they do not have the know-how to build upon it and develop it.