Bybit Margin Trading Tutorial and Strategy (leverage trading)

Bybit - The Number 1 Bitcoin Leverage Trading Platform

If you trade Bitcoin, then chances are you’ve heard of the renowned leverage trading (or margin trading) Bitcoin futures exchange known as Bitmex.  What brought fortune to the few and not the many on Bitmex was it’s wild 100 x leverage option, which allows you to borrow 100 times your stake to enter long or short trades.

If you’re new to margin trading, being able to Long or Short an asset means that you can make money if it goes up as well as down.

LONG means you are buying an asset and essentially betting that it will go up in value.   

SHORT means that you are buying an asset and betting on it’s value depreciating and going down.

Whereas if you HODL Bitcoin for example, you’re only ever happy when it goes up!   (FYI HODLING IS THE SAFEST OPTION, STOP READING NOW UNLESS YOU ARE PREPARED TO RISK LOSING)

For a long time, Bitmex was king in this field when it came to Bitcoin margin trading, but over the last few months a new player in town called Bybit has been making waves and its easy to see why. 

Below are screenshots of both Bitmex and Bybit, and it’s clear even from a glance that Bybit has a much user friendly UI and this is bringing thousands of people in to the Bitcoin leverage arena, including myself. 

Bybit offers 4 crypto assets to margin trade. 

Bitcoin (BTC)

Ethereum (ETH)

EOS (EOS)

RIPPLE (XRP)

If you want to trade any of the 4 assets you have to deposit the coin native to the asset, meaning that if you want to trade BTC you have to deposit BTC, if you want to trade ETH you have to deposit ETH. 

This means that if you send Bitcoin to the platform, you are not able to long and short, XRP, EOS or ETH, and at present there is no spot exchange feature allowing you to swap. Whether or not they have plans to change this in the future I’m not sure, but I will update this blog when I find out.

So to get started with Bybit you first need to open an account.  You can do this by using my referral link here CLICK HERE TO OPEN ACCOUNT (note, there are no restrictions on having multiple accounts, in fact I’d encourage having more than one account, as you can have a dedicated SHORT account and a dedicated LONG account. The reason you might want to do this is if a trade doesn’t go your want on a certain leverage, you can create another trade on a different account with higher leverage to cover your losses.  This is a strategy I will save for another guide, for now we’ll focus on getting you set up.

So once you have opened your account, you come to the registration page, and registering is as easy and entering your email and a password.  After submitted this you need to enter a 6 digit code that have been emailed to you, and you’re almost ready to start trading. 

I say almost ready, as I would personally recommend enabling Google 2FA by downloading Google Authenticator form the Apple Store or Google Play.  This is a second layer security solution that prompts you to enter a digit passcode that is perpetually changing on your app every 30 seconds, making it impossible for someone to access your account unless they have your phone.

Now you’re ready to deposit, and this couldn’t be simpler, you just have to click on DEPOSIT and send the desired amount of BTC (or one of the other assets) to the wallet associated with your bybit account. 

If you don’t already own any Bitcoin, you can buy some with a credit/debit card from Coinbase or Bitpanda.  There is not currently a function to buy crypto on Bybit, and again I’m not sure if they have plans to. 

Once you have sent your Bitcoin (from here on I’ll assume you’re trading with Bitcoin, but the process is the same with the other assets on the site) you have to wait for the necessary confirmations and you’ll then be ready to trade.

For the purpose of this tutorial I will be depositing $350 USD worth of BTC (which at the point of writing is 0.013 BTC) and I will be trading with $100. 

Understanding Leverage

Now before you even contemplate using 100x leverage, read this first!! As it’s a terrible idea.

The default leverage on Bybit is set to 1.00X meaning there is no leverage, and you can select in complete units any amount of leverage from 1 to 100. 

Assuming you are working on a $100 trade, if you have this on 1x leverage, and bitcoin goes up by 10% you will make $10 profit.  However, by adding leverage you can increase your profit margin by the leverage that you select.

For example (assuming it’s a $100 LONG trade)

If you set 10x leverage and the price goes up by 10% you will make $100 profit (before fees)  as 10x 10  =100

If you set 100x leverage and the price goes up by 10% you will make $1000 profit (before fees) as 100x 10 = 1000

However, the drawback here is that if the market moves down by 10% your account goes in to negative, so using the above examples this is what would happen.

If you set 10x leverage and the price goes down by 10% you will go in to $100 negative (plus fees)  

If you set 100x leverage and the price goes up by 10% you will go in to $1000 negative (plus fees)

This is why 100 x leverage is incredibly dangerous, and it is not at all recommended, but don’t panic, you won’t necessarily lose this money. There are a few ways to protect your investment.  One is with a stop loss, so that the trade closes at a target price causing a small loss. The other option, is to have sufficient liquidity as “available margin” in your balance to allow for your account to show as negative, but your trade will still be open. 

This is point where many people new to margin trading tend to panic, but even if a $100 trade on 10x leverage is showing as $1000 out of the money, you don’t have to close that trade for a loss if you don’t want to, providing there is more than $1000 available market, it allows for this “margin of error” so do speak, and as the price of your asset recovers, you are able to stay in the trade until it recovers to your entry price (which is the price you bought at) or beyond.  This however is not financial advice and is in no way a recommendation to trade like this, I am just explaining how it works.

When starting out, with margin trading it’s best to start on a very low leverage, and have some basic comprehension of analysis. For example,  in the video below I explain all of this in detail and I also enter a $100 trade on 7x leverage, which at the point of writing this blog is currently still active and up by 26%.

Opening a Trade  

Setting Leverage on Bybit

There are 3 options for opening a trade on Bybit which I’ve listed below with the explanations of what they are. 

Limit – This is where your trade gets entered in to the order book and you wait for it to be filled. You set the price, and as that price hits your order starts to fill. This carries less fees than a market buy.

Market  – This is where you essentially buying up the order book (other peoples limits) and by doing so you incur a slightly higher fee than if you place a limit order. The advantage of Market buys is that you get instant execution, so if you are trying to capitalise on a big move that is in play and you want to get your order in before the limit orders on the book hit, you can essentially jump the queue so to speak, a bit like a priority boarding on a flight, you pay a little bit more to be first.  

Conditional – This is where you set triggers of where you want to the trade to execute. For example the price of Bitcoin might be at $8000 and you want to go LONG only if it hits $7800, so much like a LIMIT order, you enter these conditions, and as this condition sits outside the orderbook, you can choose that should the condition occur, the trade can be opened either as a LIMIT or MARKET depending on your preference.

Free Bitcoin Trading Signals

There are many groups that offer premium bitcoin trading signals.  However, if you join my group on Telegram at https://t.me/keithwareingofficial you’ll benefit from 100% free signals that I get from a combination of market news and professional technical traders. 

All I ask is that if you use my Bybit referral link if you want to follow the trades that I put out.  You can see from the chat history that I have at present a 100% hit rate (that’s not going to last, but as off 17/06/2019 which is when I am writing this post, that was the hit rate!

My Bitcoin Trading Strategy (Without learning Technical Analysis)

Lastly before attempting to leverage trade, you should get some basic technical analysis going.  I personally find that with Bitcoin there are plenty of skilled professionals already publishing their opinions on websites like TradingView, Fxstreet and Newsbtc, so whenever I am looking for target prices, I simply go to google news and type “bitcoin price” and gauge what the market sentiment is in both directions. 

For example if the worst case bearish outlook on bitcoin is $6k I make sure my liquidation is below 6k, something like $5800 and if the best case bullish scenario is $10k I will set my target take profit price at $9800.

This why I ensure I have my bases covered for the best case and worst case scenarios, but I still generally look to follow trends.

For example, if I read that a trend resistance of $8200 and if it breaks we are going to $10k, I’d open my long at around $8250.  I do this because the TA is saying this is the most likely scenario based on investor behaviour.

The same goes in the opposite direction, if I read that a trend support is $7k and if it breaks below we’re going to $6k I’ll set a short at $5950 and my targets accordingly. 

Risk Management

Risk Management

My personal strategy with leverage trading is that I do not use a stop loss or a trailing stop. Whilst both features are very useful, and may be something you prefer to employ, I opt for a solid risk management plan with small trade amounts and low leverage. 

I started off with $1500 for what I call my elastic investing strategy.  I call it this because by having low leverage and large gaps typically around $1000 moves in either direction for Bitcoin, I can stay in trades throughout the majority of volatile moves and avoid liquidation, however that is not a guarantee that I will avoid being liquidated. 

That being said, it’s very low risk. 

So with $1500 I break that in to 5 x $300 potential trades and I will only trade keep $300 at a time on Bybit.  **IMPORTANT** I do this to avoid my balance being included as available margin.

This way my available margin never exceeds $300

The $1200 you should keep in a wallet where you control your keys, such as a ledger nano hard wallet. 

Now lets say I want to place a $150 trade (0.016 btc at todays value) but I want to trade with $1500. I would set 10x leverage so that my cost is 0.016 btc and my available margin is an additional 0.016 allowing for my elastic trade.

This means that if bitcoin moves against my favour by 10% I will lose my entire $300 investment. However if it moves in my favour by 10% I will double my investment, adding a further $150 to my balance. 

In the above scenarios I won’t necessarily be looking for take 100% gains, this is unrealistic.  However I will happy take out upwards of 25% gains depending on the outlook of the trade. 

Once I have my winning amount, I remove that from the Bybit platform retaining my $300 available margin.

In the event I lose, I have 4 x $300 lots left over to trade with, and as I said this is a risk management trading strategy, so I don’t expect to win every trade, but I do expect to win more than I lose, and I do bank my profits. 

Trading like this isn’t for everyone, but I have found it the best way to get my hands dirty and start trading and learning.  You can also attempt this trading strategy Bybits testnet accounts, however keep in mind you cannot bank profits here so you run the risk of busting out and getting liquidated. 

How much can I earn leverage trading Bitcoin?  

This is a bit of a “how long is a piece of string” question, and ultimately comes down to how well you can budget and how disciplined you are. I would recommend using an excel spreadsheet to keep track of your daily earnings, but lets look at it like this for a rough assumption.

Assuming on average you are averaging 30% profit gross per day. This is using the $1500 bankroll explained above.

30% profit on $150 is $45 per day

Scaled over a 30 day period this is $1350 which is nearly doubling your capital month in month out using very low risk trades, on low leverage. 

So if you wanted to scale this by adding zeros along the way and you started with $15k you could potentially be adding $13.5k per month to your bank roll.

HOWEVER!!

Don’t get too excited, as you wont win every trade, and some trades may last for days or even weeks, and not every day is a day to trade, just remember that.

To get started with Bybit click this banner below and if you want to joining my groups you can using the following links

http://t.me//offciallykeith  for my chat

http://t.me//keithwareingofficial  for my signals

Here’s a video tutorial I also put together

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