Bybit Tutorial for Beginners (How to Trade Crypto on Bybit)

Summary

This video provides a detailed guide on trading derivatives and futures on Bybit, focusing on key concepts like leverage, margin types, and order execution. It explains the difference between cross and isolated margin, the significance of mark price versus market price, and how to place various types of orders such as limit, market, and conditional orders. The video emphasizes risk management through stop loss and take profit orders, and explores the impact of leverage on trade outcomes. Additionally, it highlights trading fees, including maker and taker fees, and shares strategies for managing positions effectively.

Takeaways

• 😀 Cross margin uses your entire account balance as collateral for trades, exposing you to higher risk.
• 😀 Isolated margin limits your exposure to individual trades, as only the allocated margin for each position is used.
• 😀 Mark price is used for liquidations and futures funding, reflecting the fair market value, and may differ from the market price.
• 😀 Limit orders let you set a specific price for buying or selling, while market orders execute immediately at the current market price.
• 😀 Post-only orders ensure your order is a maker order, helping to reduce fees by adding liquidity to the market.
• 😀 Reduce-only orders prevent increasing your position size, ensuring that only reductions in position are allowed.
• 😀 Bybit charges different fees for makers (0.025%) and takers (0.075%) when trading derivatives.
• 😀 Leverage can be as high as 100x on Bybit, but using maximum leverage is risky and should be approached with caution.
• 😀 Futures trading allows you to set take profit and stop loss orders to automate exits for both profits and losses.
• 😀 Short selling allows you to profit from price declines, with take profit and stop loss orders adjusted accordingly.
• 😀 Bybit provides a profit/loss calculator that helps you assess potential outcomes for trades before placing them.

Q & A

What are the two types of leverage mentioned in the video, and how do they differ?

The two types of leverage are 'cross leverage' and 'isolated leverage.' Cross leverage uses the entire balance of your account as collateral for all positions, while isolated leverage applies margin to each individual position separately, ensuring that losses are contained to that specific position.

What is the role of the Mark Price in futures trading?

The Mark Price reflects the fair market price and is derived from the index price and funding rate. It is used to determine liquidations and funding in futures trading, and any trades or liquidations are based on the Mark Price, not the market price.

What are the primary types of orders that can be placed in futures trading?

The primary order types are limit orders, market orders, and conditional orders. Limit orders are placed at a specific price, market orders execute immediately at the current price, and conditional orders (also called stop orders) trigger when a certain price threshold is reached.

What are the differences between 'maker' and 'taker' fees in futures trading?

Makers are traders who add liquidity to the market by placing limit orders, and they pay a lower fee (0.025%) compared to takers, who take liquidity by placing market orders, and they pay a higher fee (0.075%).

Why is it advised to avoid using the maximum leverage available on platforms like Bybit?

It is advised to avoid using the maximum leverage because high leverage (e.g., 100x) greatly increases the risk of liquidation. The higher the leverage, the more volatile and risky the trades become, potentially leading to significant losses.

What is the difference between a take profit and a stop loss order?

A take profit order automatically sells the position at a price higher than the entry price to lock in profits. A stop loss order automatically sells the position at a lower price to limit potential losses.

How does post-only order functionality work in futures trading?

A post-only order ensures that the order is added to the order book as a maker order. If the order could execute immediately, it is canceled to avoid paying taker fees, ensuring the user only acts as a maker and benefits from lower fees.

What is the significance of the liquidation price in futures trading?

The liquidation price is the price at which your position will be completely liquidated if your margin cannot cover the losses. It is crucial to monitor the liquidation price to avoid losing your entire position.

How can a trader use the futures calculator on Bybit?

Bybit's futures calculator allows traders to calculate potential profits and losses based on their entry and exit prices, leverage, and position size. It helps estimate the percentage return on investment and the amount of Bitcoin that would be gained or lost in a trade.

What does the video suggest about using leverage in futures trading?

The video suggests exercising caution when using leverage. While leverage can amplify profits, it also increases risk, and traders should be aware of the potential for substantial losses, especially when using high leverage. Proper risk management is crucial.