Brief description of the exchange
BitMEX (Bitcoin Mercantile Exchange) is one of the most widely used platform for trading cryptocurrency derivatives. Instead of the classic cryptocurrencies the exchange offers futures and perpetual contracts that are derived from the underlying cryptocurrency values.
BitMEX was founded in 2014 by three partners, Arthur Hayes, Ben Delo and Samuel Reed. The exchange is officially owned by HDR Global Trading Limited, which operates from Hong Kong, but is based in Seychelles. BitMEX benefits from the fact that the regulatory environment is very benevolent in those regions.
10% discount on fees for 6 months on Bitmex
Futures a Perpetuals
Two basic financial instruments are traded on BitMEX: perpetuals and futures.
Futures are simply agreements between users to buy or sell cryptocurrencies in the future at a price that is set today. Depending on when the contract is to be settled, today’s price is different from the future. Futures 90D (90 days from today) can work with a totally different price than the price of the cryptocurrency today.
Perpetuals contracts are similar to futures, but they trade very close to the current price of the underlying cryptocurrency. Moreover, it never expires. It is a special type of contract that is suitable for trading on leverage.
You can trade derivatives of Bitcoin, Ethereum and six other cryptocurrencies on BitMEX.
Trading on leverage – Margin trading
BitMEX allows trading up to 100x leverage. This means that you can borrow up to 100 times more funds than you have to open your position. This multiplies your possible profits, but also the losses. Such trading is called Margin Trading.
The exchange uses two ways of leveraging: Isolated and Cross-Margin.
In case of Isolated leverage, the trader determines how much money in his wallet he is willing to lose on that trade. This allows you to manage risk.
Cross-Margin is for more experienced traders who are not afraid to expose the whole equity to an open position. If the trader is incautious, he can lose everything by one unsuccessful trade.
BitMEX distinguishes between making liquidity on the market or taking it out of the market. Accordingly, you either pay an additional fee (Taker Fee) or get a discount on the trade (Maker Fee). The dispersion of these charges ranges from -0.025% to 0.075%.
Maker Fee and Taker Fee are fees paid by individual traders. The Exchange itself does not collect these fees. It is essentially an interest to keep the price of the underlying cryptocurrency as close to its real value as possible.
Hidden orders are charged by Taker Fee in any case.
Deposit and withdrawal fees
The exchange works only with Bitcoins (that means, that you can’t deposit a fiat currency) and it also does not charge fees for withdrawals or deposits. You will only pay the Bitcoin blockchain fee for the transaction. The minimum deposit is 0.001 BTCs and withdrawals are not limited by size at all. You can withdraw only once a day.
How to register on the exchange
Since BitMEX is based in Seychelles, there is no need to verify your identity. This means that you need only an e-mail address, a password and a country where you reside.
BitMEX prohibits trading for US citizens only and uses an IP address to differentiate the country. If you are using VPN, make sure that you are not connecting via US servers, otherwise BitMEX will prevent you from accessing it.
Click here to register. After submitting your registration information, you will receive a verification email that you have to confirm and you can start trading.
The exchange was meant as a tool for professional traders since the beginning, so it might look very confusing for a beginner. However, as soon as you understand how it’s divided, you will be very satisfied with all the data and indicators.
99% of action takes place on a single page, as displayed in the following picture. The points are numbered and explained.
1) Market Overview
On the top bar you will find tickers of all available open markets for a given cryptocurrency. You can switch between cryptocurrencies and switch between the current price and the percentage loss or revenue over the last twenty-four hours.
2) Making orders
Place Order is the order entry box. Here you enter the quantity, price and you select the order type. Below this section you will find an overview of your positions, including ROE, liquidation price and used leverage. You can also use the slider to change the leverage in an open position.
3) Contract Details
See the details of the selected contract. You will find out where the price is derived from, what is the volume traded and what are the current fees.
4) Market selection
There is also a switch between the cryptocurrency markets at the top of the screen. You choose from these coins: Bitcoin, Cardano, Bitcoin Cash, EOS, Ethereum, Litecoin, Tron and Ripple. Clicking one of them will open up detailed information and enables you to trade the derivative.
Under the names of the currencies you will find an overview of futures and perpetuals contracts that you can trade and switch between them.
5) Selected market information
After selecting the market, the order book, the Graph (TradingView) and the history of the latest trades will be loaded in this section. Also, by default, you see a graphical representation of the order book depth.
At the bottom of the screen you can see all open and closed positions, including your trade history. From here you can control your active positions.
BitMEX is an advanced exchange and offers a variety of trading orders, each suitable for a different situation.
Market & Limit
Market and Limit are the most commonly used order types that are immediately placed in the order book. Market orders are placed at the current market price, order limits are placed in the order book and are waiting for a suitable counterparty to be found.
So-called “stops” does not appear in the order book immediately after entering the system. “Stops” are associated with stop prices. You determine the “stop price” yourself and as soon as the price of the derivative reaches the specified “stop price”, a pre-defined order is placed in the order book. Normally, the “stop” is used as a “stop loss”.
Take Profit orders are used to close a position in profit. It is not a separated type of order, but rather a specific use of Market and Limit orders. Basically it is a opposite order to an open position. For example, if you have bought 1 XBT at $3500 using Market Buy and you want to sell at $3800, you will set up a Market Sell of 1 XBT at $3800.
Instead of setting the “stop”, you specify a trailing value. For example, if I buy XBT for $2500 and set a trailing value $10, my position will close when the price drops from local high by $10.
How to send Bitcoin to the exchange
After logging in, click on the top right button “TOTAL 0.0000 XBT”. The following table will open and you will see an overview of trading history of the account and its total value. Now it is zero because you haven’t added any Bitcoin yet.
Clicking on the “Deposit” button will open a new Bitcoin wallet page with an address where your Bitcoins can be send. Once the transaction has more than one blockchain confirmation, the funds will be credited to the Wallet Balance.
Margin Balance indicates the value of the currently open positions and Available Balance combines both values together.
How to withdraw Bitcoin from BitMEX
If you decide to withdraw Bitcoins from the exchange for any reason, the procedure is very similar. Click through the top bar again to reach the wallet window, but this time click “Withdraw” button.
A table opens where you need to enter the destination XBT address and how many XBTs you select for withdrawal. You can also choose the blockchain fee yourself according to the current recommendation.
The security of BitMEX
BitMEX is one of the most secure exchanges in the cryptocurrency space. This is proven by the fact that it has never been successfully attacked by hackers.
Indeed, all deposited Bitcoins go directly to offline multi-signature BTC wallets, to which no one except the exchange employees has access.
Even if the attackers would be able to get into the trading system including the database, they will not find all the necessary private keys.
Bitcoin withdrawals are not automated. After entering the withdrawal order, the employees manually send Bitcoins, with a sufficient time delay between the order entry and submission, which serves as a temporary protection in case your account was hacked and withdrawal was initiated by the hacker.
Servers are based on AWS technology and users can activate two-factor authentication or use hardware tokens.
The protection of the trading system is following… At all times the sum of all accounts must be zero. If this is not the case, trading is immediately shut down and BitMEX starts searching the cause of the inconsistency.