BitMEX is one of the veteran exchanges in the industry and a pioneer in the field of cryptocurrency derivatives.
The platform was launched back in 2016, with its core product being the XBTUSD perpetual swap – a crypto derivatives contract that allows users to long and short Bitcoin using leverage.
Years later, the majority of exchanges have adopted perpetual futures contracts in one way or another, and they remain some of the most traded products. BitMEX was co-founded by Arthur Hayes, Ben Delo, and Samuel Reed, and is currently spearheaded by Alexander Hoeptner.
The exchange had been focused on derivatives for the majority of its existence. However, in May 2022, they also launched a spot trading platform. It allows users to transact between fiat currencies and cryptocurrencies while also trading crypto-to-crypto trading pairs.
The following is a comprehensive guide on how to trade on both its derivatives and spot platforms while also going through some of the important basics.
Bitmex allows margin trading of Bitcoin and crypto futures (altcoins). If you are familiar with the basic features that Bitmex platform offers, you may find the following advanced features useful for your trades. Before we begin, you have to have BitMEX trading account. Using the link here to register gives you a 10 percent discount on transaction fees for the first six months.
Margin trading is not suitable for beginners in trading and should be done with careful caution and attention. Someone using the information provided in this video or article, including buying or selling, does it on his or her own risk.
Having been around for a longer period, the derivatives platform of BitMEX supports more cryptocurrencies than the spot platform. That said, some of the coins you can trade include, but are not limited to:
Derivatives:
Spot:
Before you can start trading, you need to register an account. The exchange has a simple process to register and verify your account; you will need to provide some personal credentials such as your ID or, alternatively, a passport or a government-issued driver’s license. You might also be prompted to provide proof of address.
Nevertheless, the process is pretty straightforward – just follow the instructions. The KYC verification might take a few hours – in our case, the team got back to us within 3 hours, and the account was fully verified and active.
Once you get that done, it’s important to take a few critical steps to secure your account. Head to the Security Centre and make sure to enable your Two-Factor Authentication (2FA).
It’s also recommended to activate the setting that automatically closes all sessions if a new IP address is detected. However, if you are using a mobile browser, this might not be best.
Now that you have your account up and running, it’s time to deposit some funds.
To do so, head to the Wallet section of your account:
Here, you can check all the available cryptocurrencies that you can use to deposit. These are the same as those supported for spot trading, namely:
To deposit, simply click on the deposit button on top or the arrow pointing downwards next to the cryptocurrency you wish to deposit.
Select the cryptocurrency you want to deposit, and you will be given both a QR code that you can scan and an address that you should send the funds to.
Withdrawing is just as easy. However, to do external withdrawals, you will need to have your 2FA activated.
Now that you have funds in your account let’s see how to trade, starting with the spot exchange.
The interface of the spot platform is pretty simple and user-friendly. This is what it looks like:
The trading pairs are available to the left, whereas the center is occupied by a chart powered by TradingView. Right below it is the section to monitor open orders, order history, and broader trade history. On the right side, there’s the order book, as well as the order panel.
The platform currently supports two types of orders – limit and market.
Limit orders are used when you want to buy (or sell) at a specific price.
In the above example, we have set a limit order to buy around $50 worth of ETH at a price of $1000. If the price reaches this level, the order will be executed, and we will buy 0.05 ETH.
Market orders are the simplest type. They are executed immediately and filled at the best available price from the orderbook.
Following the previous example, here, we want to buy $50 worth of ETH immediately at current prices. If executed, we will receive 0.047 ETH at a price of around $1050.
To open a position, we will use a simple market order as in the example above.
As soon as we hit the blue button, the order will be executed at the rates that are currently available based on the order book.
As mentioned above, you can see your order history below the main chart:
Here, we can see the order type (in this case – a buy order), size, price, whether or not it was filled, as well as the average fill price, type of order, time of execution, and its status.
To close the position, simply sell the cryptocurrency you’ve bought using either a limit or a market order.
That’s pretty much everything there is to using the spot exchange – it’s a straightforward process that doesn’t require any previous experience or knowledge.
As mentioned above, BitMEX is a pioneer in the world of cryptocurrency derivatives and leverage trading – in fact, they invented the Bitcoin perpetual futures contract.
To understand what perpetual futures are, you first need to know what conventional futures contracts are. In simple terms, they represent an agreement between two parties where both agree to buy and sell a particular asset in specific quantity at a predetermined price – at a specific date in the future.
An example would be that user A agrees to sell and user B agrees to buy 1 BTC at a price of $20,000 on a specific date. Once that date comes, if the current price is higher than the agreed-upon price, user B would be in profit and vice versa.
The important thing here is that there is a specific date in time that the contract will be executed. Perpetual futures contracts, on the other hand, are a different type of derivative where there is no predetermined date – users can open and close them whenever they want.
BitMEX offers both types of contracts – futures and perpetual futures.
Another thing important to understand is leverage – the ability to open positions with greater nominal values than what you currently have in your balance.
The exchange supports leverage of up to 100x on some pairs. This means that if you have $100 in your account, you can open a position worth 100 times that, or $100 x 100 = $10,000. This increases potential profits if the price goes in your direction. However, it also makes it much riskier for you to lose your margin because if the price moves as little as 1% in the opposite direction, your position may be liquidated, and you will lose the margin.
This is why leverage trading should only be carried out by those who understand the nature of these contracts and have experience, as it carries a risk of capital loss. You should never trade with more than what you can afford to lose. Many experts recommend against using high leverage unless you have sufficient experience, knowledge, high risk tolerance, and a proper strategy.
The following focuses on how to trade perpetual futures.
The derivatives trading platform of BitMEX offers a lot more cryptocurrency trading pairs and a broader selection of order types. This is what the trading interface looks like. Note that it is different than the spot exchange, and the order panel is located on the left:
Apart from the limit and market orders described above, there are also:
The stop-limit order is generally used to either set a stop-loss or a take-profit point.
The stop price is the price where your stop-limit order will turn into a regular limit order (conversely – a market order if you use a stop-market order). The price tab, on the other hand, is showing when you want to buy.
To use it as a stop-loss, you need to input a stop price that, once reached, will trigger the limit order to be executed at that specified price. To use it as a take-profit, do the same but set a higher price than your entry.
So, if the price of BTC (a.k.a XBT for BitMEX perpetual futures) reaches $19295.5, this will trigger the stop-limit order and put a limit order that will get executed if the price reaches $19196.
The trailing stop order allows users to lock in profits or, alternatively – limit losses as the trade moves in either direction. It enables you to place a pre-set order at a specific percentage away from the market price when the market is swinging.
It’s typically considered a more advanced order type.
In this guide, we will use a simple market order to open a position on the Bitcoin-USDT perpetual (XBTUSDT) using a leverage of 5x. This is what our market order looks like:
As you can see, we want to buy 0.01 XBT (BTC) using 5x leverage at the current price of $19068. This puts the cost of our position at 38.45 USDT, but its order value is 5 times greater than this because of the leverage.
Below that, you can adjust the leverage of your position from 0 to 100x. As soon as we hit the buy button, this will open a long position and you can monitor it from below the main chart on the interface:
This is where you can see the position size, its value, entry price, liquidation price, the margin you’ve posted, as well as the unrealized and realized PNL.
If you wish to close the position, you can do so by hitting the market button on the right – it will close it immediately with a market order at the best available market price from the orderbook. Alternatively, you can close it with an opposite limit order.
That’s everything there is to trading perpetual futures on BitMEX.
The trading fees on BitMEX vary based on the type of contracts you use and whether you trade on the spot exchange or on the derivatives one.
The fees on the spot exchange are 0.01% for makers and 0.075% for takers. However, high-volume traders can benefit from discounts as per the following table:
On the other hand, the trading fees for perpetual contracts are a negative 0.01% for makers and 0.075% for takers. There is also a funding rate that would depend on whether or not you are long/short, as well as current market dynamics. For a real-time feed of the funding rates, you can check BitMEX’s official Fees page.
Last but not least are traditional futures. The fees are as follows:
It’s also worth noting that in December 2021, the exchange launched its native cryptocurrency – BMEX. The token can be used for staking, and based on the amount you stake, you can get the following discounts on trading fees:
The cryptocurrency exchange has never been hacked. Given its long history, this is definitely a benefit to consider. Security in the field of cryptocurrencies is critical, and BitMEX has so far managed to steer clear of any breaches.
BitMEX has also stood the test of time, having stayed resilient through numerous bull and bear cycles since its founding many years ago. With other crypto platforms experiencing difficulties from the Three Arrows Capital contagion, this is also crucial.
It’s worth noting that the exchange’s founders ran into troubles with the US Commodity and Futures Trading Commission and all three of them pleaded guilty and incurred financial penalties. However, the leadership of the exchange has long shifted, and the new image that BitMEX is building is one of compliance. This is, perhaps, one of the reasons for the very serious steps taken to verify the entire trading volume of the exchange and to combat money laundering.
In terms of customer support, BitMEX relies on a user-friendly ticket system where issues tend to get resolved relatively quickly. The platform’s customer service is a big differentiator, especially when compared to other exchanges.
All in all, BitMEX is one of the most popular cryptocurrency exchanges, especially when it comes to derivatives. Their spot platform is still relatively young, but the team is working hard to expand the service offering, and features, as well as to enhance the overall user experience and security of the platform.
To sign up for BitMEX account, click here.
