Phemex is a cryptocurrency exchange that has quickly grown to become one of the most popular trading platforms, providing users with a relatively intuitive interface, a variety of trading pairs, and the ability to trade both spot and with leverage.
In this guide, we will offer detailed information on how to trade Bitcoin and other cryptocurrencies with leverage using perpetual contracts.
- Which Coins Does Phemex Support?
- Why Trade on Phemex?
- What are Bitcoin Futures?
- Phemex: Start Here
- How to Deposit and Withdraw on Phemex?
- Perpetual Contracts: What You Should Know<
- What is Leverage?
- Opening a Short or Long Position
- Closing a Position
- What are Phemex Trading Fees?
- Security: Is Phemex Safe?
- Phemex Support
- Is Phemex Regulated?
Why Trade Bitcoin Futures on Phemex?
Phemex Exchange offers competitive fees, plenty of trading tools, as well as a platform that’s quick, secure, and easy to use, thus appealing to both experienced traders and avid beginners at the same time. As of writing these lines, Phemex is among the top 10 crypto derivatives exchanges by volume, according to CoinMarketCap.
The exchange was founded by Jack Tao – a former Wall Street veteran with over 11 years worth of experience in the world of finance.
Bitcoin futures trading has its ups and downs, just as any other type of trading out there. The main difference with spot trading is that you don’t take possession of the underlying asset – in this case, Bitcoin. Instead, you buy and sell perpetual contracts and get exposure to the price of the asset that underpins them.
This, on its own, offers a few benefits:
- You can use leverage to open larger positions compared to your current account balance
- You don’t have to hold so much money on the exchange
- You can open both short and long positions, hence being able to trade in both directions of the market
- BTC and USD settling
Now, there are a few terms in the above that you might not be aware of, so let’s try to break them down.
Perpetual Contracts: What You Should Know
Bitcoin futures trading on Phemex is possible thanks to the perpetual contracts mechanism. This is a type of derivatives contract that allows users to receive exposure to the price of the underlying asset without having to own it.
It brings a few benefits, such as the fact that you won’t have to worry about safe-keeping the asset on your own.
Unlike traditional futures contracts, perpetual contracts also don’t have a set expiration date, meaning that you can open and close both long or short positions whenever you want to.
This has made them particularly popular throughout the entire cryptocurrency industry, and practically every futures exchange takes advantage of them. They also allow users to trade with leverage, which brings us to the next point.
What is Leverage?
Leverage trading has also grown in popularity in the crypto world as it allows users to trade with amounts greater than their current account balance.
In essence, leverage trading means that the exchange “lends” you money so that you can open larger positions. Don’t get confused, though – there’s no way the exchange would let you “owe” money to it in case your trade goes bad – instead, it uses liquidation mechanisms. Giving an example would be the best way to illustrate this.
Imagine you have $100 in your account, and the exchange supports 100x leverage. This means you will be able to open a position worth $10,000 (100 x 100 = 10,000). This greatly increases your profitability if the price goes in the direction of your trade. However, it also puts you at tremendous risk. If the price goes in the wrong direction with just 1%, your position will be at a $100 loss, causing a direct liquidation – the exchange will automatically close your position.
This is why leverage trading is particularly challenging and very risky. It is highly advisable that you stay away from anything higher than 5x and only trade with leverage if you have sufficient knowledge of the market.
Phemex offers up to 100x leverage on its Bitcoin futures contract and various levels for different trading pairs.
Getting Started: Registering an Account on Phemex
It doesn’t take long to register an account with Phemex. Click here to open a new window of Phemex. Always make sure you’re seeing the correct URL of phemex.com, as there are a lot of phishing attacks via fake websites.
The procedure is fairly simple as all you need to do is to input an email address and select a password. For security reasons, create a strong password, which wasn’t used before on other websites.
Once you have this done, you will need to verify the account on your email through a 6-digit code.
For increased security, the next thing you should do after registering your account is to enable the Two-Factor Authentication (2FA). To do so, you need to go to your account dashboard and simply follow the instructions:
If you haven’t done this before, you would need to download the Google Authenticator app, scan a QR code and enter a 6-digit code. After this, you will need to use the code provided by the app every time you want to log in – this is what works as a 2FA.
After completing this step, you can deposit funds, but you should also know that you might want to get your identity verified to remove some restrictions, such as the withdrawal limit.
This is possible by following the procedure that’s at the bottom of your account dashboard page:
How to Deposit and Withdraw on Phemex?
Once all of the above is done, you can proceed to fund your account. Phemex allows its users to buy cryptocurrencies with a credit or debit card, and you can also send Bitcoin to your account’s address.
To do so, you need to hover over the “Assets” tab in the navigation menu and select “Deposit.”
For the sake of this guide, we will deposit some Bitcoin into the account. Once you click on “deposit” instead of on “buy crypto,” this is the page you will receive:
Simply send BTC to the provided address, and you’ll be good to go.
To withdraw, just click on the “Withdraw” button on the left menu, and you will see the following screen:
Follow the instructions there, and your funds will be sent through. Now that you have funds in your account, you can start trading Bitcoin futures.
How to Trade Bitcoin Futures on Phemex?
If you want to trade Bitcoin futures, you would first have to transfer some funds to your Contracts Account (where contracts stand for perpetual contracts). To do so, select your Contracts Account, click on transfer, and send the funds you want to trade with:
The overall trading interface of Phemex is very straightforward, and this is how it looks like:
However, this is the default view – Phemex allows its users to fully customize the trading dashboard simply by dragging the separate boxes to where they prefer.
As it is, you can select the trading pair from the “Select Contract” tab at the top – for the purpose of this guide, we will be working with BTC/USD.
On the left side, we have the order tabs, the order book, the contract details, and the recent trades. In the middle, there’s a detailed chart provided by TradingView, and below it is where you track your open positions.
First things first, let’s take a look at the various order types. At the time of this writing, Phemex supports the following:
- Market Order
This is the simplest type of order that you can use. It gets executed immediately at the best available market price from the order book. This is how it looks like:
All you need to do is input how many contracts you want to buy (where one contract = 1 USD), select your leverage from the slider, and open a long (buy) or a short (sell) position.
- Limit Order
Limit orders are used when you want to open a position at a price different than the current market price.
It’s also relatively easy to use. All you need to do is input the price you want to open your position at and the number of contracts.
For example, at the time of this writing, Bitcoin is trading at around $54,000, and you may want to buy when the price drops down to $50,000 – all you need to do is input this price as the limit price, enter the position size, and select your leverage.
Your order will be automatically placed in the order book, and it will get filled if the price drops to $50,000 and there’s enough liquidity for it.
- Conditional Orders
Conditional orders are different as they are activated only when the trigger price is reached. They are typically used as Take Profit (TP) or Stop Loss (SL) orders, although they can also be used for breakout trading purposes.
There are two types of them – limit and market conditional orders and their specifications are similar to those of the regular limit and market orders with the exception that they have a trigger price. This means that the limit or the market order will only be activated if the trigger price is reached.
Now that you’re aware of the different order types let’s see how to actually open and close a position.
How to Open a Position?
For the sake of this guide, we will use a simple market order to have our position opened. We use the leverage of 5x, and it’s very important to remember that you shouldn’t overdo it and keep your risk to a minimum.
Remember: The higher the leverage level is, the closer the liquidation price will be. For example, a 100x leverage position will get liquidated the moment the loss exceeds 1%, which is very uncommon considering how volatile crypto assets are.
As you can see, for this example, we want to open a position with 100 contracts (worth $100) using 5X leverage. It represents 0.0015 BTC ($100), but it only costs us 0.0003 BTC because of the leverage.
As soon as you’re happy with your specifications, you can open a long or short position. We choose to open a long position. As you click on the button, this is the confirmation screen you will get:
Once you confirm it, your position will be open and active, and you will notice it on the bottom of your dashboard.
How to Close a Position?
Closing your position is also quite easy. You can monitor its performance in the tab below the chart in the overall trading interface.
This is where you can follow metrics such as entry price, current market price, profit and loss, liquidation price, and so forth. This is also where you close your position, in case you haven’t input a stop-loss or a take-profit.
To do so, you can use either a limit or a market order and press the appropriate button on the right, next to the position you wish to close.
Which Cryptocurrencies are Listed on Phemex?
Phemex supports a wide list of cryptocurrencies that can be traded on its futures platform. Some of the most notable mentions include, but are not limited to (all of the following trade against USD):
- Bitcoin (BTC)
- Ethereum (ETH)
- Chainlink (LINK)
- Cardano (ADA)
- Ripple (XRP)
- Dogecoin (DOGE)
- Uniswap (UNI)
- Solana (SOL)
- Kusama (KSM)
- Basic Attenton Token (BAT)
The exchange is constantly adding new pairs upon customer demand, which is something favorable.
Trading Fees on Phemex
One of the most important things to consider when choosing a Bitcoin futures exchange to trade on is the fees.
In terms of the regular fees, Phemex is on par with other leading cryptocurrency exchanges, as it offers:
- 075% Taker Fee
- -0.025% Maker Fee
When trading with leverage, though, it’s incremental to consider the funding rates. Funding fees on Phmex are charged or issued between long and short position holders every 8 hours, but Phemex doesn’t charge any overnight fees.
With this said, the rates differ based on the contract that you use, and more information can be found here. The below table shows just a few contracts and the breakdown of their fees.
Security: Is Phemex Safe?
Phemex, as mentioned above, is one of the most popular cryptocurrency exchanges, and so far, it hasn’t been compromised. This is an important consideration, given that security should also be a priority.
Additionally, users can enable both email verification and Two Factor Authentication (2FA) to further protect their accounts.
According to the official website, the team has also designed and implemented multiple security measures to keep users’ funds safe. These include a Hierarchical Deterministic Cold Wallet System, assigning a separate cold wallet deposit address to each user. In addition, Phemex deploys its systems on the Amazon Web Service (AWS) Cloud.
There is an insurance fund which prevents positions from getting auto-deleveraged. In essence, since trading is a zero-sum game, the insurance fund also makes sure that the winning party of a trade receives their full profits even when the losing party’s fund do not cover the gains. The fund grows from liquidations that were executed in the market at a price better than the bankruptcy price of a specific position. However, it’s worth noting that this fund is not used for covering any potential funds lost to security breaches and hacks.
Customer Support on Phemex
In terms of customer support, the team is quite responsive and active throughout various social media such as Facebook, Twitter, LinkedIn, and so forth. There’s also a Telegram group for instant communication. The exchange has prepared extensive Learn and Academy sections, as well as a good list of FAQs that users can take advantage of in case they are uncertain of something or need more information.
Is Phemex Regulated?
As explained before, KYC is not mandatory for registering an account with Phemex, but the withdrawals are limited. This might be considered beneficial for those who want privacy and don’t want to get their identity verified.
There are some countries, citizens of which are not allowed to open an account with the exchange, and they include:
- The United States
- United Kingdom
- Quebec (Canada)
- North Korea
- South Korea
- China, and more.
For the complete list, please check section 36 from the following terms.
In conclusion, Phemex is a very well-rounded trading platform with a range of different pairs and products to take advantage of. Keep in mind that this guide only focuses on Bitcoin futures trading, but Phemex also has a spot exchange.
The interface is intuitive, there are plenty of trading pairs, the liquidity seems sufficient. However, it’s behind some of the bigger names in the industry, and the customer support is on point.