Phemex is a cryptocurrency exchange that has quickly grown to become one of the most popular trading platforms. It delivers 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.
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Phemex Exchange offers competitive fees, plenty of trading tools, as well as a platform that’s quick, secure, and easy to use. This makes it appealing to both experienced traders and avid beginners at the same time.
The exchange was founded by Jack Tao – a former Wall Street veteran with over 11 years of experience in the world of finance.
Bitcoin futures trading has its ups and downs, just as any other type of trading. The main difference with spot trading is that you don’t take possession of the underlying asset – in this case, BTC. 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:
Now, there are a few terms in the above that you might not be aware of, so let’s try to break them down.
Bitcoin futures trading on Phemex is possible thanks to the existence of perpetual contracts. 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 safekeeping (storing) 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 is one of the main differences between perpetual futures contracts and traditional futures contracts. The latter has a pre-set expiration term.
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.
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, and you will lose your money.
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.
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 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 at the bottom of your account dashboard page:
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 “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.
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:
Before you start trading, it’s important to understand that there are three types of perpetual contracts available on Phemex, depending on what type of denomination you want to use.
These are:
For the sake of this guide, we will go over the first type, as this is the most commonly used one.
Once you have your funds transferred, you need to hover over the “Contract” button on the main navigation menu. From the collapsable window, choose USD(S)-M Perpetual.
The overall trading interface of Phemex is very straightforward, and this is how it looks like:
On the top left, you will see a box that says “BTCUSD Perp.” You can click that to check out all the cryptocurrencies that are supported for this particular type of trading.
On the right side, we have the order tabs, the order book, and other information. 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:
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 what 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 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 $38,000, and you may want to buy when the price drops down to $35,000 – 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 $35,000 and there’s enough liquidity for it.
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.
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 2 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, you will get a confirmation screen.
Once you confirm it, your position will be open and active, and you will be able to monitor it at the bottom of your dashboard.
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.
Phemex supports a wide list of cryptocurrencies that can be traded on its futures platform. Currently, there are five pairs tradeable against USD:
However, if you choose to trade against USDT (the world’s largest stablecoin), this list becomes immensely bigger and includes altcoins like:
The exchange is constantly adding new pairs upon customer demand, which is something favorable.
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 offers:
When trading with leverage, though, it’s incremental to consider the funding rates. Funding fees on Phemex 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.
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.
In addition, following the downfall of FTX in 2021, Phemex, alongside other leading exchanges, has also implemented Proof of Reserves (PoR). Anyone can verify the standing of the exchange here.
There is an insurance fund that 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 funds 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 to cover any potential funds lost to security breaches and hacks.
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.
As explained before, KYC is not mandatory for registering an account with Phemex, but the withdrawals are limited. At the same time, multiple depositing options require basic identity verification.
According to the Terms of Use policy of the exchange, said terms are governed by the laws of Singapore. However, it depends on where the registering member is from when it comes to law adherence. For instance, if the user is from the European Union, then laws applicable to users from the EU will be in force as well. The exchange is not regulated by a European or a US-based authority.
There are some countries, citizens of which are not allowed to open an account with the exchange, and they include:
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, and the liquidity seems sufficient.
