BITMEX TRADING GUIDE:EVERYTHING YOU NEED TO KNOW
By Tom Alford
Bitmex is a cryptocurrency-based CFD trading platform. Their trading pairs include various cryptos that users can trade via a contract for difference. Bitmex offers high levels of leverage (up to 100x) and uses a Fair Price Marking system to fairly price both their perpetual and futures contracts.
Bitmex has its own order book. You can buy and sell crypto CFDs through their exchange. Aside from the Bitmex exchange pricing, trades are also valued (and liquidated) according to Index Pricing. Bitmex calculates the spot price of Bitcoin contracts by factoring their pricing at both Bitstamp and GDAX.
Many crypto traders turn to Bitmex because of their high leverage trading options. You can trade up to 100x on Bitcoin contracts. Ethereum can be traded with up to 50x leverage. Litecoin caps at 33.33x leverage. The other listed altcoins (Tron, Ripple, etc.) can be traded with up to 20x leverage. Out Bitmex review covers everything you need to know about the platform and how to get started.
Day Trading Crypto on Bitmex
Bitmex is a leading leverage-based cryptocurrency exchange platform. At any given time, approximately 12,000 to 20,000 members are online and actively trading crypto CFDs. Their exchange currently offers trading on the following assets:
Bitcoin Cash (20x)
EOS Token (20x)
This list is subject to change.
Once upon a time, Bitmex was also home to more than double the number of trading pairs that they have now. Some coins that used to be traded with small amounts of leverage on Bitmex include Monero, Status and Tezos.
To trade at Bitmex, you must deposit Bitcoin.
Warning: Think about the difference between long and shorting here. With a long, you profit off of both the value of winning on the trade and Bitcoin going up. With a short, you can profit off of the value of winning on the trade but lose a bit from Bitcoin going down. Therefore, leverage trading Bitcoin at Bitmex is best done when longing in a bull run.
How Trading Works
Are you attempting to day trade at Bitmex? If so, some basic things about their system and what trading styles work best will be of tremendous help. As such, here’s a basic walkthrough of how to trade on Bitmex…
1. Place your order
To enter a position you will need to place an order. You can make two different choices, “BUY / LONG” or “SELL / SHORT”. You have three options: Limit, Market and Stop Market.
You will be choosing the amount you are willing to pay for a Limit Order. If you are willing to pay a higher fee (0.075%) you can place a Market Order and pay any price. The only benefit of a market order is that it guarantees you entry; if the market is pumping fast, a limit order might not get filled and could end up costing more by the time you re-order.
Pro tip: Limit orders have 0.025% fees (for Bitcoin trading) while market orders have a 0.075% fee. The difference is major here, especially when you trade many times a day.Always place limit orders. Also mark the “post-only” checkbox to ensure they post as limit orders all of the time. If you limit order at a currently transactable price, you’ll pay market order fees.
Bitmex Fees Table
Check out the below chart for a rundown of the trading fees at Bitmex.
Maker fee – applies when you add liquidity to the market by placing a limit order that posts to the exchange’s book.
Taker fee – applies when you take liquidity out of the market by market ordering or placing a limit order that executes right away.
Notice the negative symbol next to the maker fees? That’s there because whenever you help “make” the books, you receive a rebate. The actual percentage is not what you see listed in the chart above. This number is calculated according to a few variables, such as the funding rate.
Funding Rate Explained
Every eight hours, Bitmex runs a new funding round. Either longs or shorts will pay the other party a fee for holding their position through funding. Many traders do which can make for a healthy payout at times. For instance, if the market runs super bearish while shorts get paid by longs it would be a profit premium on your standard gains.
Funding does not occur for futures contracts, it’s only relevant when trading perpetuals. Keep in mind you must use the limit order function. Mark Post-Only if you want to make sure you receive the rebate. This little bonus can add up over time, especially when the rate is super high and your leverage is high.
Trading Bitcoin at Bitmex
Bitmex’s Bitcoin CFDs are available as either perpetual or futures contracts.
The default asset is the “Perpetual” which trades according to spot prices. You can leverage trade it up to 100x depending on the amount of risk you can handle. Perpetuals only exist for Bitcoin trading at Bitmex, while the rest of the trading pairs are quarterly futures contracts.
The futures contracts for Bitcoin are currently available as monthly and annual contracts. A movement-based trading pair also exists now, “UP / DOWN”. You can trade the upside and downside profits for Bitcoin… read about it here, but don’t bother with this as a beginner.
Quick Tips for New Bitmex Day Traders
1. Do Not Impulse Trade!
It’s easy to see a large wall and think the price is about to skyrocket or crash. A whale flexing his (or her) muscle does not indicate where the price will go next. We’ve seen so many fakeouts that a big order on the books is often just a form of reverse psychology.
So, if you see this… don’t panic buy!
In fact, you would be surprised how fast a big player will sell through this seemingly strong support level. Most of it will be wash trading but sometimes the biggest traders are simply looking for the liquidity they need to enter into a massive short position.
The only time you should strongly respect such walls is if they are replaced profusely at a key resistance point after the market pushes upward. It’s a show of strength if the previous resistance becomes a fresh support and the price could skyrocket as a result.
You need to remember that everyone trading the Bitmex books are using the same system. The other traders are all putting up their bitcoins to bet on the up or downside of Bitcoin’s price movement. Since some traders use high levels of leverage near key support/resistance levels, bigger traders often suddenly increase volatility to force-liquidate people.
This move causes everyone with a high leverage short or long to get washed out before a momentous move happens in either direction. The idea here is that only whales and low leverage traders will have profitable open positions once the price makes a dramatic move.
2. Do Not Use High, High Leverage!
See the calculations above? Focus in on the last row/column, where you will notice 100x leverage is not exactly what you think. The truth is that you are taking on more than 200x leverage (when weighing the risk) but only enjoying 100x leverage (when weighing the reward).
It only takes a price move that’s out of favor by 0.49% to get liquidated. If the Mark Price is far enough from Bitmex’s price, it’s possible to get liquidated even sooner. The reason for this is because you must put up 0.5% as a maintenance margin.
What levels of leverage are safe to use?
You can justify using as much as 25x leverage if the movement is right. For example, 25x right after a breakthrough (with a tight stop) will offer a very attractive risk-to-reward ratio. However, it’s important to understand that it’s costly to get stopped out on a high leverage trade.
3. Ignore The Trollbox Completely!
A big mistake that many beginner traders make is getting caught up in the trollbox. Before, everyone on Poloniex would look at the chat to get signals for coins to day trade. Those moments were different, and sometimes the information was valuable, but nowadays we get those signals in crypto sub-Reddits and Discord groups.
If you’re wondering if the YouTube video link is a Rick Roll—it actually goes to a different song, “I Believe I Can Fly” by R. Kelly. The point of sharing this image is to show you the high level of excitement that comes from any “breakout”. But, by believing the hype and not following a strategy — you’re at greater risk of “marrying your position”, which is a financially devastating mistake.
We also recommend you read on “bankroll management for crypto day traders” to learn more about how to safeguard your trading capital.
Anyway, the trollbox on Bitmex is just a bunch of people saying nonsense. Their mood changes as quick as the price does; a sudden spike and everyone is bullish, a quick drop and they think crypto is coming to an end once and for all.
Don’t get caught up in the hysteria. Don’t scare yourself away from buying when there is “blood in the streets”. What is popular opinion is sometimes the worst advice you can get. Trade based on real signals, learn technical analysis and enter positions based off of strategy (not emotion).
Leverage Trading on Bitmex
Bitmex is an “industry-favorite” crypto exchange. Their leverage trading is backed by BTC which is a fact that many crypto die-hards love. This is not the case on other CFD platforms, like eToro, where fiat (primarily USD) is deposited and used to back CFD contract values.
On Bitmex, you have a BTC/USD order book but all deposits, withdrawals, profits, losses and etc., are derived in Bitcoin. If you go long at 10x and the price goes up 10x, $1 becomes $10 becomes $100 — while on eToro, $1 would become $10 instead. Yes, there is a significant risk when shorting (if the price drops too far down) as the ROI would be lower than with a successful long.
It’s stressful trying to leverage trade on Bitmex. In all honesty, we recommend that you build leverage-based trading strategies and then start trading here. Your goal should be to know how to trade with leverage and how much leverage to use based on the current price action.
Calculate Your Trades First
Bitmex actually gives you a calculator tool that’s pretty helpful, see here:
For leveraged trades, we particularly want to make use of the “Liquidation Price” calculator. Select that tab and you will see the following…
As you can see in the example above, with 100x leverage it would just take the price dropping from $6,756 to $6,723.5 (a $33.50 decrease) to make you get liquidated. Can you accurately predict Bitcoin’s price movement enough to not miss the “bottom” of a price swing by more than this much? In reality, it’s a crapshoot and more about luck than skill (don’t trade with 100x leverage!).
Now, let’s look at a calculation for a 25x long… which is the most we recommend you ever use when trading crypto with leverage on Bitmex. Also, we would say this is a max for Bitcoin leverage trading but other cryptos should only be traded with 5-10x leverage at most.
Here’s a terrific graphic that depicts the true cost and impact on your profitability that occurs when you enter into a highly leveraged position…
Still run the calculator tool but use the above chart to give you an idea on how much leverage you can safely use for any particular trade. Adjust your leverage exposure according to the market conditions. Please remember: you don’t always need an option position and you can also skip using leverage when the market isn’t right!
Unexpected Perks of Trading at Bitmex
A few reasons justify the choice of trading on Bitmex instead of an alternative CFD crypto exchange like OKCoin, eToro, and etc…
1. You Get a Fairer Spread…
Let’s say BTC is worth $7,250 and you can go long at $7,500 or short at $7,000 on a particular CFD-based crypto exchange. Now imagine if the price jumps up $1,000 what does that mean for your finances? Well, firstly at Bitmex you won’t get ripped off on the “spread”.
2. You Know Your Funds are Secure…
Their contract prices are made with their own order book. Bitmex also has an insurance fund with more than 9,000 bitcoins; if something like cascading calls triggers a “loss” in the system, this fund covers them.
Their “war chest” contained only half the amount of Bitcoins in April of this year. This number keeps rising because more people are trading at Bitmex. In fact, this fund is built up by filling liquidations prior to their bankruptcy price.
While there will always be some variance, the security of Bitmex’s system is second-to-none. Interestingly… This fund is primarily built off of those who trade with super high leverage as they feature the biggest liquidation/bankruptcy price discrepancies.
To learn more about the security of their leveraging system, read Bitmex’s blog post here. You will find out how they audit and protect user funds/ensure trades don’t execute or auto-deleverage too early. Primarily, it’s worth noting that Bitmex’s system is in 24/7 audit mode as..
3. You Can Customize Your Dashboard
Make use of the customizations that can be made to your dashboard. The default layout and preselected data points don’t give you the full story. Traders do better when they can pick through different layers of information to reach an educated decision. Pair this with some technical analysis and socialize your research by making use of TradingView.
Some things you can change about your Bitmex dashboard include:
What is the depth chart?
The default view of the depth chart shows the bid and ask orders from within a small price range. As you can see, the visualization encompasses all orders from $7,718.50 to $7,737.50 which means you don’t even see $10 of orders in either direction (buy or sell).
You can scroll out with your mouse or laptop trackpad, which brings you back around $50 in each direction. The ~$100 price range is sufficient at current Bitcoin prices for depth chart analysis purposes when day trading on Bitmex.
You can research the order book depth further by expanding the order book. However, Bitmex’s default display includes orders at $0.50 increments. You can change this which will make it possible to go by $1, $5, $10, $100, etc., sized increments. By adjusting you will see a better picture of the support and resistance strength at nearby price-points.
Press the settings button to adjust the increments at which orders are displayed:
Note: The corner arrow style icon is your “expand (full screen)” button, while the ‘x’ makes the order book box disappear. You can bring it back by going back to the dashboard layout customization drop-down list.
Another option in the dropdown settings list is Positions & Open Orders. Selecting this checkbox will simply allow you to easily view your triggered, pending and completed orders. You can also keep track of your stops this way. This section shows at the bottom of your dashboard but you can move the boxes around and change the layout to whatever you want.
How to open a Bitmex account?
Special Feature: Take leveraged cryptocurrency positions up to 100x.
Available Cryptos: Bitcoin, Bitcoin Cash, Cardano, EOS, Ethereum, Litecoin, Tron & XRP.
Cryptos Favourite Trading Platform: Over $4.5 bn is traded every 24 hours on Bitmex.
Industry Leading Security.
Quick To Get Started & Bitmex Require No Personal Information.
Deposit Method: Bitcoin only.
Bitmex literally has one of the easiest sign up processes on the planet. Just fill in your email, password, and name. Accept the terms and conditions and press register.
You will then be sent an automated email for registration verification. Once you click the ‘Verify My Email’ button you will be logged into Bitmex.
It’s literally as easy as that.
How To Deposit?
Depositing on Bitmex is also super easy. Just hit the ‘Account’ button at the top of your screen, click ‘deposit’ and you will be shown your BTC deposit address.
What Else to Know Before Trading at Bitmex
When writing this Bitmex review we came up with some other random points to keep in mind before trading at Bitmex.
Withdrawals are processed once per day. Funds are secure and all requests are manually approved by their staff. Bitmex is good for keeping current on deposits and withdrawals; for deposited funds, it also just takes one confirmation for funds to be credited into your account.
The trading engine can get laggy at times when there is both a high volume and frequency of trades. This issue surfaced after an exponential growth in users from 2017 to this year. The problem is not as serious as it sounds; at worst, the engine might not trigger your trade but improvements have been made and this might not be a worry anymore.
Be careful when entering a position if Bitmex’s order book has a price discrepancy when compared with the Index Price. Your position could get liquidated sooner. The flip side is also true; if you go long when Bitmex price’s are below the Index Price it works in your favor. But, you cannot easily trade based on a spread between the two as Bitmex often trends lower when market sentiment is weak.
It’s easy to get liquidated at higher levels of leverage — be very careful because sooner or later you will lose everything. Even if you use a fraction of your balance to go with high leverage, it’s easy to get caught up in the trade and add to your margin to “let it ride” beyond the initial liquidation price.
You are allowed to have multiple accounts. If you want to run a 50x leverage trade because the market seems to be about to make a swift move, transfer 100% of your “wager” to that account. Keep your normal day trading bankroll in a separate account. You can also fraction your bankroll and say “X percent will go towards “shot-taking” for potentially big payouts.
Bitmex is certainly not a platform for a casual investor, its made for advanced traders only. This means that anyone just starting out may find the platform confusing. There are a lot of easier and more beginner friendly CFD trading platforms like eToro. However, Bitmex does have the largest range of features of any CFD broker, offers a large selection of coins and leverage options. The choice to use Bitmex is, of course, yours to make. But we would recommend using Bitmex only if you are an advanced trader.
Article written by Tom Alford, TotalCrypto.io.
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This article was originally published on TotalCrypto.io.