Trade cryptocurrency derivatives on BitMEX.
Professional traders and experienced investors can choose to jump into trading derivatives in bitcoin through the BitMEX platform. It's more suited for those with a background in traditional finance. BitMEX claims to have high leverage on its derivatives products and strong site-wide security protocols.
|Product Name||BitMEX Cryptocurrency Derivatives Trading Platform|
|Cryptocurrencies||BTC, BCH, ADA, DASH, ETH, ETC, LTC, XMR, XRP, XLM, ZEC|
|Trading Fee||Fees vary|
- Up to 1:100 leverage
- Practice trading in the "Sandbox"
- Secure multi-signature wallets
- High BTC liquidity
- Easy-to-use interface and charting tools
- Not suitable for inexperienced traders
- Fiat deposits not accepted
- Low volume on altcoin assets
- Possible network latencies
- No mobile app
What is BitMEX?
BitMEX, short for “Bitcoin Mercantile Exchange”, is an advanced derivatives trading platform for cryptocurrencies. BitMEX serves as an interface for investors to interact with global financial markets using bitcoin.
Unlike many cryptocurrency exchanges, which trade one cryptocurrency for another, BitMEX is focused on derivatives trading. BitMEX offers perpetual swap contracts as well as daily and weekly futures contracts.
BitMEX does not charge fees for deposits or withdrawals made to or from the exchange, although you will still have to pay fees to the bitcoin network. BitMEX dynamically sets the minimum fee based on network activity. When trading on BitMEX, there are fees associated with each transaction that occurs on the exchange. These fees vary depending on position (buyer/seller), funding rate and contract type.
All traditional futures contracts incur a 0.0500% settlement fee on any open position at the time of settlement, with the exception of XTZ (Tezos Series) and ZEC (Zcash Series), which require a 0.2500% settlement fee. For prediction markets, the settlement fee is also 0.2500%.
How do I make a trade with BitMEX?
Before you begin trading on BitMEX, you will need to register for an account using an email address, password, country of residence and your name (optional). BitMEX is not available in all countries, and may not be accessible to you depending on your location. Here are some details related to the trading process:
- Deposit. Once you’ve created your BitMEX account, you can visit the “Deposit” tab to add funds to your wallet. Because BitMEX deals only in bitcoin, you will be given an address to a secure multi-signature wallet designed to accept bitcoin.
- Send bitcoin. You can send bitcoin to the wallet address, and after one confirmation the funds should appear in your account and be usable on the exchange.
- Minimum requirements. BitMEX does have minimum amount requirements for trading. These vary from product to product depending on the Initial Margin. This means you’ll need to ensure you have adequate funding to meet the minimum requirements for your product of choice.
- Order Types. The trading dashboard can be found in the “Trade” tab. From there, a variety of different order types are available, including:
- Market Orders
- Limit Orders
- Stop Orders
- Take Profit Orders
- Advanced Orders: Hidden, Iceberg and Post Only orders.
- Margin requirements. Before you can place an order, the system will check your available balance to make sure that you have enough funding to meet the requirements for trading, such as reserving the Initial Margin, as well as whether you already have a position in the chosen instrument. If you do, it will determine whether there are sufficient funds in your account to meet the Maintenance Margin and Profit and Loss (PNL) specifications. If all that checks out, you can place the order through the trading dashboard.
BitMEX offers a limited selection of spot and futures contracts compared to some other exchanges, such as Poloniex. Currently, the following assets are available:
- Bitcoin (XBT/BTC) - Spot and Futures
- Bitcoin/Yen (XBJ) - Futures
- Binary (B) - Futures
- Dash (DASH) - Futures
- Ethereum (ETH) - Futures
- Ethereum (ETC) - Classic Futures
- Litecoin (LTC) - Futures
- Monero (XMR) - Futures
- Ripple (XRP) - Futures
- Tezos (XTZ) - Futures
- Zcash (ZEC) - Futures
While BitMEX is a leader in volume when it comes to bitcoin (BTC), most other offerings maintain relatively low levels of liquidity. At times, this makes the degree of price movement when entering/exiting positions so drastic that trading some available assets may be impractical.
Is BitMEX secure?
BitMEX uses multi-signature wallets for both client and exchange accounts. All withdrawals are handled manually and processed at a designated time once a day. Funds are kept in offline cold storage, rather than “hot wallets.” The combination of these features gives BitMEX a very solid security infrastructure when it comes to handling client funds. Additional security features include:
- Optional encryption for emails provided by the Pretty Good Privacy (PGP) program.
- The high-speed trading engine performs security audits after each order placement and transaction.
- Access to BitMEX’s systems is partitioned and requires multiple forms of authentication to access each part.
BitMEX pros and cons
- Up to 100% leverage available on margin trading.
- “Sandbox” environment for users to practice trading.
- Secure multi-signature wallets.
- Manual processing of all withdrawals.
- The platform is written in kbd+, an in-memory database and programming tool set used in many high-frequency trading applications.
- High liquidity for bitcoin spot and futures.
- Good user interface and charting tools.
- May not be ideal for inexperienced traders.
- Not available in all countries, including the US
- No fiat deposits or withdrawals.
- Low volume on altcoin assets.
- Complaints about network latency from automated trading bots front-running orders.
- No mobile app.
What’s next for BitMEX?
As bitcoin’s popularity continues to grow, BitMEX’s bitcoin trading volume may well continue to increase. The platform’s open API and changelog reveal regular updates and improvements to the system, which will no doubt continue as BitMEX develops. Features that users can look forward to in the future include:
- BitMEX has implied that it plans to integrate its platform with more automated trading tools. Currently only two automated trading tools are supported: BitMEX Market Maker and BotVS.
- Futures contracts for select initial coin offerings (ICOs).
Frequently asked questions
Image source: BitMEX