Tutorial: How Do I Use BitMEX?
BitMEX is one of the giants of cryptocurrency trading globally. It is a platform that is both intuitive and easy to use, but still requires some knowledge of the trading world. The way in which it operates is quite different from other platforms and can therefore be more complex for those who are beginners to trading. If you fall under this category, you will certainly find the answers to your questions in this BitMEX tutorial.
Get up to speed on BitMEX
BitMEX is a very sophisticated cryptocurrency exchange. It is therefore a good idea to learn more about the platform before registering and using it. Some information must be taken into account to better choose how to conduct your business.
These include facts about the site, fees, deposit methods, withdrawals, cryptocurrencies and derivatives. We will therefore review these different points, focusing first on the origins of BitMEX.
The History of BitMEX
Since its foundation in 2014, BitMEX has continued to grow and advance to be among the best cryptocurrency trading platforms. It was created by the founders of HDR Global Trading Limited: Arthur Hayes, Samuel Reed and Ben Delo. Operating from Hong Kong, but registered in the Seychelles, this so-called ‘peer-to-peer margin trading’ platform offers leveraged contracts that can be purchased or sold using bitcoin (BTC, but referred to on the site as XBT).
BitMEX is the result of a long collaboration between three former bankers. The founders marked the site’s beginnings with simple arbitrage on Bitcoin exchanges. They quickly realised the huge value in trading financial derivatives.
BitMEX starts with a very simple premise: use the contract system to sell and buy cryptocurrencies. You can maximise your earnings by increasing your leverage, which is similar to a loan you make with the platform. This is a complex strategy and presents more risk, which is why this site is not recommended for beginners.
If the market turns out in their favor, a user’s profits can be exponential. On the other hand, if their leveraged position accumulates losses, it will be closed automatically and the user will lose all their wagered capital. To put it simply, leverage will define and amplify your gains and losses.
An undeniable success
BitMEX has established itself in the world of cryptocurrency derivatives manages to compete with other margin trading platforms such as Bitfinex. Its success can be explained in different ways:
- Up to 100x leverage
- No KYC (Know Your Customer)
- Huge Bitcoin liquidity (300% higher than the average)
- The largest trading volumes in the world
- 0.18% of all circulating Bitcoin belongs to BitMEX
BitMEX is a platform where you can trade with leverage. You borrow money and then trade for a larger volume that is greater than your account balance. In this way, if you are in a profitable position, you earn not only your gains but also your original balance.
For example, with a balance of £2,000, if you use 5x leverage, you can then take a position at £10,000 (made up of £8,000 lent by the platform). The gains and losses will therefore correspond to those of a £10,000 position.
However, this means if your position consumes your initial investment (£2,000), losses will then be reflected in the loan given by BitMEX, which the platform won’t allow. Thus, the platform will carry out a so-called liquidation: the position is closed, the platform recovers the stake and you will have lost everything.
Here is a summary table on the maximum leverage that can be set up depending on the cryptocurrency:
|Bitcoin (BTC – XBT)
|Bitcoin Cash (BCH)
Understanding how BitMEX works
Before you start using BitMEX, it is important to know how it works. Note that here, we are not really talking about a cryptocurrency exchange like Binance or Kraken. Only bitcoin (BTC) is used as a currency of exchange on this platform. It is not possible to deposit fiat currency, let alone another cryptocurrency.
Here, it’s not about buying a cryptocurrency on your own, but more about opening positions. Simply put, orders are created there which, once certain conditions are met, are automatically activated to buy or sell so-called contracts. These contracts are not strictly speaking cryptocurrencies, but derivatives. This guarantees more flexibility in legal and economic terms.
Since Bitcoin is the basis of your investment on this platform, you will need to buy it yourself first. You can consult our guides on buying bitcoin if you need help. For example, Kraken is a recommended platform. Also, you must have a Bitcoin wallet, which is a storage tool for your crypto assets. Here too you can consult our guide to choosing the right wallet.
BitMEX trading contracts
Contracts represent what we sell on the platform. Those offered by the company are so-called ‘future contracts’ and ‘perpetual contracts’. These two offers allow users to choose their trading strategy by selecting conditions that meet their requirements.
Futures are the buying or selling of cryptocurrencies at a predefined date and price in the future. Precisely this type of contract has a limited duration and closes automatically after a certain time.
Perpetual contracts are similar to futures with the only difference that there is no expiration date. This is because a perpetual contract remains open as long as the user pays a fee every eight hours. Note that this offer is limited to Bitcoin, Bitcoin Cash, Ethereum and Ripple, unlike the other contract which takes into account all eight cryptocurrencies of the platform.
Since it works in the form of a contract, when buying a cryptocurrency, we are more specifically buying contracts with the expectation that the value will rise (this is called a ‘long’ position). On the other hand, when you sell a cryptocurrency, you sell contracts in the hope that the value will fall (a ‘short’ position). Always stick to the currency rate. Thus, it is necessary to constantly follow cryptocurrency rates that interests you. On BitMEX, with bitcoin being the most traded cryptocurrency, always remember to check its value against BTC.
Orders on BitMEX
To be successful on your BitMEX, it is important to know how to use the different features of the platform when creating a contract. Orders are what fine-tune a trader’s strategy. Among the different possible orders, here are three that allow any beginner to take their first steps.
A limit order (maker order)
A limit order is what allows a user to buy or sell their contracts at a price that they set themselves. This is the most widely used order, as you can speculate on the upside and acquire some margin.
People who place limit orders are called ‘makers’ because users fill out the order, or ‘order book’. To put it simply, they place orders with a price that is different from the current price of the cryptocurrency, both up and down. These orders are therefore awaiting a seller or buyer.
A market order (or taker order)
With a market order, a user buys a cryptocurrency directly, and at the best price according to the order book. Unlike a limit order, which forces the user to wait because they have to wait for the value of the cryptocurrency to match its price, the market order allows for instant buying.
In this case, investors are called ‘takers’ because it is the people who place an order that will take it directly. They are the ones who will execute the maker orders.
Good to know: The fees applied by the platform differ depending on whether you take a maker or taker position. You can consult them by clicking here.
A stop market order
This order is only activated when the price of a cryptocurrency reaches one specified by the user. It is mainly a tool used by users to limit their losses. Generally, when placing a limit order, traders also set up a stop market order in order to buy back our limit position and thus hedge against losses.
Cryptocurrencies available on BitMEX
Unlike other cryptocurrency platforms, BitMEX does not offer trading with a large number of cryptocurrencies. At the time of writing this article, there are eight of them. Contracts on the platform concern these cryptocurrencies:
- Bitcoin (BTC)
- Cardano (ADA)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Litecoin (LTC)
- EOS (EOS)
- Tron (TRX)
- Ripple (XRP)
Good to know: that the acronym for Bitcoin on the site is XBT and not BTC.
Also keep in mind that some contracts do not allow you to contract with all cryptocurrencies, as is the case with perpetual contracts. Remember to check the cryptocurrencies available according to the chosen contract.
A platform for the experienced, but not exclusively…
It is important to note that the platform is more suited to the experienced trader than to beginners. However, the platform doesn’t completely abandon amateurs wishing to get started in margin trading.
First of all, BitMEX has made a point of designing an ergonomic and intuitive interface. It aims first and foremost to make the user experience pleasant by highlighting all the features that can help traders establish their strategy. In addition, the interface is customisable. If you would like to learn more about the platform’s interface and how to use it, feel free to check out our platform review.
Then, you should know that the platform offers a testnet. This is a trial version for getting started with a virtual account. Since the version is identical to the original, it is a very good tool to understand how to use the platform.
Using BitMEX: the different steps
Now that you know more about the platform and its main features, you are probably wondering: how do I use BitMEX? To help you understand everything, we’ll walk you through all the steps for your trading activity, from signing up to opening a position.
Registering on BitMEX
Before starting to understand how to use BitMEX, it is always useful to select the most comfortable language for you. You have a choice of English, Chinese, Russian, Korean and Japanese.
If English isn’t your mother tongue, it is a good idea to first build up a good level of it and learn about the various technical terms in the chosen language.
Good to know: If you create an account using the referral link provided in the article, you will be able to get a 10% discount on fees in your first six months.
First step: create an account
Opening an account on BitMEX can be completed in seconds. To do this, you just need to follow a few steps:
- Go to the home page
- Click on “Register”
- Enter your email address
- Create a password
- Indicate your country of residence
- Type in your first and last name
Second step: validate your email address
This is a standard procedure which consists of:
- Opening the email corresponding to the address added during registration
- Wait until the validation email has reached your inbox
- Click on the activation link to open your individual BitMEX account
Third step: connect to your BitMEX account
Now that your account is created and validated, you can start your trading activity. Start by logging into your account. To do this:
- Return to the home page of the site
- Click on “Log In”
Enter your email and password. Since this is your first time logging into the platform, 2FA is of no interest at the moment.
Enable two-factor authentication (2FA)
While this is optional, it is still important to keep your account secure. Remember that on BitMEX you will be depositing bitcoin, and therefore money. Thus, it would be more than unfortunate to see all of your balance stolen by a hacker because you were lazy.
To counter this risk as much as possible, the platform offers two-factor authentication, or ‘2FA’. This is an additional layer of security that you will be asked for when you log in (in addition to your password), when you withdraw or change some account settings. This additional security takes the form of code obtained through an application or hardware.
Once logged into your account, click on “Account”, and go to “Security Center”. The platform offers you two ways to activate two-factor authentication: TOTP (time-based one-time password) or YubiKey.
TOTP is a Google Authenticator-style app. It will generate a code whenever needed. To activate it, click on “Add TOTP …”. Then install the app on your mobile, click on the + icon and enter the code. Finally, click on “Confirm TOTP”. Note that you can also scan a QR code.
YubiKey is a hardware option in the form of a USB stick. To activate it, click on “Add YubiKey …”, insert your YubiKey into your computer, wait for the light to come on on the device, then press the illuminated button. All you have to do is enter the “YubiKey Token” and click on “Confirm YubiKey”.
Making your first deposit
Now that you have signed up successfully and your account is secure, you can make a deposit. Remember, on BitMEX, there is only one currency, or rather cryptocurrency, that is accepted: Bitcoin.
To make your deposit, you must:
- Click on “Account” on the toolbar at the top of the page
- Click on “Deposit” on the left-hand side menu
- Transfer crypto to the indicated Bitcoin wallet (you can also use the QR code)
On this page, remember to read the information about your deposit. For example, you can see that the platform requires a minimum of 10,000 satoshis, or 0.0001 BTC. Also, you will see that the platform asks you to deposit ONLY Bitcoin. If you decide to deposit something else, you will just lose your money with nothing in return.
Open your first position on BitMEX
Your account is now credited, we can move on to the main thing: conducting a trade on BitMEX! With Bitcoin being the most traded cryptocurrency on the platform and the one that opens the most possibilities, we will use it in this example.
First, go to the “Trade” page, which is the page you are redirected to when logging in. Head to the window on the left of the screen, titled “Place Order”.
Choose Limit order, then enter the number of contracts you want to sell and their price. If you want to request leverage, this happens in the part just below, “Your Position”. By activating leverage, make sure the “Cost” is lower than the “Available Balance”.
Then click on “Sell/Short”. You will then be shown a summary of your position, from the value to the amount where it will be liquidated. If you agree to all of this, then click on “Sell”.
Once the price is reached, a green window will appear informing you of the sale of your contracts.
Place a stop market to ensure the security of your position
A stop market is what will allow you to buy back your initial position in case of danger. It is very important in a standard trade and becomes very necessary when using leverage.
To place your order, return to the “Place Order” section, then select “Stop Market”. Fill in the same number of contracts as your limit order, then enter the price at which you want to trigger the order. Then click on “Set Buy Stop” (the principle being to buy back your limit order before the price drops too low).
Good to know: Always remember to delete your orders once your trading activity has ended, as they could be triggered without your knowledge. Your stop market, being placed only as a stepping stone to your limit order, must be deleted once your limit position is sold.
How to make withdrawals from your BitMEX account?
Once you have finished trading, remember to withdraw your bitcoins in order to store them safely in a Bitcoin wallet. To do this:
- Go to your Account
- Click on “Withdraw”
- Indicate the wallet address for the transfer
- Indicate the amount to be withdrawn
- Accept the fees needed for your withdrawal (the network fees)
- Click on “Submit Withdrawal”
Not that the platform processes a wave of withdrawals manually once a day. This takes place at 13:00 UTC.
BitMEX is a platform that provides access to many features. We have covered the essentials for anyone wishing to take their first steps in margin trading. Note that on this platform, you have to know how to be proactive and keep your cool – do not rush. Here are also some strategies on how to avoid the pitfalls of trading Bitcoin. When it comes to the price of Bitcoin, the platform offers you its own forecasts for the year 2020. So why not register on BitMEX now?
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Je m’appelle Florian et je suis dans l’écosystème des cryptos depuis 2018. Je consacre mon temps à démocratiser au mieux ce monde passionnant ! C’est ce que je fais dans mon quotidien, notamment en tant que Rédacteur Chef adjoint pour CoinTribune !
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.