OVERVIEW OF BITMEX
(Financial News) – BitMEX, short for Bitcoin Mercantile Exchange, is one of the largest crypto trading platforms in the world. Founded in 2014 by Arthur Hayes, Samuel Reed, and Ben Delo, BitMEX has become a popular choice for margin trading with Bitcoin. Their most popular product, an innovative Bitcoin derivative called a Perpetual Contract, gives users the option to trade with 100x leverage. Only Bitcoin deposits are accepted, and therefore all withdraws are denominated in Bitcoin. However, various contracts quote prices in different currencies, both fiat and crypto.
NOTE: BitMEX is not globally regulated and is registered in the Seychelles. Accessing BitMEX from a handful of countries (namely the U.S.) may result in your account being suspended, as so far U.S. citizens are supposed to be forbidden from using the service.
To register for a BitMEX account, its rather easy and straightforward:
- Go to bitmex.com
- Confirm your email address
For those who need a walkthrough, follow below:
Simply go to bitmex.com.
Once it loads you will see a page very similar to the one below. Shown are two green arrows pointing to the two different registration buttons. Click one of these buttons.
Next, a register container as shown below will appear. It will prompt you to enter the following:
- An email address (Required)
- A password (Required)
- Your country or region of residence (Required)
- Your first and last name (Optional)
As indicated by the arrows, the first three fields are required. The last one (first and last name) is not.
Once the fields are filled out, check the box agreeing to the terms of service. Next, click the register button to complete the account registration.
You should then be directed to a screen similar to the one below, confirming your registration email has been sent.
Next, you must open your email and click a link provided to complete your account registration. The email should look something like the one below.
Click the “Verify My Email” button as indicated by the green arrow in the image.
After this is complete, log in to BitMEX using the email and password you just registered and begin!
GETTING TO KNOW BITMEX
Now, for some the home page of BitMEX may seem daunting. However, simply learning what each tool is and how to use them results in the home page looking extremely simple, easy, and straightforward – because that is exactly what it is. Once you know how to navigate the front-end, you will see it is actually a well-built platform.
In order for the newbies to understand things a bit more I will break down each part of the home page. Furthermore, I will go into detail and elaborate on some concepts that may be new to some of you. Unless you want to deposit funds and trade (you can skip to that part of this guide here), lets get started!
Above is the exact same picture as before of the home page. This time, it is broken down into 7 different sections (although it could be even less).
There is the:
- Order, Position, Contract section
- Different contracts
- Position and open orders
- Your typical chart
- Depth chart
- Recent Trades
1: ORDER, POSITION, CONTRACT
As seen in the annotated image above, there are three main sections: “Place Order”, “Your Position”, and “Contract Details”. Directly below the Place Order heading, you will see Limit, Market, and Stop Market. These are your order types (as indicated by “Order Type”). Placing a limit, for example, places a buy / sell order at a specified Limit Price for a specified Quantity. Currently, a quantity of $75 at the price $8725.0 is filled out.
Next, there are the buy and sell buttons. These are indicated by the green “Buy/Long” and red “Sell/Short” buttons. Notice that the current position filled out (75 at $8725.0) is written on both. Below, the cost to execute this order denominated in Bitcoin is displayed (indicated by “Cost”). The order value and available balance are listed further below. Currently, our order value of $75 at a price of $8725.0 is 0.0085 XBT. However, as this is a guide, the available balance is 0.0000 since there has yet to be a deposit into this account.
At the very bottom of the Place Order section are more parameters to specify your order type. For now, if you are a beginner, don’t worry about these options. Just know that there are certain parameters traders may use for their orders, such the displayed ones of Post Only, Hidden, Good-Till-Cancelled (default), and Reduce-Only.
Next is the Your Position section. At the very top, you will see how many contracts your current position is and your return on equity (ROE) %. Since we are not currently in any position, both the contracts and ROE are at 0.
Just below this is one of the functions that makes BitMEX so attractive to traders: margin trading (aka leverage). Notice that the scale starts at Cross and ends at 100x.
Cross margin is a method that utilises the full amount of funds in a user’s available balance, ensuring the user’s position is not liquidated. 100x on the other hand is leveraging your position 100 times. In other words, a user may open a $10,000 position while only putting up $100. This, however, is not recommended as it may quickly lead to liquidation, especially in such a volatile market like Bitcoin. However, lower leverage can be a good method to incorporate into your strategy once you understand the advantages and disadvantages completely.
At the very bottom of the Your Position section is the Risk Limit. Each account on BitMEX has a maximum risk limit of 200 XBT. Since we have not deposited any funds into this account, the risk limit is 0.0000 / 200 XBT. For traders wanting to use more than 200XBT, they must open another account. (NOTE: BitMEX may link your multiple accounts in order to permit transactions between the two without a fee, otherwise you will pay an on-chain transaction fee when moving funds between your accounts).
Lastly at the bottom third is the Contract Details. Remember how I said that BitMEX offers a new, innovative derivative called a Perpetual Contract? Well, that is this contract!
When entering a position, the quantity space actually specifies how many individual $1 contracts you wish to buy at a specified Bitcoin price in U.S. Dollars. Therefore, when entering a position of $75 at price $8725.0, you are actually buying 75 one-dollar BitMEX contracts denominated in Bitcoin but quoted in USD.
I know, unless you’re used to derivatives and how they work, things may seem a bit complex. However, with a simple understanding of how futures contracts work and how Perpetual Contracts differ and why, things make a lot more sense. For those who are familiar with derivatives and other trading instruments, I highly recommend looking at the documentation provided on BitMEX – its quite innovative and impressive!
The XBT/USD Perpetual Contract details at the bottom include the current price, followed below by the index and mark price.
The index price is the price of Bitcoin gathered from various external sources, some being among the largest Bitcoin exchanges such as Bitfinex. This gives a more accurate price of Bitcoin in the open market, as the data is coming from multiple sources.
The mark price on the other hand is a price calculated by BitMEX in order to avoid unnecessary liquidations at times of high volatility or in the event of market manipulation. Since BitMEX offers highly leveraged products the Mark price helps determine a more stable, fair price according to BitMEX.
24H Volume shows the total trade volume in USD that the platform processes. In the image, it shows nearly $2.5 billion of volume.
Open interest has to do with the funding rate seen just below it. As mentioned before, BitMEX has created a new type of derivative called a Perpetual Contract. This contract, unlike traditional futures, does not have a settlement date but rather funding intervals. Every 8 hours, depending on where the BitMEX price is relative to the index price, either users holding long positions pay users holding short positions or vice versa. These intervals act as a sort of “settlement” to tether the BitMEX XBT/USD price back down closer to the index price of BTC/USD. Lastly, as stated before, the contract value is shown to be $1.00.
The next section, labeled number 2, is the Orderbook of the XBT/USD Perpetual Contract. If you are familiar with orderbooks, this is quite your standard one. If you are not, no need to stress, as it is extremely straightforward.
On the top half you have your sellers (red) and on the bottom half your buyers (green). There are three columns in the orderbook: Price, Size, and Total. Price refers to the price at which an order is placed, while size refers to the total size of the order (since we are dealing with contracts each worth $1, you can assume size is the total order value in USD). Total is an aggregate of all the other orders placed in front (closest to the market price).
In the middle of the orderbook contains the current XBT/USD price. Below this, is the Index and Mark price. Next to these two prices you may notice 5 rectangle boxes. These boxes represent Auto-Deleveraging, a mechanism that, crudely put, ensures there is always an opposing trade on the other side of another trade. For example, if a users position is liquidated, and the liquidation cannot be filled by the time the mark price reaches the bankruptcy price, this mechanism automatically deleverages opposing positions according to profit and leverage priority.
3: DIFFERENT CONTRACTS
These tabs are various different contracts created by BitMEX that users can trade. Labelled in the image is the XBT/USD Perpetual (100x) Contract along with the ETH/USD Perpetual (50x) Contract. Other contracts include Cardano, Bitcoin Cash, EOS, Litecoin, Tron, and more. For this guide we are focusing only on the XBT/USD Perpetual Contract for simplicity.
4: POSITION AND OPEN ORDERS
Here is where you manage your position and open orders. When submitting an order that is not immediately executed (e.g. Limit) it first appears in Active Orders. Once filled, it then moves to the Positions tab, displaying relevant information (size, value, entry price, mark price, liquidation price, margin, and ROE %).
Closed Positions displays exactly what it says: closed positions. If a stop is placed, instead of appearing in the Active Orders tab, it appears in the Stops tab. The Fills tab displays orders that have been filled, as sometimes orders do not get fully filled due to a variety of reasons (the market moving too fast, orders being too big, etc.). Unless you are doing huge trades, there is not much to worry about since BitMEX is quite liquid and orders typically get filled very quickly.
Lastly, to the very right, is the Order History tab. Here you will find all previous orders, whether filled, cancelled, or amended.
5: YOUR TYPICAL CHART
Typically every trading platform has some basic charts where you can look at the price of an asset over a specified time period. Usually TradingView is the one providing these charts, and in this case, they are providing the charts for BitMEX too. For those unfamiliar, I’ll do a quick breakdown of the annotated image.
Time Frame – the price of an asset shown within a specified time frame
Chart Type – the type of chart displayed (e.g. Candles, Bars, Hollow Candles, Heikin Ashi, etc.)
Settings – here you can simply customise your chart settings and, for example, change your candle colours
Indicators – this function allows you to add indicators below the chart, exactly like the RSI and MACD indicators below
Open New Window – this simply opens the chart in a new window, making it bigger and allowing you to dive into TA
Open, High, Low, Close – quite straightforward, this data displays the opening price, highest price, lowest price, and closing price for a specified time period (in the image, it shows 4H Candles).
RSI Indicator – a common TA indicator some traders use called the Relative Strength Index
MACD Indicator – another common TA indicator some traders use called the Moving Average Convergence Divergence
It is worth mentioning that although the chart in the image looks a bit off, the X and Y axis are adjustable to give a better view for the user. For the sake of simplicity, I simply used the chart from the original screenshot.
6: DEPTH CHART
Labelled number 6 on our image of the BitMEX homepage is the Depth Chart. A depth chart simply displays 2 different volumes: one for bids (buyers) and one for asks (sellers), usually green and red respectively.
Both sides start from the middle, with the volume of buy orders increasing cumulatively to the left. For sell orders, the volume increases cumulatively to the right. The reason the increase is cumulative, for example, is if I submit a buy order for 100 at $9000, I am willing and able to take a quantity of 100 at $9000 or any price below it, not just at $9000. The same goes for a sell order; if I want to sell a quantity of 100 at $9000, I am willing and able to do so at a price of $9000 or higher, as if the price was higher I would get a better deal.
7: RECENT TRADES
Lastly, the final section in our BitMEX homepage is the Recent Trades box. This is an extremely straightforward concept, as all it does is simply show recent trades made between users.
There are four different columns: Price, Quantity, Time, and Buy/Sell. The price displays the price at which the trade was made, followed by the quantity traded, the time at which the trade occurred, and finally whether or not the trade was a buy or a sell order. Like in previous data, green means it was a buy while red means it was a sell. If you look closely, you might notice green and red arrows appearing periodically within the recent trades box. This indicates whether the trade made moved the price up (green arrow) or down (red arrow).
DEPOSITS AND WITHDRAWALS
On the home page, if you click the top right section showing your total / available balance, it will take you to your wallet page. The total / available balance section looks like the image below.
After clicking this, you are redirected to the wallet page shown below.
Unlike other exchanges that accept and store multiple crypto and / or fiat currencies, BitMEX only accepts Bitcoin deposits. Therefore, users may only withdraw Bitcoin from the platform.
After clicking the Deposit button on the wallet page, users are then directed to the page below.
NOTE: Each account has its own unique Bitcoin deposit address, therefore any deposits made to the address above will be sent to this example account and not yours.
A QR code and a string containing the Bitcoin address are shown in the user’s deposit page. Below the address there are a few important notes that BitMEX reminds its users of. As seen in the notes, the minimum deposit is 0.0001XBT (at the time of writing, this is just shy of $1). After one confirmation on the Bitcoin network, the deposit is credited to the user’s account.
After clicking the Withdraw button on the wallet page, users are then directed to the page below.
First and foremost, to make a withdraw from BitMEX, a destination address is required. Then, the amount the user wants to withdraw from their account. Next, users may control the Bitcoin network fee for their withdraw. Since Bitcoin transactions are prioritised by fee, the higher the fee the more likely it is your transaction will be processed quicker. The same goes the other way, as a lower fee results in a lower probability of your transaction being processed next block.
BitMEX processes all user withdraws together at the same time each day (13:00 UTC). This is due to the fact that multi-sig cold storage wallets are used, ensuring a high level of security.
After filling in all the required fields for a withdraw, BitMEX will send a confirmation email. Users must then click the confirmation in the email and approve the withdraw.
On the right side of the withdraw page is a list of the users most recent 20 withdraws. This includes the time of withdraw, the address it was sent to, the amount, and finally the status of the transaction.
Last but not least (or maybe least depending on how you look at it) is the BitMEX Trollbox. The Trollbox is one of my favourite aspects about BitMEX not because I use it, or because it’s helpful, but because here and there it provides quality entertainment. Put simply, the Trollbox speaks for itself. It is a chatbox for BitMEX users to send messages and discuss their positions (which happens less than you would think). Instead, it is a chatbox full of trolls trying to get people to take ridiculous positions or follow them on some social media outlet. Here and there you will get a trader revealing his position, with some boasting $1 million profit while others crying over $1 million liquidation. All in all, if you spend a lot of time in front of the screen on BitMEX, the trollbox can certainly help pass the time.
Overall, BitMEX is one of the go-to platforms for crypto traders. While all deposits and withdraws are denominated in Bitcoin, BitMEX offers a variety of derivative contracts quoted in different currencies for users to trade. Through their innovative XBT/USD Perpetual (100x) Contract, BitMEX has gained a huge popularity within the crypto industry. Other exchanges, such as Binance, have began to implement a similar derivatives contract to satisfy the market BitMEX proved existed.