BitMEX, one of the biggest cryptocurrency exchanges in the world, is dominating cryptocurrency and bitcoin markets with over 10 billion dollar daily trading volume.
What is BitMEX?
Founded in 2014 by Arthur Hayes, Ben Delo and Samuel Reed, the exchange is prominently easy to use. It wouldn’t be wrong to say its interface is completely user-centered. On the other hand, trading fess are quiet low on the site with a buy-sell interface even non-experienced cryptocurrency or leveraged trade users can use in a matter of minutes. Before going into details let’s continue with general information.
BitMEX Market List
Currently including 8 different cryptocurrencies, BitMEX introduces the limits for leveraged trades as: Bitcoin (XBT) 100x – Bitcoin Cash (BCH) 20x – Cardano (ADA) 20x – EOS Token (EOS) 20x – Ethereum (ETH) 50x – Litecoin (LTC) 33.33x – Ripple (XRP) 20x – Tron (TRX) 20x. For example, in Bitcoin/USD pair you can buy and sell up to 100x of your asset, in other words you can short or long. For Ethereum the limit is 50 times (50x).
How Does BitMEX Work?
What does it mean to execute leveraged trades?
Let’s explain this with a brief example for users who don’t have a good command of the subject. Assume that you have 0.10 BTC and you want to make use of it. You have signed up to BitMEX and by depositing 0.10 BTC you have funded your account. On the left side of the website (as seen in the image) you can set the leverage rate between 1-100. If you set it 50x, it means you trade 0.10 × 50 = 5 BTC. So it multiplies the amount of your funds by 50.
After setting the leverage, enter USD equivalent of 5 BTC (e.g. $30,000) in the Quantity field, which means you’re executing a trade for $30,000. Afterwards enter the price you’d like to trade in the Limit Price field. The last and most important parts are Buy/Long and Sell/Short. At this point if you think Bitcoin price will go upper than the current price, you need to execute “Buy” order, if you think it will go lower, you need to execute “Sell” order.
How Can You Execute Leveraged Trades?
So what happens then? If Bitcoin price moves in line with your estimation, you can make a profit by executing sell order at any price you want. And the profit calculation is based on this. Without complicating it let’s go with a simple example again. Assume that you’ve executed buy order as in the above example at $6,507 and $30,000. Three hours later Bitcoin price has hit 6,587 USD, and at this point you’ve made a $80 profit, but as you’ve used the leverage feature, your total profit is 5 × 80 = 400 because you had leveraged your 0.10 BTC to 5 BTC. So you multiply your profit by 5.
And in the contrary case? Just as you can’t know everything for sure, you might be wrong about this. Let’s simply examine the case where things went wrong with the same example. Thinking BTC would go up you had executed buy order at $6,507.5 but the price fell to $6,477.7. At this point you lose $30 per 1 BTC. If you break the contract you made by executing sell order, your total loss will be 30 × 5 = 150 USD. The best decision to take in this case is to execute Stop Loss order.
What Is Stop Market?
Let’s explain shortly. It’s a type of order mitigating the loss which must definitely be executed in leveraged trades. As seen in the image, execute the order by entering the amount and the price. In fact, Stop Loss means “if the price falls to this level, sell immediately and automatically.” Back to our example. In the example above the loss is 150 USD. If the price keeps falling though, it may get bigger. For this reason, lest things go wrong and the price starts falling, you can execute Stop Loss order, for example at 6,480 USD. In short all this trade means: As I thought the price would go up I executed buy order at 6,507.5, but the price may also follow the downward trend, that’s why I mitigate my loss at that point by executing Stop Loss order. So in the case where things go wrong for me, I will lose max. 20 USD per 1 BTC. Of course these numbers are random, each user can develop their own strategy.
If you’re still reading this without getting bored, that’s basically all you need to know before you start executing leveraged trades on BitMEX. The system is so easy to use that with a couple of clicks you can master almost all the nuances.
The last but not the least, a couple of things more. There is no ID verification on BitMEX under any circumstances. This is an important feature the global exchanges are lacking as BitMEX appeals to those who wish to remain anonymous. Another thing to note is comission fees. The market maker orders are charged -%0.025 fee on BitMEX (yes, minus). In other words, per each market maker order BitMEX makes you a refund of 2.5/10,000 instead of charging you the commission fee. As for the market taker orders, the comission fee is %0.075. By the way, these fees are reflected in your balance when orders are completed, not when you execute orders.
Morever, if you sign up through this link, you’ll get a %10 discount on commission fees for the next 6 months. When you click on the link, you’ll see on the signup page the discount displayed in the green area below.