BitMEX - Not your Daddy's Crypto Platform
- Are you a pro looking for a serious crypto derivatives platform? Look no further.
- 100:1 leverage available on bitcoin; other major coins offering 50:1 leverage
- Get into ICOs after they have closed
BitMEX - High Octane Cryptocurrency Trading
Are you bored trading cryptocurrencies with a mere 20:1 margin? Do you need some serious, steroid-infused, buckle-me-in, tiger-riding, who are you and why am I in your bed?, ethereum, bitcoin and general crypto trading? So take a look at BitMEX, which has developed an exceptionally sophisticated platform allowing the trading of crypto derivative instruments with leverages as high as 100:1.
Be warned - if you take advantage of their highest leverages, you have entered the most speculative corner of the leveraged cryptocurrency trading niche. The platform is also extremely sophisticated and meant for professional traders familiar and comfortable with derivatives trading. If you don't really understand what you are getting into, your chance of losing your investment is much, much greater than earning a profit, though you might get lucky in the short run.
You need to buy bitcoin
BitMEX uses bitcoin as the engine for their platform. They accept no fiat deposits, nor do they accept deposits in the different cryptocurrencies available for trade. This means traders can get started with just an email and password, and there is no additional documentation required for withdrawal - withdrawals also processed just in bitcoin. Be warned, BitMEX does not accept US traders, and verifies customer location via IP check.
If you are knowledgeable about derivatives and interested in trading crypto volatility, but you have been held back by your reluctance to actually buy bitcoin, check out our reviews of the best bitcoin exchanges and just take the plunge already.
Cryptocurrency Derivatives with BitMEX
Bitcoin, being the only accepted currency for deposit, serves as collateral on all trading contracts, regardless of what underlying instruments are being tracking, be it ethereum vs bitcoin, dollar against litecoin, and so on.
It is no simple task to develop a platform that can offer leverages up to 100X in a sustainable fashion. Their ability to do so rests in no small part on the underlying trading technology, which we will not detail but basically allows for super fast executions, and is up to standard with mainstream derivatives platforms.
Just as importantly, there must be solid logic anchoring derivatives instruments to the underlying asset value - in other words, so the price of bitcoin on bitmex resembles the price of bitcoin at, say, Coinbase. And finally, a mechanism must be established to ensure that BitMEX can handle massive swings in value. We discuss both of these issues below, in turn.
Thought I told you that this party don't swap?
So how does a derivatives platform ensure that the value of their most popular contract, XBTUSD, is tethered to the value of the underlying asset it purports to represent? You make a new trading product and call it the perpetual swap, that's how. Essentially, a funding rate is set to jam the price back in line. If the funding rate is positive the longs pay shorts, if negative the shorts pay longs, thrice daily, once every eight hours. This interest is set to keep the price in line with the wider market, which is represented by a baseline calculated using a 50/50 average between Coinbase and Bitstamp. The rate also happens to keep trading more or less hinged to reality during the interim periods.
Use this link for a 10% fee discount for six months.
Auto-Deleveraging - maintaining a healthy trading ecology
Auto deleveraging (ADL) is a method by which BitMEX can ensure liquidated positions can be closed even in a massively swinging market whilst avoid things like socialized loss. When a position bankrupts without available liquidity, the positive side of the position is deleveraged, in order of profitability and leverage, the highest leveraged position first in queue. Traders are always shown where they sit in this ADL queue, if it were indeed to be needed.
Trading at BitMEX
Lovely platform, all very intuitively placed. Click on Trade, and all the instruments will be displayed beneath. Clicking on the particular instrument opens the orderbook, recent trades, and the order slip on the left. The order book shows three columns - the bid value for the underlying asset, the quantity of the order, and the total USD value of all orders on short and long side.
There are a number of trading features easily set up on the trade slip - SLs, TPs, Time In Forces, and even Hidden Orders. Easily drag your way to higher leverage with a slider, which ascends from a serene green to a frantic red as numbers increase. Below you can see my placed order of litecoin at 25X margin. Shows you your unrealized PNL, the PNL if you were to liquidate at market (scroll over the unrealized PNL), your margin, etc.
A click on stops show your stop or take profit, as well as the pips between. You can see below my stop loss, which ended up costing me $500 I would have made (hit and then bounced way up). And to think I just did it for the screen shot you probably won't even look at.
Top it off with a troll box that is actually quite civil, entertaining and interesting, and the whole trading experience is quite nice.
Find below vital stats for all futures instruments. Use this link for a 10% fee discount for six months.
Note that a negative fee amount represents a rebate.
The ticker expresses the expiration of the particular futures contract - I use the above tickers simply for demonstrative purposes as many would have expired prior to your reading this sentence. The first three letters are the coin symbol, followed by the month code, standard across the derivatives industry, and then the year in which the contract settles.
For example, Bitcoin is represented by its (less popular) coin symbol XBT, then the letter U which corresponds to the month September, and then 17, meaning that settlement takes place in 2017. Expiration is always the last friday of the settlement month, which happens to be the 29th in this case, and so this particular bitcoin futures contract expires on September 29th, 2017. Ethereum Classic on the other hand happens to be a seven-day contract, as can easily be seen from the ticker.
You might notice that their are a number of semi-obscure altcoins on offer - and by semi-obscure I simply mean less than a nine-digit market cap. BitMEX noticed the sizable time gap between the initial coin offering and when tokens were able to be traded on exchange markets, not to mention the difficulty of getting into these coin offerings as popularity has soared. The integration of futures markets for these coins - in the interim between ICO and launch - allows bulls to get in on the action if they missed out, bears to short worthless tokens. Good on BitMEX for filling this gap.
Support at BitMEX is amongst the most knowledgeable in the market, and they conduct themselves as you would expect from a US outfit - or in other words, they are polite, courteous, speak English well, and know what they are talking about.
Yes, their platform is nicely optimized for mobile so you can close/open positions in a pinch. But if you are working with this engine, best to use it on your desktop.
BitMEX, a brief history
BitMEX stands for Bitcoin Mercantile Exchange, a name play off of the famous derivative exchange market in Chicago, the Mercantile Exchange. The platform was started by three smart trading professionals, one a derivatives trader, the next an expert in real time web applications, the third a long-time high frequency trading system's developer for big companies like, according to his bio, JP Morgan and IBM. A shared desire to introduce their two passions, cryptocurrencies and derivatives, the three partners launched BitMEX from offices in Hong Kong.
Looking for a platform that accepts regular paper money? Check out our comparison of Bitcoin and Ethereum CFD Platforms.