شنبه 25 آبان 1398
Due to rapidly increased demand for the leveraged trading, and in particular for Bitmex exchange, I decided to write an individual instruction about this topic. I hope that you will find it interesting and useful.
As I told before: Bitmex exchange is gaining popularity very intensively, just like Binance exchange a half a year ago. But why? The answer is quite simple -it allows us such tool as shorting btc and some other significant cryptocurrencies with leverage. When the whole market is red, altcoins are permanently falling, and people are in the panic, there is only one way to earn some money- make capital on fall. It is the reason why Bitmex exchange is becoming more and more popular, while other major exchanges just lose visitors on the current red market. I attached the image which shows the statistics of two of our representatives.
- Long position (BUY) — Investors open “long” positions in the expectation that the currency will rise in value.
- Short position (SELL) — Investors who open “short” positions believe the price of the currency will decrease in value.
- Liq. price (liquidation price) — is the price at which the position is reset to zero and you lose money.
- Leverage — the coefficient by which the exchange multiplies the client’s bid. The higher leverage you choose — the closer liquidation price is.
Perpetual Swap and futures
BitMEX has two types of assets, with which you can trade. This is a tool called “Perpetual Swap” -external swap and “plain vanilla futures” simple futures.
What is a swap? Swap is an unlimited Bitcoin contract, which is designated as XBT. XBT is equal to BTC. Full designation of the contract on the exchange and on the Tradingview platform is XBT/USD. 1 contract is equal to 1$. The perpetual bitcoin swap is the most popular derivative on Bitmex, because of its simplicity and volume. We recommend it to beginners.
What does it mean — an external contract? This means that it doesn’t have time for expiration (expiration — a fulfilment of obligations under fixed-term contracts) and the position is held for any period — 5 minutes, 5 days, 5 months or 5 years.
Let’s consider futures. A futures contract is a derivative financial instrument. This is the typical contract of sale: the product, currency or other product at a predetermined price at the specified time in the future. After the expiry of the term, futures are executed either by delivery of the underlying asset (delivery futures) or by cash (settlement futures).
Few words about the exchange
Margin trading on the BitMEX exchange: BitMEX is popular due to the ability to trade with borrowed funds. Every coin has it’s own maximum leverage.
- Bitcoin (BTC): 100x
- Ripple (XRP): 20x
- Litecoin (LTC): 33x
- Ethereum (ETH): 50x
- Bitcoin Cash (BCH): 20x
- Cardano (ADA): 20x
- EOS (EOS): 20x
- Tron (TRX): 20x
Fees: Commission fees have a significant impact on the profitability of trades. This is especially important for traders with large deposits. Fees on BitMEX work a little differently, unlike on other exchanges, given that there we trade with derivative of financial instruments. Thus, there are two types of commissions: “maker” and “taker”. “Maker” is used when a trader makes an order, and “taker” when it is executing. What does it mean?
If you are a “taker”, then you close the order, which already exists in the order book. You reduce liquidity. If you are a “maker”, you add liquidity to the order book, placing a limit order. This will be a buy limit below the current price or a sell limit above the current price.
When you use perpetual swaps, every 8 hours between traders processes funding — someone pays money to your or you have to pay. If you play “short”, while the most of traders hold “long” — then they pay you. If you are in the “long” as the majority, then you pay.
- At the very top there is a bar with several tabs:
Trade- this is where you are, it’s the main trading interface.
Account- the place where you can see all the needed information about your account: transaction history, deposits, withdrawals, personal info.
Contracts- documentation about Bitmex contracts (derivative products).
References- useful information about the BitMEX exchange.
API- all info about work with API keys.
- This bar gathers the main tradable cryptocurrencies on Bitmex. Bitcoin, Ethereum, Cardano, Bitcoin Cash, Litecoin, Ripple, EOS and Tron. Click on the cryptocurrency you would like to trade.
- Here are the contracts about the selected cryptocurrency.
- This is the order book, you can see buy orders in green and sell orders in the red part. You also have additional information for each order, including price and quantity.
- Here we can see the chart of the selected coin. All charts are provided by the TradingView. You can also deploy the chart to full screen and use all the tools and indicators available on TradingView.
- At the very bottom of the screen is the widget of the positions that you have opened. If you have a limit order that hasn’t been executed yet, you can cancel it or execute it for the market price with a single click.
- In this window you can choose options about a position: quantity of contracts you want to invest in the position, the price you want to buy contracts for and then open desired position — LONG or SHORT.
- In this slot, you can choose leverage before opening a position. Once you’ve taken your position, you can see here the number of contracts of your position and the return on equity in %.
- Details about the contract you are trading.
Let’s talk about different types of orders on BitMEX exchange. I’m talking about seventh paragraph in the previous theme.
- Limit order — this is the classical type of buy/sell orders that we set below/above the market price. For example, the market price is $8787 and you want to buy some XBT, you put the order at $8700 and as soon as price reaches this level — your order will be filled. “Quantity” means how much contracts you want to invest in the position.
- Market order — for example, you want to be 100% sure that the train won’t leave without you. In this case, you should open the market order. The meaning of it is the same as the limit order. The only difference is that you open a position for the current (!) Market price. Market orders execute firstly, only then limit orders.
Take profit orders
I don’t recommend you this type of orders. If you want to take profit- you can put the limit/market order for an opposite kind of position. For example, you opened LONG at 6900$ for 100 contracts. Price reached 7100$, and you want to close your LONG position for the market price. Just open the window “market” and SELL the needed quantity of contracts.
- Take profit market — A market order will be placed when the market reaches the Trigger Price. This type of orders can be used to set a target price on a position. It is like Stop loss, but triggers are set in an opposite direction.
- Take profit limit — A limit order will be placed when the market reaches the Trigger Price.
- Stop Market (Stop loss) — is an order that automatically closes your open position in a small loss as soon as the price reaches trigger price. This type of orders works in the same way as on the others exchanges.
- Stop limit — This type of order can perform two tasks. The first task is to put a Limit Order for LONG for a price higher than the current one. For example, you want to buy BTC when it breaks through a significant resistance level which is above the current price. Then you put a limit stop order. In other words, the difference between the Limit Stop Order and the Limit Order is that you can buy an asset at a price higher than the current one. The second task is to put a Limit Stop Order for a price lower than the current one. This type of order is used for sale at a price below the current. Usually, such type of orders is placed in a case that you expect a breakdown of important support level.
- Trailing stop — This type of stop is very similar to Market Stop, but has one advantage. For example, you think that the price will go smoothly to $9500 and don’t want to lose this profit along the way. Current market price is 8700$. You open the position with a market order (buy) or limit order just below the market price. After the execution you set a Trail Stop Loss: set the number of contracts and trail value(example $150). After setting this stop, the order will go up with the market price, but on distance equal to your trail value. So, for example, if the price went to the mark of 8900$ — the trail stop loss would be located at the 8750$. If the price reaches $9200 and goes down, the order will stop at the specified price (9050$) and in the case of a touch it — will close your position. If the price sharply goes up, then the order will follow it too and will be closed by the same principle, when the market “returns” back. I advise you to put a trailing stop only in a case that you already have an opened position, not just a limit order. Another key moment: If you have opened LONG position, then put a “-” sign in the column of trail value. In a case of SHORT position- “-” isn’t needed.
It is very crucial to check “Close on Trigger” option if you use Stop Orders. What does this thing do? This is the initiation of an order only if you already have an opened position. Otherwise, if you don’t have an opened position, but on some of the limit orders there is a “Close trigger”, then when the price reaches the Market Stop price, your limit order won’t be executed.
Opening a position
To open a position you need to make a purchase or sale, as on a regular exchange.
After the order is executed, an info about open position appears at the bottom of the page [6 point on the screenshot of the interface].
- Symbol XBTUSD is the currency, bitcoin/dollar.
- Size -430 — minus means that I sold or opened a short position
- Value 0.0710 XBT — position volume 0.07 btc.
- Entry Price 5994.50 — I entered the position for this price.
- Mark Price 6051.86 — current price, fixed at short time intervals.
- Liq. Price 6289.7 — the price at which the position will be liquidated.
- Margin 0.0031 (x23.09) — 0.0031 is the approximate amount of money that exchange took from my account for opening the position.
- Unrealised PNL (ROE%) -0.0006 XBT (-18.94%) — the current result of the open position. If you close the position now, you will lose 0.0006 btc, which is -19% of the invested money.
- Realized PNL 0.0001XBT — if the position is open for a long time, part of the profit is transferred to the main account and becomes available for withdrawal or opening another positions.
- Close position 6051.8 Close — placing an order on 6051.8, which completely closes the position.
- Market — the button closes the position right now with a market order. The price will not be the most profitable.
In addition to close a position, you can place an order of the same volume, but instead of a short-long, and vice versa. You can SHORT for $500, and when the price falls heavily, put a LONG for $1000. When a $1000 order is executed, a short position of $500 will close and long for $500 open.
Useful information about the service
- For security reasons, BitMEX exchange processes withdrawals with the manual review once a day at 13:00 UTC.
- In the upper right corner of the “Place Order” window, you can find a small icon of a calculator. There you can count your profit/loss and liquidating price using different data.
- Based on my personal experience, BitMEX exchange likes lagging while huge price movements are happening on the market. Thereby Bitmex can avoid extemporaneous losses. However, traders suffer because of this.
- You don’t need to send your personal data (photo of the passport) to the exchange’s support. You can deposit, withdrawal and trade without any limits right after the essential registration.
- The minimum deposit amount is 0.001 BTC.
- Customer support is at a high level compared to some other crypto-exchanges. They have round-the-clock support via e-mail, tickets and channels in social networks: Reddit and Twitter. Traders’ comments indicate that the response from support takes an average of no more than an hour.
- If you were a newbie — advice you to practice using orders on the test network.
Useful links for trading on BitMEX
- https://coinfarm.online — source that perfectly demonstrates the mood of traders and ratio of SHORT and LONG positions.
2. https://twitter.com/BitmexRekt — Bot in Twitter that reports about liquidation of large positions.
3. https://t.me/WalletsScan — Bot in Telegram that reports about large cash transactions between exchanges.