BitMEX (The Bitcoin Mercantile Exchange) is a trading platform that offers investors access to the global financial markets using only Bitcoin. BitMEX is built by finance professionals with over 40 years of combined experience and offers a comprehensive API and supporting tools.
ABOUT THIS TUTORIAL
After reading this tutorial you will have acquired an overview of BitMEX, its main features, how to create your account in BitMEX website, how to deposit, how to perform withdrawals. Furthermore, we shall also describe what to trade on BitMEX, leverage, liquidation, fees and security issues.
⦁ BitMEX (The Bitcoin Mercantile Exchange) is a Peer-to-Peer Trading Platform that offers leveraged contracts that are bought and sold in Bitcoin.
⦁ BitMEX only handles Bitcoin. All profit and loss is in Bitcoin, even if you’re buying and selling altcoin contracts. BitMEX does not handle fiat currency.
⦁ BitMEX allows trading with a high amount of leverage.
⦁ More Bitcoin/USD liquidity than any other platform. BitMEX’s XBTUSD market is the most liquid in the world;
⦁ Audits per second. BitMEX’s engine constantly audits the balances and history of all accounts;
⦁ 0 Bitcoin lost trough intrusion or hacking. BitMEX keeps all funds in cold storage;
⦁ BitMEX offers up to 100 x leverage on Bitcoin and high leverage on Altcoin contracts;
⦁ Their trading engine was built using the same technology used by investment banks and hedge funds;
⦁ BitMEX employs the latest in multi-factor security, inside and out. Safety is a primary concern;
⦁ BitMEX offers a variety of contract types. All contracts are bought and paid out in Bitcoin;
⦁ BitMEX holds a “Perpetual Contract”, a high-leverage contract that never expires;
⦁ It is possible to sign up in less than 30 seconds and it requires no personal information;
⦁ You can trade in minutes; deposits only require 1 confirmation
HOW TO REGISTER ON BitMEX?
Next, we are going to guide you through the registration procedure in BitMEX trading platform in a step by step fashion.
Step 1) Start accessing BitMEX’s homepage here. You should see the following page
Step 2) Click on the Register icon at the top-right corner of the page
Step 3) After completing step 2), you will be directed to the registration form below
Here you are required to enter the following data:
⦁ email address (your email);
⦁ password (your password);
⦁ country (your country of residence);
⦁ name (first and last name);
After filling up the required information you should make sure to mark the “I accept the Terms of Serve” button as pointed out below in the red box:
Once this is done, you should click the Register icon. This will lead you to the following confirmation page:
Now your registration is complete, all that is left to be done is to confirm your email address as described in the next step.
Step 4) Open your email account (the same used in registration step 3). Afterward, open BitMEX’s email and click on the “Verify My Email” icon (as highlighted below):
After clicking the highlighted icon you will be lead to the following page
This means your email address has been confirmed and you will be redirected automatically to BitMEX’s negotiation page.
Now you are ready to start negotiating bitcoins.
WHAT TO TRADE?
In BitMEX you can trade any of the following contracts:
⦁ Perpetual Contract
This is a product similar to a traditional Futures Contract in how it trades, but does not have an expiry so you can hold a position for as long as you like. Perpetual Contracts trade like spot, tracking the underlying Index Price closely. It achieves this via the mechanics of a Funding component;
⦁ Futures Contract
This is an agreement to buy or sell a commodity, currency or another instrument at a predetermined price at a specified time in the future;
⦁ BitMEX UP Contract (Upside Proft)
This is a contract which allows buyers of the contract to participate in the potential upside of the underlying instrument;
The buyer pays a premium on trade date for which he is entitled to receive the difference between the underlying instrument settlement price and strike price on maturity date if positive, else no payment occurs. All transactions are Bitcoin settled.
These are fully margined contracts which offer an efficient way to participate in a market rally. Investors can only be net long UPs, they cannot short sell. Only the BitMEX anchor market maker can be net short.
The possible loss is limited to the initial investment.
Unlike other BitMEX products, there is no liquidation price or margin calls on this product.
⦁ BitMEX DOWN Contract (Downside Profit)
This is a contract which allows buyers of the contract to participate in the potential downside of the underlying instrument.
The buyer pays a premium on trade date for which he is entitled to receive the difference between the strike and the underlying instrument settlement price on maturity date if positive, else no payment occurs. However, if the underlying touches or falls below the KO barrier price during the life of the contract it expires and settles early using the KO barrier price. All transactions are Bitcoin settled.
These are fully margined contracts which offer an efficient way to participate in a market decline. Investors can only be net long DOWNs, they cannot short sell. Only the BitMEX anchor market maker can be net short.
The possible loss is limited to the initial investment.
Unlike other BitMEX prodcts, there is no liquidation price or margin calls on this product.
ABOUT LEVERAGE, LIQUIDATION, AND FEES
When dealing with any kind of contract you must pay particular attention to leverage, liquidation, and fees issues. We summarize the BitMEX’s policies concerning those aspects.
BitMEX offers leverage on all of its products except UP and DOWN contracts.
The amount of leverage BitMEX offers varies from product to product. Leverage is determined by the Initial Margin and Maintenance Margin levels. These levels specify the minimum equity you must hold in your account to enter and maintain positions. Leverage is not a fixed multiplier but rather a minimum equity requirement.
The highest leverage BitMEX offers is up to 100x leverage on its Daily Bitcoin / JPY Futures Contract and the Perpetual Bitcoin / USD Perpetual Contract.
When the Mark Price of a contract falls below your liquidation price for longs or rises above your liquidation price for shorts, your Maintenance Margin level has been breached and the Liquidation Engine takes over your position. In your Trade History, the price the liquidated position was closed at is the Bankruptcy Price (equivalent to where your Maintenance Margin is equal to 0).
Upon liquidation, the Liquidation Engine attempts to close the position at the prevailing market price. If it is unable to do so then Auto-Deleveraging will occur.
Can you go bankrupt? No. BitMEX has a sophisticated margin and liquidation process that is designed to prevent any trader’s margin balance on BitMEX from ever going below 0.
Furthermore, you do not need to socialize losses. BitMEX employs an Auto- Deleveraging System that does not need to socialize losses.
Finally, BitMEX offers auto-deleveraging which occurs when a liquidation remains unfilled in the market. Traders who hold opposing positions will be closed out according to leverage and profit priority.
BitMEX does not charge fees on deposits and on withdrawals. When withdrawing Bitcoin, the minimum Bitcoin Network fee is set dynamically based on blockchain load and can be viewed on the Withdrawal Page.
However, BitMEX charges a trading fee on every completed trade.
BitMEX is committed to the security of its platform and its users. They believe in rigorous, conservative, security measures, and will not compromise security for convenience.
Below we present the main security measures adopted by BitMEX.
⦁ Wallet Security
BitMEX runs a first-of-its-kind multisignature deposit and withdrawal scheme. All BitMEX addresses are multisignature and all storage is kept offline.
Even in the event of a full system compromise, including web servers, trading engine, and database, there would not be enough keys available to an attacker to steal funds.
Additionally, each and every withdrawal on BitMEX is audited by hand by at least two BitMEX employees before sending. No private keys are kept on any cloud server and deep cold storage is used for the bulk of funds.
All deposit addresses sent by the BitMEX system are verified by an external service to ensure they contain the keys controlled by the founders. If the public keys do not match, the system is shut down immediately and trading is halted.
⦁ System Security
BitMEX systems take advantage of Amazon Web Services’ world-class security.
All BitMEX systems require multiple forms of authentication to access, including hardware tokens. Individual systems are unable to communicate with each other except across approved and monitored channels.
⦁ Trading Engine Security
The BitMEX Trading Engine is the first of its kind. Written in kdb+, a database and toolset used frequently by major banks in high-frequency trading applications, the BitMEX engine has unprecedented speed and reliability.
Rather than use our speed just to execute more transactions per second, BitMEX does a full risk check after each and every order placement, trade, settlement, deposit, and withdrawal. At all times, all accounts in the system must sum to zero. If they do not, trading is immediately halted for all users.
⦁ Communication Security
BitMEX provides optional PGP encryption for all automated emails. If you wish to take advantage of this, please go to My Account and insert your PGP public key into the form.
Once PGP encryption is enabled, BitMEX systems will encrypt and sign all automated emails sent you to your account by firstname.lastname@example.org.
Below we explain how to perform deposits in BitMEX platform.
Under the Account tab, click on the Deposit link highlighted below
You will be provided a multi-signature address to deposit Bitcoin as exemplified below
After 1 confirmation, funds will be credited to your account.
The minimum amount to trade on BitMEX varies from product to product depending on the Initial Margin. For XBTUSD (for example) it is $1 USD * 1% (Initial Margin) = $0.01. At a XBT/USD price of $600 this equals 0.00001667 XBT.
Next, we explain how to perform withdrawals from BitMEX platform.
Under the Account tab, click on the Withdrawal link highlighted below
The above link will lead you to the withdrawal page below
It suffices to fill the required data and you are done.
The cutoff time for Bitcoin withdrawals is 13:00 UTC. Shortly after that, Bitcoin will be sent to the address you specified.
At the bottom of the page, you will also find the Withdrawal History.
If after reading our tutorial you still have doubts on how to use BitMEX platform you can find a complete reference section in their website as well as a FAQ section.