Complete Guide to BitMEX
Founded in 2014 by HDR Global Trading Limited, the trading platform BitMEX is registered in the Seychelles and operates in Hong Kong. HDR was in turn founded by former bankers Ben Delo, Samuel Reed and Arthur Hayes.
BitMEX stands for Bitcoin Mercantile Exchange and it is currently one of the biggest Bitcoin trading platforms, with more than 540,000 monthly accesses and more than 35,000 BTC traded daily. Since its inception, the exchange has traded more than $34 billion worth of Bitcoin.
BitMEX only accepts Bitcoin deposits, something very few other trading exchanges do. The Bitcoin can then be used to buy a big selection of other crypto. BitMEX’s specialization is sophisticated financial operations, including margin trading. Like many other exchanges that operate in the blockchain sector, BitMEX is not regulated in any jurisdiction.
How do I register with BitMEX?
Users have to register on the website to create an account on BitMEX. Only an email address is needed for registration, making it possible to use an anonymous email address. The email address must however be valid, as a confirmation email is sent to verify the account. Once a user is registered, no trading limits apply. Users must however be at least 18 years old to sign up.
BitMEX does however not accept any traders from the US and uses IP checks to verify that users are not from the USA. Although it is possible to bypass this with a VPN, US individuals should rather use exchanges that do operate within the US legal framework.
With BitMEX, users can trade crypto against fiat currencies, including the USD, the Japanese Yen and the Chinese Yuan. Various tokens can be traded, including Bitcoin, Dash, Bitcoin Cash, Ethereum Classic, Monero, Ethereum, Tezos, Litecoin, Zcash and Ripple.
BitMEX’s user interface is easy to use and intuitive, especially if you’re familiar with similar markets, but beginner will struggle with it. The interface also appears dated in comparison with newer exchanges like Kucoins and Binance.
Users that have registered on the platform can click on Trade, resulting in the trading instruments being displayed.
Selecting a specific instrument opens the order slip, recent trades and the order book. The order book has three columns containing the bid value for the asset, the order quantity and the total USD value for both short and long orders.
Users can change the trading platform’s widgets based on their viewing preferences, giving them full control on what is displayed. TradingView charting is also provided for via a built in feature, offering a full selection of charting tools. This is an improvement on what many of its competitors offer.
Trades that have been executed can easily be viewed on the trading platform. Various tabs can be selected to view Active Orders, Stops, Orders Filled (partially or totally) and Trade History. Traders can cancel orders on the Active Orders and Stops tabs by selecting the “Cancel” option. All positions currently open are shown, together with an analysis of whether it’s in the red or black.
BitMEX uses auto deleveraging to ensure that liquidated positions can be closed, even if the market is volatile. Auto deleveraging means that if a position goes bankrupt and is no longer liquid, the position’s positive side deleverages in order of profitability and leverage, with the highest leveraged position first in the queue. When required, traders are shown their position in the auto-deleveraging queue.
Although the BitMEX website has been optimized for mobile, there is currently only an unofficial Android app and no iOS app. BitMEX does however recommend that users use it on their desktop where possible.
Various order types are offered:
• Market Order – execute at current market price;
• Limit Order – execute at specified price;
• Stop Market Order – not entered into the order book until the market reaches the trigger;
• Stop Limit Order – price of Order can be set once Stop Price is triggered;
• Take Profit Limit Order – used like a Stop Order but triggered at a target. Used to take profit rather than cutting losses;
• Trailing Stop Order – same as Stop Market order, but a trailing value is set as a trigger;
• Take Profit Market Order – same as Take Profit Limit Order, but triggers a market order, not a limit one.
Margin trading is offered in all of the tokens displayed on BitMEX.
Swaps and Futures
Futures contracts are agreements to sell or buy an asset at a predetermined price in the future. Users can leverage up to 100 times on specific contracts on BitMEX.
Perpetual swaps work the same as futures, but they have no settlement and no expiry. Unlike futures, which could diverge from the Index Price substantially, swaps trade close to the underlying reference Index Price.
Binary series contracts are also offered by BitMEX. These contracts are prediction-based and only settle at 0 or 100. This is a more complicated way of placing a bet on a given event. Currently, there is only one Binary series betting contract available and it relates to the next 1MB block on the Bitcoin blockchain. These contracts are traded with zero leverage, a maker fee of 0%, a taker fee of 0.25% and a settlement fee of 0.25%.
Users of BitMEX may leverage their position on the exchange. Leveraging is when orders are placed that are bigger than the trader’s existing balance. This may lead to a higher profit when compared to an order placed with only the wallet balance. This type of trading is known as “Margin Trading.”
Cross-Margin and Isolated are two types of Margin Trading. The former should be treated with caution as it stipulates that all the money in a user’s wallet may be used to hold their position. With the latter, the user selects the amount in their wallet that should be used to hold their position once an order has been placed.
Users can set leverage levels with a leverage slider. The maximum leverage available on Bitcoin Cash and Bitcoin is 1:100. This is a very high leverage for crypto, as the average offered rarely exceeds 1:20.
Fees charged by BitMEX
BitMEX uses a straightforward fee schedule for traditional futures trading. BitMEX does however offer up to 100% leverage depending on the product. Trading at high levels of leverage is however sophisticated and is best left to professionals investors who understand speculative trading. The fees and leverage for the various tokens can be found on the BitMEX website.
Additional fees are charged for hidden (iceberg) orders. A hidden order will pay the taker fee until the full hidden quantity is executed, after which the order will revert to normal. The trader will receive the maker rebate for the amount not hidden.
Withdrawals and Deposits
No fees are charged on withdrawals or deposits. When Bitcoin is however withdrawn, there is a minimum Network fee based on blockchain load. Therefore, the only costs are those charged by crypto networks and banks.
As BitMEX only accepts Bitcoin deposits, the collateral on trading contracts is Bitcoin, irrespective of whether trade involves Bitcoin or not. The minimum that can be deposited is 0.001 BTC and withdrawals have no limits, although they have to be made in Bitcoin. Users simply have to enter the amount to be withdrawn and a wallet address to make a withdrawal.
Although deposits can be made around the clock, withdrawals are hand processed once per day at a specific time. Processing withdrawals by hand are meant to increase the security of user funds by allowing extra time and an email notification to cancel fraudulent withdrawal requests. It also eliminates the use of hot wallets and automated systems that are more susceptible to compromise.
Is it Safe to use BitMEX?
BitMEX is widely recognized as having strong security. The platform utilizes multi-signature withdrawal and deposit schemes that can only be used by BitMEX’s partners. BitMEX also uses Amazon Web Services to protect their servers with two-factor authentication, hardware tokens and text messages.
BitMEX also uses a risk check system. This system requires that the total of all account holdings on the exchange must be 0. If this is not the case, all trading is stopped immediately until the issue is resolved. Private keys are also never stored in the cloud and all withdrawals are checked by employees by hand. Deposit addresses are verified externally to ensure that they hold matching keys. If this is not the case, all systems are shut down immediately.
The BitMEX platform is coded in kdb+, a toolset and database frequently used by major banks for trading applications with high frequencies. It appears that the BitMEX engine is more reliable and faster than that of some of their competitors, including Bittrex and Poloniex. BitMEX uses email notifications, and all communications are PGP encrypted. This exchange has never been hacked.
How does BitMEX Support Customers?
BitMEX offers 24/7 support on various channels, including social media, a ticket systems and email. The customer support team typical responds within an hour and customer support reviews find the responses helpful and personal.
BitMEX also uses a knowledge base, trading guides and FAQs, which could help and direct customers towards the correct channels for assistance.
We found only a few complaints about BitMEX online, with most relating to the complexity of the website and technical issues. Although older complaints refer to low liquidity, this seems to have been resolved.
BitMEX is not ideal for novice investors as the interface is complex and users might find it difficult to get used to the platform or even navigate the site. The platform does however offer a wide range of tools and once users get used to the interface, they’ll appreciate the wide range of information provided.