Table of Contents
If you want to learn exactly how to trade Bitcoin on BitMEX, you’ve come to the PERFECT place. This BitMEX tutorial will be a simple step-by-step guide for you.
Not only will you learn the basics, but you’ll also learn extremely valuable tools for making your Bitcoin trading more profitable.
Successful Bitcoin traders around the world are using the BitMEX exchange. Actually, BitMEX is the biggest cryptocurrency leverage trading exchange in the world & in this tutorial, we will show you step-by-step how to trade on BitMEX like a successful cryptocurrency trader.
In this BitMEX tutorial you will learn:
- How to trade Bitcoin on BitMEX
- The basics of leverage trading
- How to short Bitcoin & altcoins
- What a liquidation price is
- How to set a stop loss
- How BitMEX fees work
Intro To BitMEX Exchange
The mechanics of Bitcoin trading might seem complicated at a first glance. However, in this tutorial, we will make it extremely simple. This BitMEX tutorial will be suitable even for complete beginners. Also, there is a guide on this website called How To Trade Bitcoin, for people who are new to trading.
One of the most common questions people ask is: Can I lose more Bitcoin than the Bitcoin I deposit into BitMEX? No, the only funds you can lose are the funds you deposited. You will never become indebted to BitMEX.
If you made a 0.05 BTC deposit on BitMEX, the maximum amount you can ever lose is that 0.05 BTC. In order for you to be able to do leverage trading, BitMEX has something called the “liquidation price”. More about this below, so keep reading!
Register An Account
It’s really simple to register an account, and all you need is an email address. No KYC is needed to trade cryptocurrencies on BitMEX.
10% Discount On BitMEX Fees
Use our sign-up link here, to get 10% off the BitMEX fees for 6 months. This discount is very valuable for traders because you get an edge over the rest of the market. If you already have an account and are uncertain if you have this 10% discount or not, just create a new account with our link. This way you know for sure that you have this 10% BitMEX fee discount for another 6 months.
US Citizens & NordVPN
If you are a US citizen, or if you are simply trading from the US, you’ll need a VPN. It’s not illegal to trade from the US, but the USA is geo-blocked because of USA regulation. So, to trade from the USA we recommend that you the VPN called NordVPN. There are free VPNs also, but they are usually really bad. NordVPN in the most popular one out there.Get NordVPN Here
Leverage Trading For Beginners
When you do leverage trading or margin trading as it’s also referred to as you can trade with more money than what you have in your account on BitMEX. As an example, you can deposit 0.1 BTC to use as an initial margin in a position worth 1 BTC. This would imply that you went on 10x leverage. If you use 0.5 BTC as the initial margin on BitMEX and use 50x leverage on that position, your position will now be worth 25 BTC.
Another way to look at it is, if you’re on 15x leverage and the price moves up 1%, your return on investment (ROI) is 15%. If the price instead moves down, your position is down 15%. Also, there is something called the “liquidation price”. Keep reading to get a full explanation.
The Liquidation Price
If BitMEX just let everyone borrow money for Bitcoin trading to go on 100X leverage, one small Bitcoin price movement in the wrong direction could put BitMEX in bankruptcy. This is where the “liquidation price” comes in. If the Bitcoin price moves in the wrong direction for your trade, eventually the Bitcoin price will reach the liquidation price. At this point, your trade is liquidated, which means that you lose the initial margin. The initial margin is the BTC you used as “collateral” to open the full leveraged trade.
The image below makes it easy to see how the liquidation price works. As you can see, the liquidation price always comes before the “bankruptcy price”. If your trade theoretically were to reach the bankruptcy price, the full position would have gone to zero. In other words, both your initial margin and the leverage used for that position would be lost.
The BitMEX Insurance Fund
Therefore, the liquidation price will work almost like a stop-loss, avoiding the BitMEX traders’ position to be auto-deleveraged. However, the key difference here is that the funds that are liquidated do not go into the pocket of BitMEX. Instead, the funds go directly to what is called “The BitMEX Insurance Fund”.
Let’s say there is a price dump, and millions of dollars are to be liquidated. In this case this could trigger a huge flash crash of all these leveraged positions. If there are thousands of longs that need to be liquidated at the same time, chances are BitMEX might not be able to liquidate everyone perfectly at the correct price. Finally, this explains why the insurance fund is crucial. Basically it’s there to make sure that everyone gets payed when they close their position in profit.
Order Submission Error
The only major downside with BitMEX right now is the fact that there are too many people trading on BitMEX, because of its popularity. The exchange can sometimes be overloaded with orders in highly volatile moments. In these moments when you try to put in an order, you might get the message “Order submission error. System overloaded”.
Now, if you are trading more long term, this might be fine. However, if you’re looking to trade breakouts, then we suggest you trade over on Bybit instead. Bybit can handle more trades per second, and has a very user friendly cryptocurrency leverage exchange. Read our full Bybit tutorial here. Also, you can get a $60 deposit bonus on Bybit if you use this link.
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How To Trade Bitcoin On BitMEX
Now, let’s go through the process of trading Bitcoin and altcoins on BitMEX step-by-step. On BitMEX you can do margin trading for Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Cardano (ADA), EOS (EOS) , Bitcoin Cash (BCH) & Tron (TRX). However, in this tutorial we will be using Bitcoin as our trading example. Let’s get right into it.
Limit Order, Market Order & Stop Market
There is more to Bitcoin trading than just “buy” or “sell”. There are several different order types on BitMEX. Let’s go through the three main order types. These are the order types that you’ll use the most as a Bitcoin trader.
A market order is an order that is executed immediately at the current market price. In other words, if you press market, BitMEX will make sure that your order gets filled by matching it directly against the order book. If you use the market order you will be guaranteed fill. However, you will not be guaranteed a price.
Further, sometimes a market order can experience “slippage”. Slippage, might happen in a very volatile price crash and basically means that your order gets filled at a price far away from where the price was when you executed the order. You want to avoid slippage if possible.
Also, the trading fee of a market order is quite high. Consequently, the only time you should use the market order on BitMEX is if you are in a hurry to enter the position. For example if you want to catch a breakout of a pattern.
A limit order is the best way to trade on BitMEX. This order type is used to control you entry price. When you submit a limit order, the order will be put in the order book and will be waiting for the Bitcoin price to reach your limit level.
As an example, if the Bitcoin price is at $100,000 and you want to enter a long position at $90,000, you’ll submit a limit order to buy bitcoin at $90,000. When the Bitcoin price moves down to to this level, you will automatically be entered into your position.
The most interesting part about the limit order is that you actually get payed to enter a position with a limit order. The reason why limit orders get a rebate, and the market orders pay a fee, is because of liquidity. Basically, BitMEX want their order book to be as deep as possible, and if everyone used the market order then the order book would be empty. Therefore, BitMEX pays people to provide liquidity to the order book by submitting their limit orders there.
Stop Market Order
Something that is very important when Bitcoin trading is a stop loss, and we can use the “Stop Market Order” for this. The stop market order is simply a market order that will be executed only when a certain price level is met. Let’s say you want to buy long when the Bitcoin price hits $90,000, but you want a market order, not a limit. In this case you use the stop market order, because when “the stop price” is met, you market order will be executed and filled. The stop market order is used to set up a stop loss. More about stop losses further down in this BitMEX tutorial.
How To Deposit On BitMEX
To deposit Bitcoin into BitMEX, click “Account” at the top of the BitMEX trading view. Now click “Deposit” and deposit Bitcoin like you would on any other exchange. This is also the process if you want to withdraw Bitcoin from BitMEX, but you click “Withdraw”, instead of “Deposit”.
At the top of your BitMEX trading screen you’ll see “Total Balance” and “Avail Balance”. Total balance is what you have deposited into BitMEX. Avail Balance is showing you how much of that is currently available. If you deposited 1 BTC and is currently in a trade where you used 0.1 BTC for initial margin, then your available balance will be 0.9 BTC, or XBT as it’s called on BitMEX.
A Bitcoin Trading Example
Now, when your BitMEX account is funded with some Bitcoin, you are ready for your first margin trade. Look at the top left corner of the BitMEX trading view, “Place Order”, as show by the image below.
An Example Of A Bitcoin Short Position
In order to make this even easier we’ll make a real world example of how to trade Bitcoin. In this trade example we will enter a short position worth 20,000 contracts (1 contract = $1), worth $20,000, and we will use 10x leverage. This will mean that the initial margin we use will be worth $2,000 while the rest of our position is the leverage provided by BitMEX. Also, for the purpose of this BitMEX tutorial we will use the market order.
The Place Order Tab
In the “Quantity” box we enter the amount of contracts we want our full position to be worth (initial margin + leverage). Now, below the “Sell Market” (which means short market) you can see that the cost will be 0.1871 XBT, or BTC. However, if you look further down, you can see that the “Order Value” is showing 1.8466 BTC. This is because of the 10x leverage that we’ve chosen in the leverage slider below, as shown, in the bottom of the image. You can choose up to 100x leverage on BitMEX. So, the cost is what will in fact be used from out Available Balance in BitMEX, and the Order Value, is the value of the full position, (initial margin + leverage).
“Post Only”, For Guaranteed Rebate (Limit Order)
If you want to submit a limit order on BitMEX, we recommend that you click the “Post Only” box in the Place Order area. This way you are guaranteed to get the maker rebate for providing liquidity in the order book. You basically get payed to submit the order. More about this further down in this BitMEX tutorial, where we discuss the BitMEX fees.
Review The Terms Before Shorting Bitcoin
Now, if you press “Sell Market”, you will get the following pop up, as shown in the image below. It’s filled with all the information you need to confirm before finally submitting your order. The most important thing to be aware of is the Estimated Liquidation Price, as shown by the green the arrow in the image. Make sure that you are comfortable with this price level. Because remember, if the Bitcoin price reaches this level, your BitMEX position will be liquidated.
How To View Your Now Open Short Position
If you agree to the terms of your BitMEX short position, click “Sell” Down in the right corner of the pop-up. When you done so, you are currently in a Bitcoin short position on BitMEX. You’ll see your position lower down in the BitMEX trading view, under “Open Positions”. This is shown in the image below by the green arrows.
In your open short position, the following info can be found:
- Size – This shows you how many contracts or $USD your position is worth. If it’s in red numbers, it’s a short position. Of the numbers are green, it’s a long position.
- Value – This is the same number as the size, but measured in BTC. The number is combining your initial margin + the leveraged assigned to your BitMEX position.
- Entry Price – This is the level on which you entered the trade.
- Mark Price – This is the current Bitcoin price.
- Liq. Price – The liquidation price.
- Margin – This shows you initial margin, the funds that were drawn from you account to open the leveraged position.
- Unrealised PNL (ROE %) – This stands for: Unrealised Profit and Loss (Return On Investment). This will show you if you are in profit or loss currently in your trade.
- Realised PNL – This will change if you close part of you position in profit or in loss.
To close you position, press the red “Market” button to the far right of the Open Position area.
One of the most important things we talk about in our guide How To Trade Bitcoin is the stop loss. To set up a stop loss, press “Stop Market” under the Place Order tab. Enter the quantity of your current position, if you want your whole position to be stopped out. Choose a Stop Price where the position will be market executed. Finally, press “Set Buy Stop” or “Set Sell Stop”, depending on if you are currently in a short position or in a long position on BitMEX.
How To Trade Altcoins On BitMEX
Bitcoin trading is one thing, but if you want even more volatility and more opportunities, you can look into altcoins. On BitMEX you can trade many different cryptocurrencies or “altcoins”.
Choose A Cryptocurrency
Currently BitMEX supports trading of the following altcoins: Cardano (ADA), Bitcoin Cash (BCH), EOS Token (EOS), Ethereum (ETH), Litecoin (LTC), Tron (TRX and Ripple (XRP). To choose an altcoin on BitMEX to start trading, click any of the altcoins at the top of the BitMEX trading view. These cryptocurrencies are marked by the green arrow in the image below.
Altcoin Trading On Bybit & $60 Deposit Bonus
The most popular alternative to BitMEX is Bybit exchange. Bybit is also a leverage crypto exchange, exactly like BitMEX. The reason why altcoin traders like Bybit, is because you can deposit Ethereum (ETH), Ripple (XRP) and EOS (EOS) on Bybit exchange. This is not possible on BitMEX, where you can only deposit Bitcoin (BTC).
This means that on Bybit you can “physically”, so to speak, trade altcoins. Bybit is growing extremely quickly and we are happy to recommend it to our readers. Read our full Bybit tutorial here.
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BitMEX Fees Explained
The BitMEX fee structure can be complicated to understand. Therefore, we want to make it as easy as possible to understand.
How To Get 10% Fee Discount On BitMEX
To get a 10% discount on BitMEX for 6 months, we’ve gotten you a special link. Click here to register on BitMEX and get the discount activated automatically. This 10% discount on BitMEX will be applied to all BitMEX fees on the exchange. Accordingly, this will give you a small edge over the market, which is very valuable when trading cryptocurrencies.
Maker Rebate & Taker Fee
When you open a limit order, you are called a market maker, because you make the market by providing the order book with liquidity. If you use a market order, you are a market taker, because you basically take liquidity from the market. Makers are rewarded with a maker rebate, and the takers are penalised with a taker fee. As an example of how you can make money from rebates is the following: If you submit a limit order worth $200,000, you will get $50 back to your account as a maker rebate. You are basically getting paid to provide the BitMEX order book with liquidity.
- BitMEX taker fee is 0.075%
- BitMEX maker rebate is -0.025%
Perpetual Futures & BitMEX The Funding Rate
When you are trading Bitcoin & altcoins on BitMEX, you are trading futures. However, there is no expiry date on these BitMEX futures. Instead, these are something that BitMEX calls “Perpetual Futures”, because they never end. The important thing to understand here is that instead of paying a fee when closing the position, you are paying fees every 8 hours when you BitMEX position is open. This is called the BitMEX funding rate.
- The BitMEX Funding Rate is 0.01%.
Longs & Shorts Pay Each Other
Interestingly, this rate is not a fee to BitMEX, but rather it’s the holders of longs and shorts paying each other. At the moment of the funding time you will either be payed or charged. It’s always the majority paying the minority. So for example, if there are more longs than shorts, it’s the longs that will be paying this fee to the shorts, and vice versa.
The funding rate is 0.01%, of the whole position (initial margin + leverage combined). If the BitMEX funding rate is positive, it’s the longs paying the shorts. If the BitMEX funding rate is negative, the shorts will pay the longs.
Best Bitcoin Trading Exchanges
For more Bitcoin Exchanges please check our complete list here.