BitMEX guide on how to start leveraged Bitcoin trading. Explained: shorting BTC, margins, PNL, fees, traps, tricks, and profitable strategies.
Last update: 1 July 2019
This BitMEX guide on how to start margin trading will explain you step by step: how to use leverage, fees, and will show you profitable strategies. BitMEX is absolutely the most traded leveraged exchange in the world of futures and perpetual Bitcoin contracts. Begin your trip with BitMEX trading wisely!
Here is an interview with CEO of MinistryOfMarginTrading concerning how to begin investing on BitMEX.
#1 Beginner:: How would you explain to me BitMEX exchange using just one sentence?
MinistryOfMarginTrading: This is an advanced leveraged platform where can make 100% profit when Bitcoin price will change 1%. BitMEX gives huge possibilities for profits for all investors who know what will happen at the market.
BitMEX platform: comfortable interface settings
#2 Beginner: Ok I got it. Is BitMEX like Forex broker? I heard that Forex Brokers provide 100x leverage or even 500x and a lot of investors lose money.
MinistryOfMarginTrading: BitMEX is Peer to Peer contracts exchange. This means BitMEX doesn’t care if you are profitable or not as they are making money on fees. Forex brokers often earn when their own clients lose the deposit and this is a conflict of interest as you are trading virtually for real money against... your broker.
BitMEX is not a broker, it is an exchange which just matches two traders when one wants to earn on surges and another who wants to earn when the price drops. Somebody loses, somebody wins.
On top of it, BitMEX provides full order book where you see online all limit orders and previous trades second by second. It makes BitMEX 100% different than Forex. My guide is: you must be smarter than average to be profitable.
#3 Beginner: Ok You explained that BitMEX is market neutral but there is also 1:100 leverage on Bitcoin and it can be very dangerous for newbies.
MinistryOfMarginTrading: Correct, it is a kind of risk. Let me explain it to you. The main difference is that using BitMEX platform you can choose and select your leverage from 0,01x up to 100x. Nobody forces you to use 100x
I use 100x too not to often and only in a case to do a quick arbitrage with a small deposit. When you start BitMEX margin trading on Bitcoin or Altcoins you must keep self-discipline and use leverage maximum 10x. I recommend 5x during the first 2 months.
We prepared for BitMEX traders special calculator in excel to calculate all profits, fees, liquidation price before you open a trade. It's a very useful free tool. Manipulating blue cells: 1. contracts quantity 2. leverage 3. entry price 4. close price calculator will display you 4 different scenarios at BitMEX. The same calculator is for Ripple (XRP).
#4 Beginner: How does BitMEX leverage work? Please explain and tell me how much I can gain or lose?
MinistryOfMarginTrading: The worst scenario that you can see in our BitMEX calculator is that you can REKT and lose the whole deposit (estimated liquidation price). At the moment when mark price will hit liquidation price. BitMEX has NBP implemented (negative balance protection).
On the other hand profits on BitMEX are unlimited – literally: the sky is the limit. The biggest problem on BitMEX is to open a trade at the right time, timing is the key word here.
For example, recently in three days, Ripple future contract price exploded from 0,00004242 BTC to 0,00013215 BTC it is more than 200%. With 10x leverage, if you invest $2700 in the day3 you would have PNL almost $60 000.
It is extremely uncommon to open trade like this at the beginning at the bottom, but you can jump to fast train like this few minutes later and still earn a lot.
#5 Beginner: How does BitMEX leverage work? How much I can gain or lose? Examples, please. How to short Bitcoin on BitMEX to earn when a price declines?
MinistryOfMarginTrading: Margin trading on BitMEX allows you to open large trade with the smaller amount required. Leverage on BitMEX is cost-free. If you want you can open a trade worth $10 000 owning only $1000. It means that you use 10x leverage. In this case, if a price changes 1% you gain or lose 10% of your deposited $1000. The only difference between long and short is that you have to click another button.
BTC price now $10 000
You own $1000 and want to short Bitcoin. On BitMEX platform you choose leverage 1:10 and contracts quantity 10 000 which means that your trade value is 1BTC. Your liquidation price will be close to $9050.
Another Trader has $5000 and wants to earn on surges (long). He chooses 1:2 leverage and the same 10 000 contracts quantity which means that his trade value is 1BTC as well.
Liquidation price in his case will be about $5050.
You are matched now on BitMEX. You earn $10 – he loses $10, and when you lose $300 when he wins $300. So simple. If you want to close the trade, you can do it anytime and BitMEX will match this trader with another investor.
If Bitcoin price drops $400 you earn $4000 as you are short, and he loses 4000$ as he has the same quantity of XBT contracts. We explained BitMEX leverage with more examples here.
#6 Beginner: What other pairs and products can I trade on BitMEX? I mean apart from Bitcoin?
MinistryOfMarginTrading: On BitMEX the most traded products are perpetual contracts for Bitcoin and Ethereum. Perpetual means that it will never expire. Futures for Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Tron, Cardano, Ripple, EOS Token are expiring every 3 months.
If you go short or long using Bitcoin Cash futures, you bet which currency will react better.
For instance, pairs like Bitcoin Cash vs BTC futures price is 0,1000 ($600/$6000) where $600 is Bitcoin Cash price and $6000 is Bitcoin price. When BCH price rises 10% to $660 and BTC rises 5% to $6300 then the contract is traded at 0,1047.
BCH gains more in % then BTC that is why the price of the contract raised about 4,7%. On the chart below you can notice a very clear trend of how Bitcoin Cash loses versus Bitcoin day by day.
#7 Beginner: Is BitMEX platform legit? Is BitMEX exchange a scam?
MinistryOfMarginTrading: BitMEX was founded in 2014 and is the biggest by volume leveraged exchange to trade futures and perpetual contracts in the whole cryptocurrency world. 27th July turnover exceeded 1,000,000 BTC in 24 hours it means BitMEX broke its own BTC trading volume record.
Everyday trading volume is several billion USD, so I think this is the best proof that Bitmex is legit. Sometimes you can find traders accusing BitMEX to be a scam as they were not aware of all details of how to start trading at BitMEX exchange.
This exchange requires training as it is not easy. It may look easy.
#8 Beginner: How to start BitMEX trading? I need a tutorial or a guide with an explanation step by step. Does BitMEX allow for demo trading?
MinistryOfMarginTrading: This website is about margin trading investments so here you can find a lot of BitMEX guides. BitMEX has Testnet (demo) – more you can learn here but it is a huge difference between BitMEX demo vs live account. You can learn a lot of bad habits trade on BitMEX Testnet because It was created for bot developers.
I learn this platform for $5. I registered on BitMEX without any KYC and ID and I sent 0,001 BTC first as I was very suspicious. In the right corner of BitMEX platform (close to your nickname), you can change displays BTC for Satoshi which I recommend on the beginning. 0,001XBT it is 100 000 XBt.
It is a very useful guide when you start BitMEX trading. You will see deposited BTC on your account after just one blockchain confirmation.
#9 Beginner: Why I should first deposit into BitMEX only 0,001BTC?
MinistryOfMarginTrading: I have 10 years of experience in trading: shares, bonds, forex and futures, and BitMEX platform caused me some problems on when I started.
Even my friends who have been trading at Forex MT4 since years often called me to explain to them some BitMEX features. It means that there is a very high probability that you will lose all your first and second deposit. I am more than sure that you need 2-4 weeks to understand leveraged trading and how to calculate profits on BitMEX.
This is an exchange for professional traders. What is more, sometimes BitMEX expects downtime or displays information that system is currently overloaded - and you cannot execute your trade. We take it as an advantage because it affects all traders.
And what would you do if you invested all your money and you couldn't close the trade?
#10 Beginner: Do you want to scare me?
MinistryOfMarginTrading: Yes, I do 😊
#11 Beginner: Explain to me what I should do after registration at BitMEX. BTW how long does it take?
MinistryOfMarginTrading: Registration at BitMEX exchange takes 1 minute, then:
1. Change leverage to 5x
2. Deposit 0,001BTC
3. Change displaying for Satoshi
4. Open a trade with quantity 20 using limit order than close using a market order
5. Click trade history and check if you opened an account with a discount
#12 Beginner: How to get BitMEX fees discounts? I mean how to get BitMEX rebates?
MinistryOfMarginTrading: There is a huge difference at BitMEX in fees between taker and maker orders. In general, if you want to open/close trade now and this is rush, you pay fee 0,075% (market order).
If there is no rush you can use a limit order to get 0.025% fee rebate from BitMEX.
10% discounted BitMEX account in trade history will display 0,0675% (taker fee). You save 1$ on every 10$ spent on commissions. The rule is simple: everybody who registers through this link will get 10% discounts for the next 6 months.
Registration without the link is also possible but BitMEX will be charging you with higher fees every single time you use a market order.
Check it exactly on the examples Bitmex fees explained here as other futures (BCH, ADA, EOS, XRP, LTC, TRX, ETH) have bigger fees and rebates! (0,25% and 0,05%).
#13 Beginner: Earning on BitMEX fees rebate? Does any other exchange pay you for executing trades? How does BitMEX earn if they pay me for trading on their platform?
MinistryOfMarginTrading: The most popular crypto exchanges don’t offer rebates like BitMEX.
In the case scenario, Coinbase offers limit orders (maker) for free. Small exchanges similar to BitMEX like Deribit have almost the same fees offer but there is a lack of liquidity. BitMEX has the biggest liquidity in the whole crypto world.
This exchange is crushing all competitors by traded volume. BitMEX pays 0,025% for limit orders and charges 0,075% (-10% discounts) for market orders. 0,0675% - 0,025% = 0,0425% We can say BitMEX earns about 4$ when 1BTC is traded at $10,000.
#14 Beginner: What it the best profitable strategy to earn at BitMEX?
MinistryOfMarginTrading: You can use at least different 10 strategies.
Profitable? Some strategies can just work for a week or work in some very specific circumstances. It depends on your balance, time, character, knowledge and experience. Advanced traders use a different strategy than BitMEX newbies. New starters they don’t know what they don’t know. Most of the time beginners base on technical analyses.
My guide is: it is very hard to invest just base on chart and volume – you need more. Advanced traders at BitMEX do not try to predict what happens – they know what will happen as they are observing several exchanges at the same time and try to take advantage by arbitrage. We wrote an interesting and controversial article on how to join to top 10% traders.
#15 Beginner: But I don’t have an idea what is arbitrage I want to earn because I expect that Bitcoin price goes to $9000.
MinistryOfMarginTrading: Are you sure? :) Check our on-line BitMEX trading Webinars.
Here you have an example in our BitMEX excel calculator for Bitcoin and other altcoins how to simulate when you want open long. Look below at the screenshot.
The same quantity = 12000 means the same BTC trade value 2BTC (12000/6000)
Scenario A –leverage 5x, deposit taken 0,4BTC (cost) , liquidation price 5025 (quite safe)
Scenario B – safe, leverage 10x, the deposit is taken 0,2BTC, liquidation price 5482 (risky)
Scenario C – risky, leverage 25x, the deposit is taken 0,08BTC, liquidation price 5798 (very risky)
Scenario D – death, leverage 100x, the deposit is taken 0,02BTC, liquidation price 5970 (very risky)
Advanced BitMEX traders sometimes use margin cross and put at risk all deposit.
Look how near is liquidation price when you go x100 leverage. Remember liquidation at BitMEX is the worst that can happen to you as you lose much more than you should.
#16 Beginner: Can we compare BitMEX profit for x10 leverage manipulating close price?
MinistryOfMarginTrading: Yes, we can, look below. As you see if you don’t hit liquidation price which is about 10% lower than it is your entry.
Your BitMEX profits are unlimited and depend on XBT quantity. If you do not understand something and want to know more BitMEX strategies e-mail us to get an invitation for Webinar training about trading leveraged Bitcoin on BitMEX.
We help all investors who registered with BitMEX using our link with discount. We are observing the market all day long and trade only several times per day, so we talk a lot with investors who are with us.
#17 Beginner: How can I monitor my profits at BitMEX platform? I have to know how much I earn :)
MinistryOfMarginTrading: There are several ways to check your PNL:
1. Every day you can check profits in account wallet (below left)
2. When you close a trade, compare an actual balance to the previous one
3. Go to trade history and copy date to our BitMEX calculator.
4. Trade history and using pen and your notebook if you are good at maths ;)
5. Place your mouse cursor over the PNL (below right)
#18 Beginner: Finally, the best tricks or guidelines on how to use BitMEX platform?
MinistryOfMarginTrading: If you scalp on BitMEX it is very useful is to checkbox about all liquidation at the platform. You will get a little annoying notification but extremely useful for profitable trading, especially, when you scalp a lot. This is one of the best BitMEX tips, look below and enjoy:)