18. How to trade BitMEX futures

 

 

I will tell you all about how to trade BitMEX futures in 2021.

 

 

 

 

 

 

 

 

 

1. Introduction to BitMEX Futures Exchange

 

 

- BitMEX Futures Exchange is an exchange that can trade cryptocurrency futures and has been operating for 7 years as of 2021.

 

- The BitMEX Futures Exchange is an exchange that everyone who knows a little about the coin market in Korea knows.

 

- BitMEX Futures Exchange supports short buying and short selling, and offers high leverage and low trading fees, so thousands of traders visit every day!

 

 

 

 

 

 

2. How to sign up for membership

 

 

- Membership registration is complete by entering your email and password, and verifying your email. All of this can be done in just a few minutes!

 

- Due to the recent change in BitMEX policy, KYC (identity verification) is required, so prepare your ID! Even if it's a little cumbersome, it's good to do KYC for a smooth transaction!

 

 

 

 

 

 

 

 

 

 

 

 

 

3. How to deposit & withdraw

 

 

- BitMEX Futures Exchange only supports deposits or withdrawals in Bitcoin.

 

- If you do not own Bitcoin, you must purchase Bitcoin directly through a domestic cryptocurrency exchange and send it to BitMEX in order to trade futures!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. About short buying and selling of futures!

 

 

- The biggest reason to trade BitMEX futures is that you can short and take advantage of leverage.

 

- In the stock market, individuals do not have the same credit as institutions, so it is difficult to borrow stocks and short.

 

- On the other hand, cryptocurrency exchanges have the advantage that users in more than 100 countries around the world can freely trade across borders.

 

- Among them, futures exchanges such as BitMEX offer short selling and leverage even for individuals!

 

 

 

 

 

 

 

How to Short Buy & Sell BitMEX Futures!

 

 

 

1. Choose the order method you want!

- You can choose from the following ordering methods: Limit, Market, Reverse Stop Loss, Stop Loss Order, Tracking Stop Loss, Take Profit Limit and Take Profit Market!

 

- If you are unfamiliar with the ordering method, it is sufficient to use only the limit price and the market price!

 

 

 

 

 

 

 

 

2. Enter the amount to be invested in "Amount".

- For this example, I will choose the market price!

 

- And enter the amount you want to trade in "Quantity"!

 

 

 

 

 

 

 

 

 

 

3. Set the leverage multiple you want to use.

- If you have entered the order method and transaction amount, you can set the leverage this time.

 

-If you do not want to use leverage, you can use the default value of 1 multiplier.

 

- To set the leverage, just click the small circle on the gauge and move it left and right!

 

- I have set 5x leverage as shown in the image below~

 

 

 

 

 

 

 

 

 

4. Click the Short Buy (green) button to place your order.

- Once you have set the leverage, you can now place an order.

 

- Short buy is a green button and short sell is a red button!

 

 

 

 

 

 

 

 

 

 

 

 

4. How to place an order

 

 

If the short buying and short selling mentioned above are to set the direction of the position, there are several ways to place an order before entering the position.

 

 

 

 A) limit order

- The limit price can minimize transaction costs (fees and slippage).

 

- The limit price receives a commission as a reward for providing liquidity to the market.

 

- Limit price is the best ordering method for mid- to long-term strategies.

 

 

 

 

 

 

 

 

B) market order

- The market price is more expensive than the limit order for commission and slippage.

 

- The market price allows you to immediately enter/close a position at any desired time.

 

- Unlike a limit order, the market price can lower the probability of non-execution.

 

 

 

 

 

 

 

 

C) Stop Loss Order

- Loss limit is an automatic order method that clears the loss section at the limit price.

 

- If you made a short buy, you are setting a limit sell order in the loss section.

 

- If you short sell, you are placing a limit buy order in the loss section.

 

 

 

 

 

 

 

 

D) Stop Market Orders

- The reverse market order is an order method that stops at the market price when a loss occurs in the position you entered.

 

-The difference from the same order method as the limit loss is that the limit loss price is executed at the limit price and the reverse limit market order is executed directly at the market price.

 

-Simply put, both are stop-los functions, but one can be understood as a limiting price and one as a market stop-loss (stop loss).

 

 

 

 

 

 

 

 E) Tracking Stop Loss Order

- Tracking Stop Loss is an order method that liquidates a stop loss or profit loss at the market price from the position you entered.

 

- Regardless of the entry price, the order is +/- based on the current price.

 

 

 

 

 

 

 

F) Take Profit Limit Order

- Take Profit Limit is an order method that liquidates the current position at the limit price in the profit section.

 

- In the case of a short purchase, the limit sale is set at a price higher than the entry price, and in the case of a short sale, the purchase is made at a price lower than the entry price.

 

- The order is automatically entered at the set trigger price, and the liquidation order is entered at the limit price at the set price.

 

 

 

 

 

 

G) Take Profit Market Orders

- A take-profit market order is an order method that is liquidated at the market price in the profit section of the current position.

 

- Has same concept but the difference with take-profit limit is that it is liquidated at market price.

 

- This is the concept of paying a small transaction fee to ensure profit margins.

 

 

 

 

5. All about margin.

 

 

 

A) What is margin?

- Margin can be translated into Korean as margin.

 

- Margin trading is the act of trading derivatives of a specific asset class based on margin.

 

-The advantage of margin trading is that both short-term borrowing (leverage) and long-short (short buy & sell) are possible on the exchange.

 

 

 

 

 

B) Add Margin / Remove Margin

- Margin addition and margin removal are the actions of increasing or decreasing the margin after entering a position.

 

- This is one way to manage risk, each with its own pros and cons.

 

- The link above shows more detailed explanations and examples of each method.

 

 

 

 

 

C) Cross Margin / Isolation Margin

 

 

 

- Cross Margin (CROSS MARGIN) is a margin mode that calculates including the balance you have in addition to the amount you put in as collateral for the position you entered.

 

- This can increase the gap between the liquidation price and the entry price, and can lower the probability of being subjected to a rigid liquidation. However, if a margin call occurs and is forcibly liquidated, all funds will be publicly dismantled.

 

 

 

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- ISOLATED MARGIN is a margin mode in which only the margin for the input amount is secured as collateral, and only the entered amount is blown even if a margin call is received.

 

- In this case, the amount other than the entered position may not be liquidated, but the probability of forced liquidation is relatively higher than in the cross-margin mode.

 

 

 

 

 

 

D) What is a margin call?

- MARGIN CALL is a compulsory liquidation of all assets.

 

- The reason for the forced liquidation is to throw all the positions at the current price before the traders are converted to negative balances in order not to lose money on the exchange side if the entered position incurs a greater loss than the collateral (margin).

 

- This is the worst situation that can occur during margin trading, and it is also a situation that must be prevented by thoroughly managing money and risk.

 

 

 

 

 

E) How to prevent margin calls.

 

 

There are several ways to avoid margin calls.

 

  

 

A) Adjustment of investment weighting and leverage

 

- Overweighting is the most efficient and scientific way to manage money. Overweight refers to the weight of each investment in cash and investment assets, or in multiple asset classes (stocks, bonds, gold, bitcoin).

 

- Famous methods of weight control are Shannon's Law, Kelly's Law, and Risk Parity. These are advanced money management techniques. If you want to know more in detail, please refer to Quant Investment's Money Management Techniques.

 

 

 

 

 

B) stop loose

- In order to defend against margin calls, you must clearly set the principles before trading. You can avoid margin calls if you have a cut-loss principle when you achieve a certain loss.

 

- However, depending on the strategy, there are strategies that work well when you make a stop loss, and there are strategies that do not work well and only accumulate losses.

 

- Even if you have a clear strategy, it would be even better if you could backtest what you did in the past when you made a stop loss and when you didn't.

 

 

 

 

 

C) firm strategy and statistical thinking

- No matter how much weighting and money management techniques are used, if you don't have a solid strategy and statistical thinking, you will only lose money slowly in the long run, and you will end up with a can of money.

 

- It takes a long time and requires a lot of study, but in order to raise funds, you must have an edge over other market players.

 

- A lot of training and research are needed to realize statistical advantage. Coinpick has published a series of quant investment series, so it will be of great help if you study the material!

 

 

 

D) Using the limit price

- You can lower the transaction cost by using the limit price. The reason is that you can save on fees and enter positions at the price you specify.

 

- Therefore, the gap between the entry price and the exit price can be wider than that of entering the market. This can reduce the probability of getting a margin call, even if it is small.

 

- However, orders may not be executed for the limit price, and the market price may be more advantageous depending on the strategy. It can be said universally that limit orders are a bit more suited to swing trading or long-term strategies, while short-term trades have a better market price.

 

 

 

 

 

E) Use of safety devices

- You can set an alarm by setting the gear icon in the upper right corner of the order window on the BitMEX exchange.

 

- When you enter a position, the liquidation price is displayed. By setting an alarm between the liquidation price and the entry price, you can prevent margin calls by adding collateral or closing positions before receiving a margin call.

 

 

 

 

 

 

 

 

 

 

6. BitMEX Exchange Fee

 

 

 

A) Trading Fee

- The Maker fee is -0.025%, and the Taker fee is 0.075%.

 

- Maker plays the role of accumulating properties at the asking price by placing a limit order, and helps traders who trade at the market price to enter/close at the desired asking price.

 

- The reason fees are marked as negative (-) is because you are receiving payments, not paying fees. This is to receive commissions as a reward in exchange for providing liquidity to takers.

 

- Conversely, takers can be understood as traders who take the quote price set by the maker.

 

- These are groups who place orders at the market price and enter a position at the current market price. Takers have to pay a fee of 0.075%, which is cheaper than spot exchanges (minimum 0.1% to 0.2%).

 

 

 

 

 

 

 

 

B) Deposit and Withdrawal Fee

- BitMEX Exchange does not support deposits in KRW. Therefore, you need to purchase the bitcoin you have in your personal wallet or bitcoin from the domestic exchange and send it to BitMEX.

 

- When depositing and withdrawing from a domestic exchange <-> BitMEX, you only need to pay the Bitcoin network fee for both.

 

- The Bitcoin network fee is proportional to the speed of the Bitcoin blockchain, and BitMEX recommends a minimum of 0.003 BTC.

 

- Also, when you apply for withdrawal, the withdrawal is not made immediately, but is sent by traders who applied for withdrawal at 10 pm Korean time.

 

 

 

 

 

 

 

 

C) Funding Fee

- The BitMEX exchange supports trading with Bitcoin, Ethereum, Ripple, Litecoin, Bitcoin Cash, and Chainlink. You can see that the leverage multiple, short long funding and short short funding provided by each coin are different.

 

- The difference in the leverage multiple is proportional to the trustworthiness of each coin, and the funding cost fluctuates in real time according to the short buying or short selling ratio of market participants. And they all have to be paid or paid out every 8 hours.

 

- The reason why futures can have lower fees than spot is that they are derivatives. Derivatives are products that track the price of the asset rather than actually holding the coin. And since it is a financial product that estimates the price, a price gap (NAV%) with the spot may occur. And the tool that can minimize the price gap between spot and futures is the funding fee system.

 

- Funding fee is paid or received 3 times a day at 5:00 AM / PM 1:00 / PM 9:00 Korean time. This is a case of exchanging a commission between a long position and a short position. One side is deducted, and the other side receives it.

 

 

 

 

 

Tips for reducing fees!

 

  

 

1. Let's Trade Perpetual Futures Contracts!

There are several different types of cryptocurrency futures. Among them, the perpetual contract market is the market with the most volume and the largest number of traders. High trading volume means abundant liquidity, which is a factor that can minimize slippage.

 

2. Let's make good use of the limit price rather than the market price!

The limit is paid a commission. By reducing fees, you can improve your returns, which can be snowballed in the long run, which can be a huge benefit. However, it is necessary to review whether the limit order is suitable for the strategy you are using!

 

3. Observe the funding cycle carefully!

Funding fee is updated every 8 hours. If you are going to enter a position where you have to pay a funding fee and the next cycle is not far away, you can minimize the transaction cost by waiting for a while and placing a limit order.

On the other hand, if you plan to enter a position that receives a funding fee, you can take a strategy of entering the position before reaching the next cycle and receiving the funding fee and exposure in the desired direction.

In addition, by using the strategy of entering the position that is paid before the next cycle at the designated price for the funding fee, you can receive a maker fee and funding fee and close the position immediately to get a stable profit.

 

 

 

7. Trading Strategy

 

 

 

Trading without a strategy can lead to bad results in the end. Those who are new to investing can be lucky to see a return. And it's called beginner's luck. When you look at your earnings, you fall into the confirmation bias that you are a genius. And you spit out the bigger amount with more leverage. And the result is 99% cans.

If you prefer trading based on indicators through technical analysis, you can develop a trading technique that suits you well and participate in the market by referring to the chart viewing and trading methods organized by Coinpick!

 

 

 

 

 

In addition to technical analysis, other trading ideas and strategies are listed below.

 

 

 

 

 

Volatility Breakthrough

- Volatility Breakthrough Trading is a strategy that legendary trader Larry Williams cherishes and cherishes, and was originally used in the COMMODITY market.

 

- This has been proven to work well in the cryptocurrency market, and based on this, robo-advisor companies like Heybit were born.

 

- And Quantopick is providing this strategy for free to all visitors so that they can automatically trade margin trading on futures exchanges such as Binance, Bybit, and BitMEX using 3COMMAS and Trading View Alert.

 

How to do automatic trading strategy to break through volatility!

Volatility Breakthrough Strategy Practical Trading Log!

 

 

 

 

 

 

 

 

 

Obtaining funding

- If you click "Funding History" on the Bitmex Exchange, you can view the funding/payment record of each coin currently supported by the Bitmex Futures Exchange.

 

- Here, you can aim for the funding cost and try to make a stable profit by entering the market for a short time according to the funding fee of each coin.

 

- However, there are other traders who are aiming for this, so there is no guarantee that it will be 100% successful.

 

 

 

 

 

 

 

 

9. Notes

 

A) Risk of leverage

- Leverage can be seen as funds loaned by the exchange with short-term credit using the assets it owns as collateral. While you can use leverage to make more money, you can also get margin calls.

 

- Margin call is an action to forcibly close the position in order not to lose money on the exchange before the loss of the entered position exceeds the collateral. Leverage is like a Double-Edged Sword, so be careful!

 

- Leverage can be seen as funds loaned by the exchange with short-term credit using the assets it owns as collateral. While you can use leverage to make more money, you can also get margin calls.

 

- Margin call is an action to forcibly close the position in order not to lose money on the exchange before the loss of the entered position exceeds the collateral. Leverage is like a Double-Edged Sword, so be careful!

 

 

 

 

 

B) Importance of fees.

- Fees are costs incurred when buying or selling, and are money that must be paid to the cryptocurrency exchange that brokers the transaction. So, the lower the fee, the better it will be for us, right? Usually, the fee for spot exchanges is about 0.1% and for futures, about 0.05% (limited price + market price), but futures exchanges tend to have cheaper fees.

 

- As futures are derivatives, they are usually cheaper than trading in spot, and can be short as well as long. And futures products have the advantage of being able to use leverage.

 

- You may feel that the fee is low, but if you trade with high frequency, you will pay a huge cost. This is because the fee also increases with compound interest. What this means is that even if you make a lot of money, make a lot of money, and keep trading, the fee is taken as a fixed percentage (%), so the face value you take from the exchange increases. 

 

 

 

C) The risk of derivatives such as margin trading and futures.

- Margin trading and futures trading are not actually buying or selling specific products, but trading derivatives that are followed. That means you can't actually transfer bitcoin to another exchange after you buy it.

 

- There is a risk that the entire exchange may collapse if the exchange side designs the derivatives incorrectly. Similar to the subprime mortgage crisis, there is a structural risk that, in the worst case, all assets could disappear overnight.

 

 

 

 

 

Below is the exchange evaluation system developed by Coinpick,

 

We are here to help you find useful exchanges with this reference!

 

 

 

 

 

비트맥스 외의 선물 거래소에 관심이 있으시다면,

아래의 링크를 통해서 바로 알아보실 수 있습니다! 

 

바이낸스(BINANCE)

 

바이비트(BYBIT)

 

페멕스(PHEMEX )

 

에프티엑스 (FTX)