BTCMEX A to Z
BTCMEX is a new cryptocurrency derivatives exchange that strives to offer “Opportunities for everyone” and bring the professionalism of the financial sector to digital asset trading. This article provides a complete overview of the btcmex.com exchange, its core team introduction, and vision, the platform’s distinctive features, and advantages.
One of the major investors in BTCMEX is the most famous crypto adopter and the biggest Bitcoin whale in China – Li Xiaolai. The venture investor is known in the blockchain industry for his participation in other successful projects, which include EOS, Steemit, and BigOne Exchange. Li Xiaolai made a public appearance to introduce BTCMEX in October 2019. The exchange is headquartered in Hong Kong with several offices and local multilingual Customer Support teams worldwide.
The core team which Dr. Tam and Kerel Verwaerde at the forefront had sufficient experience in trading and Fintech fields. The team of technical developers was formed from professionals who come from other exchanges, including Huobi and OKex. What brought all of them together is their strong belief that a cryptocurrency trading platform must provide a professional service taking a user-focused approach and fight with current market inefficiencies. One of the main goals of BTCMEX is to elevate the crypto exchange to the level set in the financial industry to bring and involve institutional investors into digital assets trading.
BTCMEX currently offers BTC/USD Perpetual Contracts leveraged trading and is available for web, mobile, and Apps for IOS and Android. The trading chart is powered by TradingView.
What is cryptocurrency?
Cryptocurrency is a relatively new form of electronic cash payments that started with the creation of Bitcoin on October 31, 2008, by an anonymous developer, Satoshi Nakamoto (pseudonym). While its creator remains anonymous to this day, the technology he brought paved the way for the development of numerous other cryptocurrencies and the broader adoption of the blockchain technology in a number of other fields.
Cryptocurrencies are a form of digital money that, through the blockchain technology, uses a cryptography process to create, regulate the distribution, and secure ownership of “coins” or “tokens”. Cryptocurrencies were designed to work as replacement money for fiat currencies issued and controlled by central banks. The initial idea was to provide a fast, mostly anonymous coins that could not be controlled and would not need a third party, such as banks, intervention.
Started in 2008, cryptocurrencies have seen a drastic rise in popularity and use with over 2,000 cryptocurrencies existing to date and an entire economy being built around them. They have grown from a simple store of value and exchange to an economy more akin to stock markets and traditional finance. In such a climate, It comes to no surprise that cryptocurrencies trading and price have surged over the recent years with Bitcoin, the flagship of crypto, hitting almost USD 20,000 at the end of 2017. The price has, however, since fallen and many crypto-enthusiasts and “hodlers” have lost much. This fall in price has upset many as “hodling” or traditional trading can only gain profit from bull markets, and only derivatives trading can profit from both rises and falls in price.
Some of the most notable cryptocurrencies are:
– BTC, Bitcoin, the original cryptocurrency and all-time market leader
– ETH, Ethereum, the flagship of altcoins (non-Bitcoin coins) and proposing improved smart contracts
– XRP, Ripple, focuses on money transfers and is seeing many real-world applications already
– EOS, EOS, offers smart contracts like ETH but has a more active filed in the Dapp creation
– BCH, Bitcoin Cash, this successor to Bitcoin is trying to return to the original goal of offering decentralized means of payment
Cryptocurrencies are a new and emerging trend that show promise, many potential applications, and are sure to change the markets.
What is a Cryptocurrency Exchange?
Exchanges, trading platforms, or online brokers are online platforms or websites on which traders can register, deposit, and enter trades, with the hope of profiting from said trades.
Three types of exchanges currently exist on the market; namely, centralized exchanges, or CEX, decentralized exchanges, or DEX, and hybrid exchanges.
Centralized exchanges provide a platform for traders to store their assets on, trade with one another, and act as the middleman during the transactions. They resemble traditional stock exchanges and are currently the most popular type of exchanges on the market due to their high liquidity, volume, more friendly trading UI, educational materials, more functionalities, and customer support.
Decentralized exchanges, on the other hand, are true peer-to-peer exchanges on which the traders interact directly with another and, for example by using smart contracts, trade without the need for a middleman. DEXs suffer from low liquidity, a less friendly UI, lack of customer support, less functionality, and the risk of permanently locking yourself out of your own money. They, however, have two advantages that help them remain in the market as they have low, or no, fees and are much harder to hack than CEXs; something the cryptocurrency community is very receptive of due to the previous hack incidents on major exchanges.
The last type of exchange, the Hybrid exchanges aim to combine the best of CEXs and DEXs but currently is only in the Beta phase, has not been tested, and only offer very limited functionalities and liquidity. As such, they would require at least a few years of testing, improving, and refining before truly entering the market. However, once they do they are sure to change the market.
Three main types of trades can be entered on cryptocurrency exchanges: fiat-to-coin, coin-to-coin, and derivatives.
Fiat-to-coin relates to the buying or selling of cryptocurrencies using national currencies, named fiat, such as USD or EUR. Traders buying a cryptocurrency hope that the price of a bought coin will increase with time to make a profit.
Coin-to-coin trades relate to the buying or selling of a cryptocurrency coin using another cryptocurrency, for example buying BTC with ETH. Traders buying the next cryptocurrency hope that the price of the bought coin increases to make a profit or want to escape a perceived drop in the price of the coin they used to buy.
The cryptocurrency derivatives markets currently only offer futures, options, and Perpetual Contracts. Derivatives use future price speculation to profit from trades and as such can profit from both a rise or fall of a cryptocurrency given that the correct direction was chosen.
BTCMEX is a cryptocurrency derivatives exchange offering BTC/USD Perpetual Contracts.
Where to start?
It’s fast and easy to create an account on www.btcmex.com. Use either a mobile phone number or an email address, set up a password, confirm the verification code sent to you and you’re good to go. No KYC or other cumbersome process refrains access to the platform.
Of course, you also need to abide by the terms of service and be of legal age to register on the exchange. The residents of any countries in which cryptocurrency trading is not allowed, cannot access the platform and that any users whose IP address would come from those countries will see its access blocked.
Find the “Register” button in the top right corner of the BTCMEX homepage or go directly to https://www.btcmex.com/app/user/register. Users can choose to register with the email or mobile phone number. You can join the platform in these several simple steps:
- Enter your email/phone number
- Get the verification code
- Create a password
- Confirm the password and agree to terms of service
- You’re in!
Now you can make your first deposit and start trading!
My Account: Deposits and Withdrawals
You can deposit, withdraw and check the status of your assets in your “Account” on BTCMEX. Find the button on the left of the homepage or visit https://www.btcmex.com/app/account/account-capital.
Click “Deposit” to get access to your personal Multi-Signature Cold Wallet on BTCMEX. You’ll get your wallet address and deposit history on this page.
The minimum amount required for the deposit is as low as 0.0001 BTC.
Keep in mind, that only deposits in Bitcoin (BTC) accepted on BTCMEX. Do not try to deposit fiat, or any other cryptocurrency, otherwise you’re risking to lose your money.
You can always check your wallet balance, trades, and orders history information, as well as available bonuses in the “Assets Overview”.
Go to the “Withdraw” page to make a withdrawal or follow the link https://www.btcmex.com/app/account/account-withdrawal.
Input the wallet address and the amount of the transaction in BTC. The system will automatically calculate the transaction fee and the amount available for the withdrawal.
BTCMEX does not take any withdrawal fees. The fee required is the Bitcoin network fee of minimum 0.0004 BTC, though the recommended transaction fee is 0.001 BTC.
To make the withdrawal process on BTCMEX as easy as possible, there’s no KYC procedure. Nevertheless, all the withdrawals are safe, as all the requests are processed manually by the senior executives on a daily basis.
All the requests are processed by 12:00 UTC+8 (Beijing time). BTCMEX takes these measures to provide the safest crypto trading experience for the customers.
In case you experienced any difficulties with deposit or withdrawal procedures, the Customer Support team is always there to help with further instructions.
BTCMEX Trading Bonus
BTCMEX has a flexible system of bonuses, which can be used to open positions, cover the trading fees, and allow to withdraw the profits made. You can even try out the platform for free with the first non-deposit welcome bonus.
There are three accumulative bonuses of $120 in total available for claiming on BTCMEX.
The $10 Ignition Trading Bonus is easy to get by following @BTCMEXGlobal on Twitter and sharing our pinned post with the personal bonus claiming code.
You can claim $50 Booster Bonus after completing the first deposit of at least 0.01 BTC.
The Nitro Bonus of $60 is granted to users, whose total deposited amount reached 0.03 BTC.
The bonus status and amount can be checked in your personal wallet in the “Assets Overview” on your “Account”.
Visit the BTCMEX Trading Bonus page to get detailed information and Terms & Conditions.
Start Trading: BTCMEX UI
BTCMEX offers a clear, simple, and customizable UI. All the information needed is available directly or at the push of a button without cluttering or distracting the eye. The trading platform is powered by the widespread TradingView to display its chart with many indicators being available in the classic TradingView format such as Moving Averages, Relative Strength Index, Bollinger Bands, or Ichimoku Clouds.
The order book, unlike other major exchanges, gives direct access to all order types, time in force, and quick and efficient order setup. The three order types currently available on BTCMEX are Market, Limit, and Conditional orders with Good Till Canceled, Immediate Or Cancel, and Fill Or Kill as the advanced time in force options.
The calculator is also available to check the estimated PNL and the price of liquidation even before placing the order.
You can switch between dark “night” interface mode and “day” light version for your convenience. There’s a wide color palette available to fully customize the trading chart according to your taste. The style of candles and indicators can be selected manually.
The panels can be dragged along the board and resized to fit your preferred settings. The Order Book, Recent Trades, the Chart, Your positions, and Orders are shown by default. You can also select the Market Depth chart and the Index Contract information to be shown manually.
Market Depth and Liquidity
The Market Depth chart is shown on BTCMEX as an electronic list of buy and sell limit orders in the order book; these are organized by price level and updated in real-time. It refers to an overall number of open orders available on the platform at a specific moment and indicates the ability of the exchange to handle relatively large orders without impacting the cryptocurrency price.
The Market Depth is closely related to Liquidity – the degree to which a digital asset can be easily bought or sold on the exchange. The cryptocurrency market tends to experience high volatility – a drastic price fluctuation throughout a certain period of time.
The exchange’s high volume of trade, good market depth, and liquidity ensure there’s no spread between buy and sell prices, and all the placed orders can be executed immediately.
One of the major problems the industry is facing is system overload and slow speed execution. BTCMEX has taken this to heart and developed a custom-made speed matching engine capable of performing at 10 to 20 times the average industry speed or 100,000 TPS per contract. The advantage of “per contract” part is that every new contract will be installed in parallel with existing contracts and get its dedicated 100,000 TPS instead of taking processing power away from a central speed matching engine.
This means that even during the busiest period of activity the trading pair will always remain available and that no general system overload will impeach traders from opening or closing their positions. BTCMEX does not have an internal market-making team, which should help in dealing with system overloads and some of the problems that result from it such as perceivably unjust liquidations.
As can be seen from the multiple hacks that happened these past few years, security is one of the most important factors when choosing an exchange as it may mean the difference between profiting from trading and losing all of one’s assets.
Conscious of this, BTCMEX has been co-develop and tested in cooperation with worldwide web security firms to provide top-of-the-line security to user accounts. This coupled with a multi-signature cold wallet, on which assets are kept, provides the best security currently available in the industry.
BTCMEX guarantees non-stop trading. 24/7 server uptime is ensured by off-site backups and hot fix system patches.
The cryptocurrency market has blossomed into a diverse ecosystem with the introduction of cryptocurrency derivatives, which is a brand-new line of financial products. A derivative is simply a financial contract between two or more parties that derives (hence “derivatives”) its value from an underlying asset. There are forwards, futures, options, and swaps amount financial derivatives.
Perpetual Contract is an innovative type of futures unique to cryptocurrency market trading. Unlike in traditional stocks or forex trading, crypto Perpetual Contracts give an opportunity to speculate on the future price of an underlying digital asset without an expiration date or settlement.
BTCMEX offers BTC/USD Perpetual Contracts trading with up to 100x Leverage. The detailed information about Bitcoin Perpetual Contracts is available in the official Trading Guide.
Cryptocurrency leveraged trading allows one to make a profit in both Bull and Bear market conditions by multiplying the position size using Leverage. Regardless of the current trends, a crypto derivatives trader can profit from having an opportunity to open both Long or Short positions.
In traditional trading, as well as crypto, longing means being positive on the market and buy an asset predicting that the price will go up. Shorting, on the contrary, means selling the asset to rebuy it at a lower price in the future.
You can enter the market opening a position on BTCMEX. If you open a Long (buy) position, and the Bitcoin price will go up, the percentage of the price move will be applied to your position and calculated as profit. But if the price drops the Long positions experience loss. The opposite would happen if you’re holding a Short (sell) position. If the price goes down, Short positions profit, but if it moves up – they experience loss.
Traders have possibilities to profit on BTCMEX not only from opening Long or Short positions but also from applying up to 100x Leverage to their trades.
Please note! Cryptocurrency leveraged trading is a highly speculative and risky activity, BTCMEX does not recommend you to apply the highest Leverage to your position, as it might increase chances of liquidation – losing the whole margin. BTCMEX explained why Leverage should be used extra carefully.
Every Perpetual Contract on BTCMEX worth $1. To open a position you need to enter the number of contracts you want to trade (the position value) and apply Leverage. For example, opening a $500 position with 25x Leverage, means $20 are used as collateral. Leverage can be adjusted after opening the position. It will change the amount of the collateral used, but not the position value. Adding or removing margin is a tool that helps to avoid liquidation.
Leverage is the main tool that allows multiplying your profit in cryptocurrency trading, but makes it risky at the same time, increasing chances for the position liquidation.
Leveraged trading is risky and doubly so in the cryptocurrency markets, which are famous for their high volatility. Conscious that many traders have suffered from market manipulations, unfair insider advantages, or speed advantages, BTCMEX has adopted a transparent Liquidation system and fair Dual-Price Mechanism in regards to the trading policy.
When the price of an underlying cryptocurrency is going in the unfavorable for a trader direction (down in case of a Long position, up for a Short), a trader experiences loss. The event of liquidation occurs when a trader loses almost all of his initial margin – the amount used to open a position. Liquidation is a forced automatic close of a position as a result of which a trader loses his entire margin.
For example, the Liquidation price of a Long position of 500 contracts at and the Entry BTC/USD price of 8,000 will be 7,730.5 USD. Let’s see an example for the Short position with the same conditions. The liquidation price will be 8,290 USD.
When the Mark Price – the BTC/USD market average – hits the Liquidation price, the position will be automatically closed.
Fair Dual-Price Mechanism
The Dual-Price Mechanism was introduced by the cryptocurrency exchanges after the market saw unreasonable liquidations, caused by internal price manipulations on a number of famous exchanges. The Last Traded Price – BTC/USD price on the particular exchange can be moved by large trades of so-called whales. Sudden price fluctuations are risky for the majority of traders as they might cause unexpected liquidations.
To elevate the game for all of BTCMEX users the exchange system uses Dual-Price Mechanism – the condition when liquidations are caused by the average market Bitcoin price and not the Last Traded Price on the exchange.
The average market price that serves as a trigger for liquidations on BTCMEX is referred to as Mark Price. The Mark Price is calculated equally from the Indexes of three exchanges Kraken, Coinbase, and Bitstamp (33.33% each) and includes a decaying Funding Index.
From the examples above, the liquidation prices of 7,730.5 USD for a Long position and 8,290 USD for the Short, must be triggered by the Mark Price, which will not be affected by any, even large trades on BTCMEX.
Though the event of liquidation is triggered by the Mark Price, the liquidated position is closed by the Last Traded Price, which means the realized PNL is calculated according to the price on BTCMEX.
Here is an example of PNL calculation for a Long position.
The mechanism that prevents the Last Traded Price on the BTCMEX from deviating significantly from the BTC/USD market price is called Funding. Funding refers to periodic interest payment that ensures that the underlying asset is not “overbought” or “oversold”.
On the crypto exchange funding means that the holders of Long positions will pay an interest fee to “shorts” when the LTR is higher than the Index Price, and the other way round, if the Funding rate is negative, or the LTR is lower than the Index Price “shorts” will pay “longs”.
Funding payments happen every 8 hours. Only traders who have open positions on BTCMEX during these timestamps are subjected to funding payments. The transactions happen between users directly and are not deducted by the platform.
In such a way, Funding creates additional incentives to buy or sell the asset in order to keep the LTP price aligned with the Bitcoin market price.
Insurance Fund and ADL
To protect the exchange from the possible loss that may occur during the event of liquidation, BTCMEX established the maintenance margin requirement. It ensures that the liquidation fill price is always better than the position’s bankruptcy price. The requirement needed to keep the position open is 0,5% of the total position value.
Insurance Fund and ADL are the two mechanisms of loss covering that are designed to make trading as fair and transparent as possible and secure users’ profit even if the loss occurs.
The Insurance Fund on BTCMEX serves as a buffer balance which is used to cover the loss in case a position was liquidated at a price worse than its bankruptcy price, thus the exchange suffered a loss. The fund is refilled with the remaining amount that comes from the positions that were liquidated at a price better than their bankruptcy prices.
The Insurance Fund is the fairest and most secure loss covering scheme existing in the market, and will always be triggered before the ADL – Auto-Deleveraging. There are two ways to cover a potential loss if the Insurance Fund balance is not sufficient – Socialized Loss and ADL.
Some big exchanges use Socialized Loss – the mechanism that spreads the loss amount between all the profitable traders on the exchange, no matter how big their positions are and what Leverage they apply for the trades. BTCMEX uses ADL, or Auto-Deleveraging – more intelligent loss covering step.
The loss usually happens as a result of force liquidations of over-leveraged positions of a big size and significant PNLs.
Unlike in the case of Socialized Loss, where every all the exchange users suffer from the actions of whales, ADL ranks traders by profit and Leverage priority. This means, high profitable and high-leverage positions will be targeted first. The system will automatically deleverage opposing traders’ positions, not affecting low-leveraged trades.
BTCMEX strives to bring the easiest and intuitive trading experience. Multiple order types available on the trading page https://www.btcmex.com/app/transaction/XBTUSD are designed to satisfy the needs of both professional day traders and new crypto enthusiasts. There are Market, Limit and Conditional orders available on the platform.
The fastest way to open a position is to place a Market Order. There are buy (Long) and sell (Short) orders which are executed instantly at the market price. Buy orders are matched with sell orders from the order book and the other way round. Market orders are not placed in the order book, they are matched with the existing orders instantly and executed at the best Last Traded Price. However, when placing a large order, especially during periods of high volatility, slippage may occur, and the order may not be executed at the best ask price, but divided and matched with several following orders in the book as well.
With the Limit Orders, it’s possible to set the price at which to enter the market. Limit orders will not be executed until the LTP (Last Traded Price) reaches the trigger Limit price, only then the position is opened.
The Conditional Orders are designed to both enter and exit the market. Technically to close a position a trader needs to open another one in the opposite direction. Conditional orders allow setting both entry and exit trigger prices at once. Although BTCMEX currently doesn’t have a direct Take Profit or Stop Loss settings, Conditional orders function as TP/SL on the platform. There are four types of Conditional orders available: Take Profit Market, Stop Market, Take Profit Limit, Stop Limit.
The white line on the Buy/Sell buttons indicates which orders are more likely to be executed immediately or faster at the given period of time.
To make the order placement position easy and transparent there’s a calculator available to check the estimated Profit and Loss and a Liquidation Price of a position.
The details about different order types and placing orders on BTCMEX can be found in the official Trading Guide.
To prevent slippage described above and guarantee the order execution at the preferable price the following Advanced Time in Force settings are available for the Limit Orders on BTCMEX.
Good Till Cancelled (GTC) – a default TIF setting on BTCMEX, that keeps the order in the book until executed fully or partially.
Immediate Or Cancel (IOC) – if the order executed partially, the unfilled contracts are automatically canceled.
Fill Or Kill (FOK) – the order is canceled automatically if it can’t be fully executed at the trigger price.
Apart from Time in Force, BTCMEX offers to choose the Post-Only option for the order placement. Post-only orders will never be executed immediately and ensure that the order will enter the order book. The Maker fee is always applied to such orders.
Reduce-Only order can be placed to reduce the size of the current open position or close it completely.
Hidden Orders are placed but not visible for other users in the order book.
BTCMEX offers the lowest trading fees among other crypto derivatives exchanges in the market. The fee structure is based on the daily trading volume and depends on which type of orders traders place.
Users provide liquidity or place Limit orders that stay in the order book are considered as makers, thus, pay lower fees.
Traders, who place market orders, which are matched with the orders existing in the book immediately are takers. Taker fee starts from 0.075% and is reduced with the raising amount of the trading volume.
Below is a detailed table of trading fees on BTCMEX.
New Users Tutorial
For all the new crypto derivatives enthusiasts BTCMEX explains the basics of the Bitcoin Perpetual Contract trading in four simple steps in the interactive New User Tutorial: https://www.btcmex.com/trade-course?redirect=/app/transaction/XBTUSD.
In four easy steps, the users are getting the general knowledge about the concept of leveraged trading and opening Long and Short positions.
Trading Guide & Codex
One of the company’s goals is to make cryptocurrency trading easy and comfortable for both professional traders and crypto newcomers. Not only BTCMEX is constantly working on product development and improvements but it also focuses on providing trustworthy crypto content. The cryptocurrency industry is relatively new, thus does not have unified and well-developed glossary of cryptocurrency-related terms and concepts. Financial authorities are pointing out to this issue being one of the obstacles to develop comprehensive digital assets regulations all over the world. The team is actively contributing to define and explain crypto concepts in several languages by developing the BTCMEX Trading Codex – the most accurate definitions of cryptocurrency trading terms.
The other important things that the BTCMEX team is trying to enhance are cryptocurrency background awareness and trading knowledge by completing the official Trading Guide and providing numerous educational materials, covering trading fundamentals and technical analysis. The BTCMEX Blog in its turn has a number of opinions and industry insights as well as the latest crypto news and weekly market digests.
BTCMEX has also a strong presence in Social Media, where users can find useful links, technical support, product updates, and communicate with the community.