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The special case of BitMEX


BitMEX is one of the largest exchanges of the world, by volume. It operates since 2014 and has proved to be robust and trustable. It's registered in the Seychelles, which offer stable and friendly laws for crypto operations.

It offers leverages up to 100x for Bitcoin, 50x for Ethereum, and 20x for other coins.

BitMEX screenshot

It is not available for the following countries: North Korea, USA, Iran, Québec, Cuba, Crimea and Sevastopol, Iran, Syria, and Sudan.

Futures contracts

A futures contract is an engagement to buy the underlying asset represented by the contract, before a future date, at a pre-determined price.

BitMEX only provides trading of contracts: you only own contracts and Bitcoin, not the represented asset:

It has two kind of contracts available:

BitMEX provides 3 tradable contracts for BTC:

available Bitcoin contracts on BitMEX


An index, also called an indice, is the averaged price of different markets.

“Spot price”: it's the price for which a cryptocurrency is currently available to buy or sell, with an immediate delivery. Most exchanges trade on spot. However, BitMEX doesn't, since future contracts don't deliver you the underlying asset immediately.

BitMEX runs many indexes, for example:

If an exchange used for an index get in troubles, it can be removed or replaced. New ones can be added


Perpetual contracts

Contracts have names, for examples:

Very fun fact: When a ticker symbol starts with a X, it means that the underlying asset is not attached to any country. It is used for many “supranational” currencies, such as XAU for gold, and XAG for silver. However, it is not systematically respected. That's why some exchanges such as Kraken and BitMEX mark Bitcoin as XBT, while others mark it as BTC.

Futures contracts

Futures names include the deadline date, in this format:

TICKER + Month Code + Year


On BitMEX, futures contracts prices are always tracked against BTC.
They are quarterly contracts: they last for one quarter of a year.
There are also biannual contracts for Bitcoin.

Here is the list of month codes:
January = F
February = G
March = H
April = J
May = K
June = M
July = N
August = Q
September = U
October = V
November = X
December = Z

Keeping the correct price

Contracts are different markets than their underlying asset: they can't be directly arbitraged with other exchanges. However, we want their price to be pegged with spot rates.

Pegging the futures

Pegging the futures is a simple and natural process.
As the contracts get close to their expiration date, no trader wants to long above the spot price, and no one want to short below it.
But, they'd be interested to long and short to approach the spot price, as this is guaranteed (small) profits.
This naturally encourages them to peg the price.

Pegging the perpetuals

Since they never expire, there is no natural incentive for traders to tie to spot price.
This is where the BitMEX funding fee comes in place:

  1. If contract's price is below its index, then the shorts will pay the fee to the longs.
    This way, people are motivated to long, and discouraged to short.

  2. If contract's price is above its index, then the longs will pay the fee to the shorts.
    This way, people are motivated to short, and discouraged to long.

When the Funding Rate is positive, longs pay shorts. When it is negative, shorts pay longs, as you can see on the example below: ETHUSD (Price of the contract) is above its index BETH. Traders are incited to short.

Funding fee on BitMEX Example of funding fee on BitMEX

The fee is paid every 8 hours, at 4:00UTC, 12:00UTC and 20:00UTC, only if you have an open position.
And yes, if you don't want to pay the fee, you can close your trade, and reopen it right after the deadline.

BitMEX doesn't charge any fees on funding: it is exchanged directly peer-to-peer.

Characteristics of a contract

Let's check the characteristics of the XBTUSD contract, as an example.

Details of the XBTUSD contract on BitMEX

“Mark price”: to avoid unfair liquidations due to manipulation, lack of liquidity, or sudden price swings, BitMEX uses an unique system called “Fair Price Marking”. It is a protection that works to your advantage.
Liquidations and unrealised P/L are executed and calculated according to this mark price.

Two ways to use leverage

BitMEX propose you 2 ways to manage your collateral.
One uses all your balance: it is more flexible, but more risky.
The other is restricted to your order size: it protects your balance not involved in the trade.

Cross margin

Cross margin on BitMEX

When the slider is put on “Cross”, you are using cross margin.
It works the same way than with Bitfinex: your whole balance will be used as a collateral.

One important change, is the required initial margin and margin maintenance (those numbers are for XBTUSD):

To remind you, on Bitfinex the numbers were 30 and 15%!
This is a major difference.

Cross margin permits you to use a 100x leverage!
Let's say you have the equivalent of $1000 in your balance.
If you want to use the 100x leverage, you have to open an order for 100000 contracts.
Of course, this is ridiculous, and your liquidation price will be extremely near your entry.

A wiser thing to do, would be to use a 5x leverage, by opening a position of 5000 contracts.

Isolated margin

Isolated margin on BitMEX

If you select anything but “Cross”, then you will use isolated margin.
With this method, maximum leverage is 100x.

Only the amount you put in the position is used as a collateral, you can't risk more than your order size.
However, since your collateral is smaller, your liquidation price will be tighter. Everything comes at a price!

If you open a position of 5000 contracts at a 10x leverage, you will only use $500 as a collateral.
Once your position is open, you can change the leverage buy adjusting the slider: if you switch it to 100x, your collateral will fall to $50.
After that (or even before), you can add (or remove) margin collateral clicking the +b button to add margin collateral on BitMEX button

Example of a position on BitMEX

I advice beginners to only use isolated margin, and to start with a 2x leverage.


Example: 1x leverage long

Daniel long 1000 contracts @$1000 (1BTC)
Its an engagement from him to buy 1000USD worth of BTC in the future
We could say he is long 1BTC

Bitcoin goes to $2000
Daniel wants to cancel its contracts, he does so by shorting 1000 contracts @$2000 (0.5BTC)
We could say he is short 0.5BTC

By cancelling its contracts, he is free of any engagement from them.
He was long 1BTC then shorted 0.5BTC, while being free of contracts promises, so he keeps the difference of 0.5BTC.

Tool: 1x leverage short

“To hedge”: Hedging is a way to protect yourself from adverse reaction of the market

Shorting with 1x leverage, on BitMEX, is an awesome way to hedge against the market.

Let say you short 2000 contracts @$2000, which is equal to $2000.
No matter the price or the direction of the market, when you close you position, you will end with the equivalent of $2000 in Bitcoin.

Your final Bitcoin balance may change, but the USD equivalent of your position will be preserved.

Tool: BitMEX calculator

It's a useful tool, available on the exchange itself. It helps you calculate you liquidation price, P/L, etc...

Open the BitMEX calculator BitMEX's calculator

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  Vocabulary and examples List of exchanges with leverage