Bitmex Ultimate Guide. Part 1/3

This is an ultimate and currently the only one in its kind Bitmex guide that covers all crucial and tiny details that most of the authors in the entire world wide web have either underestimated or forgot to elaborate as they should have…

Bitmex is a HUGE margin trading platform! Currently the best marketplace to short BTC with leverage for hedging and speculative purposes, IMHO. Just look at the graph above! By the way, it rents world’s most expensive offices in Hong Kong…Sure, if you can afford it, why not?

Though, existing Bitmex FAQ is not well-equipped and it lacks concrete visual examples that some people really need to fully grasp the functionality of all order types provided on the platform. Moreover, only a few orders are frequently applied while the rest remain misunderstood by traders. I promise to do my best to efficaciously delineate all of the existing Bitmex order types (Limit Buy & Sell, Stop Limit Buy & Sell, Take Profit Limit Buy & Sell, Market Buy & Sell, Stop Market Buy & Sell, Take Profit Market Buy & Sell, Trailing Stop Buy & Sell) and explain with visual examples how you can practically apply them with your unique trading and hedging strategies. Moreover, such concepts as Funding Rate, Risk Calculator, 100x Cross, ImmediateOrCancel, Margin management and other crucial details will be covered.

Sorry, I used to trade with RU settings 😀

✅ Best result achieved. ROE 1210.76%. Sharpe ratio was around 35. It is possible with a strict risk management!

I’ve been using it for quite a long time and ready to share its pros and cons:

It doesn’t matter if you are a newbie or a professional trader. You will certainly find this guide useful. Sleep with it…eat with it…and trade with it until you sharpen your trading strategy to a pro level!

1.1 Bitmex Limit SELL order

Characteristics:

  • You define market entry price (fills at the price you want, or better unless ImmediateOrCancel or FillOrKill function is applied).
  • Maker fee is (-)0.025% for BTC, ETH. You are getting paid!
  • Maker fee is (-)0.05% for Altcoins. You are getting paid!
  • You are making this market and hence your order is in the Order Book (Unless Hidden function is applied. In this case you pay a Taker fee 0.075% for BTC, ETH and 0.25% for Altcoins)
  • Reduce-Only function can be applied (If checked, reduces your open LONG position)

In the example above you can clearly see that all you need to do is pretty much obvious. Choose a trade size, define your entry price (Limit price), choose your preferred leverage. Note, that in case of a Limit BUY order, 5150$ limit price is OK since the market price is ABOVE it. However, short-selling market with a limit SELL order with a limit price BELOW the market price will cause an instant execution as an ordinary market SELL order (Yes, you will pay 0.075% in this case). Here is the proper way to use Limit Sell order:

Ok, here we go! In the second scenario Limit SELL order with a limit price of 5250$ ABOVE the market price is initiated.

Below you can see how the contract structure looks like. It contains everything you need to know before the actual execution. Accurately and rationally apply your risk management! Take into account the “Cost”, adjust your leverage if needed, do not forget about the liquidation price. By the way, liquidation fee is the most expensive on Bitmex.

That is why I embedded a 10% referral

Bitmex fee discount to at least protect you by this percentage.

I strongly recommend setting a “Stop Market” order above your liquidation price (for LONG positions) and below for SHORT positions with a gap of 0.2%–0.5% (because slippage is possible).

Avoid liquidations!…Seriously, secure your trades. I know some traders tend to think that they can efficiently use liquidation as an automatic stop-loss, but they forget about high fees.

Awesome! — Contract is confirmed and your order is currently in the waiting list displayed in the Order Book and in your “Active Orders’’ section at the very bottom of your Bitmex desktop:

Take into account that a Limit Buy/Sell order is never guaranteed!

Concerning margin requirements, you can easily either add or remove your isolated order’s margin. Simply, follow the steps below. By doing this you can adjust your available margin in any way you want. By adding extra margin you postpone your liquidation, providing more “space” to float for your open trade. Just follow the example below and notice what happens once extra margin is added:

Adding 0.1 XBT margin to the SHORT order. Changing 5301.5$ liquidation price to 11275$.

Below is the case in which amending (dragging order on a graph or changing entry price in your “Active Orders” list) your Limit SELL order to a price BELOW the market price causes instant execution. Bitmex will notify you with this warning before the amendment.

Warning before the execution for a limit SELL order. It works the opposite way for LONG.

1.2 Bitmex Limit BUY order

Characteristics:

  • You define market entry price (fills at the price you want, or better unless ImmediateOrCancel or FillOrKill function is applied)
  • Maker fee is (-)0.025% for BTC, ETH. You are getting paid!
  • Maker fee is (-)0.05% for Altcoins. You are getting paid!
  • You are making this market and hence your order is in the Order Book (Unless Hidden function is applied. In this case you pay a Taker fee 0.075% for BTC, ETH and 0.25% for Altcoins)
  • Reduce-Only function can be applied (If checked, reduces your open SHORT position)

Limit BUY order is set at 5150$. Current market price is 5265$. We expect the market to drop a bit.

Don’t forget that you can always adjust your Limit Order trade size, entry price unless the market has already activated your order. In the example provided below current market price (5276$) is still above the limit price (5150$) and hence we still have time to make some adjustments. Simply, follow these straight forward steps:

Open “Active Orders” section and find the order that you need to adjust.

You’ve noticed I mentioned ImmediateOrCancel and FillOrKill order execution options. From a practical perspective, they are very useful in risk management:

  • Immediate-Or-Cancel is an order that executes all or part immediately and cancels any unfilled portion of the order.
  • Fill-Or-Kill order is activated only if the entire quantity (trade size) can be filled at your set limit price or canceled, if the price is unavailable.
  • Good-Till-Cancel order executes your trade at your price or better. It remains active until either the order is filled or the trader cancels it.

2. Bitmex Market BUY & SELL orders

Characteristics:

  • Market defines your entry price (volatility can be harsh).
  • Taker fee is 0.075% for BTC, ETH.
  • Taker fee is 0.25% for Altcoins (ADA, BCH, EOS, LTC, TRX, XRP)
  • Not displayed in the Order Book.
  • You can use it as an instant take-profit or stop-loss order for your existing trade.

In the example below a Market SELL order is initiated at the weighted average price of 5075.11$. Notice that the order is executed partially at different prices and hence our entry price is a weighted average. In the right bottom corner you can spot partial market executions. Though, in some cases trades are executed without slippage. Depends on volatility:

Market SELL example. BUY order is executed the same way.

3.1 Bitmex Stop-Limit BUY order

Characteristics:

  • You define market entry price (fills at the price you want, or better unless ImmediateOrCancel or FillOrKill function is applied).
  • Trigger price options: Mark/Last/Index
  • Maker fee is (-)0.025% for BTC, ETH. You are getting paid!
  • Maker fee is (-)0.05% for Altcoins. You are getting paid!
  • You are making this market and hence your order is in the Order Book once a Stop Price is triggered (Unless Hidden function is applied. In this case you pay a Taker fee 0.075% for BTC, ETH and 0.25% for Altcoins)
  • Close on Trigger can be applied (If checked, reduces your open SHORT position)

Below is a step-by-step guideline. The only major difference between an ordinary Limit Buy and Stop-Limit Buy orders is that the latter requires a trigger price (Stop Price here) to activate original Limit Buy order. In other words, Stop-Limit Buy = Stop Price (trigger) + Limit Buy.

In this example I used close to market prices just for the sake of saving my time. The market price is 5228$, Stop Price (trigger) is 5229$ (1$ above the market), Limit Price is 5210$, which will be initiated and displayed in the Order Book once the Stop Price is triggered. As simple as that!

Once your Stop-Limit Buy order is confirmed you will find it on a graph, which you can drag any way you want (it just changes your Stop Price). However, once the Stop Price is triggered and consequently your Limit Buy order is initiated you can no longer move it on a graph, but you can adjust your limit entry price and trade size in “Active Orders” section. Kind of strange, but this is how it works 😀

Stop Limit Buy initiated → Waiting for the market to trigger your Stop Price (5229$)→ Stop Price triggered (at 5229$)→ Limit Buy is now pending at 5210$

Below is one of the possible cases in which you can use a Stop-Limit Buy order. Play with it anyway you want depending on your strategy. You can also easily use it in conjunction with a Limit Sell or Take-Profit Sell orders as a stop-loss for your short position.

Take-Profit Sell/Buy orders will be explained in the 2nd Part. Stay tuned!

Stop price is 127$. Limit price is 125.8$

Stop price triggered! Limit Buy is pending at 125.8$

Market price dropped to 125.8$ → Limit Buy initiated!

3.2 Bitmex Stop-Limit SELL order

Characteristics:

  • You define market entry price (fills at the price you want, or better unless ImmediateOrCancel or FillOrKill function is applied).
  • Trigger price options: Mark/Last/Index
  • Maker fee is (-)0.025% for BTC, ETH. You are getting paid!
  • Maker fee is (-)0.05% for Altcoins. You are getting paid!
  • You are making this market and hence your order is in the Order Book once a Stop Price is triggered (Unless Hidden function is applied. In this case you pay a Taker fee 0.075% for BTC, ETH and 0.25% for Altcoins)
  • Close on Trigger can be applied (If checked, reduces your open LONG position)

Stop-Limit Sell= Stop Price (trigger) + Limit Sell:

In this example I used close to market prices just for the sake of saving my time. The market price is 5210$, Stop Price (trigger) is 5205$ (5$ below the market), Limit Price is 5250$, which will be initiated and displayed in the Order Book once the Stop Price is triggered. As simple as that!

Once your Stop-Limit Sell order is confirmed you will find it on a graph, which you can drag any way you want (it just changes your Stop Price). However, once the Stop Price is triggered and consequently your Limit Sell order is initiated you can no longer move it on a graph, but you can adjust your limit entry price and trade size in “Active Orders” section.

Stop Limit Sell initiated → Waiting for the market to trigger your Stop Price (5205$)→ Stop Price triggered (at 5205$)→ Limit Sell is now pending at 5250$

Below is one of the possible cases in which you can use a Stop-Limit Sell order. Play with it anyway you want depending on your strategy. You can also easily use it in conjunction with a Limit Buy or Take-Profit Buy orders as a stop-loss for your long position.

Take-Profit Sell/Buy orders explained further in this guide ↓

Stop price is 5160.1$. Limit price is 5172$ — — — — — — — — — — — — — — — — — → Market plunges and triggers Stop price (5160.1$). Limit Sell is pending!

Limit Sell at 5172$ is activated — — — — — — — — — — — — — — — — — → Market continues its plunge. This is a profit zone for Short positions (opened at 5172$)

4. Bitmex Stop Market Buy/Sell orders

Characteristics:

  • Executed instantly (volatility can be harsh).
  • Trigger price options: Mark/Last/Index
  • Taker fee is 0.075% for BTC, ETH.
  • Taker fee is 0.25% for Altcoins.
  • Not displayed in the Order Book.
  • You can use it as an instant stop-loss order for your existing trade.

First things first , let me elaborate what do Mark/Last/Index price triggers stand for:

  • Mark price is a calculation of a Fair price, which is based on the Index price and Fair Basis.
  • Index price is a price on reference exchange (Kraken, GDAX, BitStamp)
  • Last price is literally the LAST price traded on Bitmex.

So it is up to you which trigger to choose. This option is only available for Stop Limit, Trailing Stop, Stop Market, Take Profit Limit, Take Profit Market orders.

Last price trigger is a default option.

Below is a step-by-step guideline. Example provided is based on the Buy Stop order with an entry price set at 5081$. Basically, if your ‘’Stop Price’’ is below the market price then it is a Sell Stop order. Alternatively, above the market is a Buy Stop order. Both orders are executed instantly and you won’t see them in your Orders Book. You are a “Taker” and hence you must pay a Taker fee.

Buy Stop example with a Stop Price at 5081$. Once initiated you will find it in your “Stops” list of orders.

Don’t worry, here is a concrete example for you to get the idea of how it works and can be used. Also! — Don’t forget that you can use this order to close your open positions. This can be either your market stop-loss or a pending market entry. Example provided below is case of a pending market LONG entry:

We are waiting for a possible break-out of the top line. Some traders enter the market at major pumps and dumps. We set a Buy Stop order at 4333.5. As soon as the market reaches this level the order is activated as if you would manually open an ordinary Market Buy order.

Ok! — Here we go. Buy Stop activated. Bitmex automatically opened a Market Buy when the market price triggered 4333.5$ level. Though, remember about slippage!

Finally, the market triggered a Buy Stop order — — — — — → You now have a LONG open position.

Concerning the Stop Marker Sell order it works just the opposite direction. Easy peasy lemon squeezy!

5. Bitmex Trailing Stop Buy/Sell orders:

Characteristics:

  • Similar to a Stop Market order
  • Executed instantly (volatility can be harsh).
  • Trigger price options: Mark/Last/Index
  • Taker fee is 0.075% for BTC, ETH.
  • Taker fee is 0.25% for Altcoins.
  • Not displayed in the Order Book.
  • You can use it as an instant stop-loss order for your existing trade.

You can also use it as a pending Market Buy/Sell order. However, I strongly do not recommend using it this way, because your entry can be irrational and hence unsuccessful from the risk management perspective.

In the example below I am presenting a Trailing Stop for an open LONG position. Note that “Close on Trigger” is checked (in this case our Trailing Stop can only REDUCE our position, not increase it). As mentioned above, from the practical perspective the best way is to use it as a stop-loss marker order for your open position:

Trailing Stop for an open LONG position is following the market only UPWARDS. Otherwise it would be a floating stop-loss with an unlimited risk. So, if the market price moves upward by 10$, then the Trailing Stop will also move upwards by 10$. However, if the market moves downward by 10$, then the Trailing Stop won’t!

Well, I think this is enough for the 1st part of my Bitmex Ultimate Guide. Hope you enjoyed it and, more importantly, found it useful. At first glance Bitmex seems to be quite complicated. However, in reality it turns out that this exchange is doing a great job as it provides us with a vast amount of trading strategies due to the abundance of order types.

In the next chapter I will cover:

  • Take Profit Limit and Take Profit Market orders (These are indeed very powerful tools!)
  • Bitmex Profit/Loss calculator
  • Special risk management excel calculator for any contract at Bitmex.
  • Funding rate (sometimes it can be a profitable passive income)
  • 100x cross leverage (Yes, 100x is OK if the risk is adequate)
  • Something else

Twitter: https://twitter.com/Dmitry_Quail

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Platforms I am using: Bitmex, Bitfinex, Trading View, Binance, 3Commas (quite good for portfolio management)

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