Unofficial Crypto-Currency Derivative Trading Guide

Prepared by: Alex Harvey


While there are many exchanges and websites that off crypto-derivative trading contracts, I found that BitMEX provided the best contracts, exposure, and interface. The author is in no way affiliated with BitMEX, or any BitMEX partners. Furthermore, the following is intended for informational purposes only. This is not a place for the giving or receiving of financial advice, advice concerning investment decisions and or trading tips. Crypto-currencies are a risky investment as is, leveraged crypto-contracts expose the trader to even more market risk, invest at your own risk!


BitMEX (Bitcoin Mercantile Exchange) is a Peer-to-peer crypto trading platform that allows users to trade derivative contracts on the price movement of various cryptocurrencies. It is important to note that BitMEX contracts do not involve buying or selling of the underlying currencies, as all trades are through Bitcoin, the trader is simply betting on the underlying price moving up or down. BitMEX offers leveraged contracts that are bought and sold in Bitcoin.

While all trades are denominated in Bitcoin, when you deposit your Bitcoin into your BitMEX account you will see a balance listed in XBT, this is the underlying BitMEX currency and its dollar value moves accordingly to real-market Bitcoin prices. For example, if you deposit 1 BTC into your account, your balance will be 1 XBT.

5 navigation Tabs on BitMEX:

Bitmex Contracts:

XBT Series (Bitcoin contracts)

XBT USD — Perpetual Contract

XBTZ18 — Traditional Futures contract, expires at end of 2018.

XBTU18 — Traditional Futures Contract, expires September 2018

XBT7DU105 — Upside profit contract settled every 7 days

XBT7D_D95 — Downside profit contract, settled every 7 days

XBJ Series (Japanese Yen)

XBJ — Futures contract, expires annually

XBTJPY — Perpetual contract.

Cardano Series

ADAU18 — Futures Contract, expires Sept 2018

Bitcoin Cash Series

BCHU18 — Futures contract, expires Sept. 2018

EOS Series

EOSU18 — Futures contract, expires Sept 2018

Ethereum Series

ETH USD — Perpetual contract

ETHXBT — Perpetual Contract

ETHU18 — Futures contract, expires Sept 2018

Litecoin Series

LTCU18 — Futures contract, expires Sept 2018

Tron Series

TRXU18 — Futures contract, expires Sept. 2018

XRP Series

XRPU18 — Futures contract, expires Sept 2018

Perpetual Contracts: Key components

Position marking — Perpetual contracts are marked according to fair price marking. Mark price determines unrealized PNL. According to fair price marking, the mark price will lag slightly behind the exchange price, this way, if there is a flash drop, your position won’t get liquidated unless the drop remains long enough to impact the mark price.

BitMEX Trading Dashboard (testnet)

Placing an order:

To place an order, direct your attention the left side of the Bitmex screen, where you will see the words ‘Place Order’. There are 3 types of orders that can be placed on Bitmex…

Order Parameters:

Quantity — Number of orders, each order is worth exactly $1 in BTT. If I have 96 orders at an XBT value of 0.0147 this has a notional value of $96.

Cost: XBT — This is how many XBT (Bitcoin) that the order will cost you. This amount goes into your margin and can be liquidated if your trade was poor and the market moves against you.

Order Value = Notional value of the order = Cost + Leverage.

Available balance = Your balance that is available to invest.

Types of order posting on Bitmex

Post only — This type of order only posts commands to the order book and doesn’t buy from existing commands. This is mainly used by robotic/algorithmic traders so that they only have to pay the maker’s fee and don’t have to pay the taker’s fee.

Maker is the one who creates the command

Taker buys from existing commands, makers fee is usually cheaper

Time in Force — 3 options for order timing:

Cross margin

— A cross margin selection tells the site to use all available balance as collateral for trading.


— Bitmex allows leverage of up to 100x on some contracts. Changing the leverage of your position ultimately affects how much you have to post as collateral in your initial margin. The higher leverage you order, the less XBT you have to post as collateral, but increasing the leverage will also affect your liquidation price. If you are LONG and increase leverage, then your liquidation price will increase, meaning if the market moves against you, a highly leveraged position would be liquidated sooner than a less leveraged one. Furthermore, increasing leverage raises your upside potential.

Liquidation price

Unrealized PNL

— Based on lagging mark price, hover over to see Unrealized PNL based on current market prices.

Risk Limits

Funding Rates

Key Margin terms:

Wallet balance = Deposits — Withdrawals + realized PNL

Unrealized PNL = Current profit + Profit/Loss from open positions

Margin Balance = Wallet Balance + Unrealized PNL

Position margin — The portion of your margin that is assigned to the initial margin requirements on your open positions.

= (Entry value / Leverage) + Unrealized PNL

Order margin — Portion of your margin assigned to the initial margin requirements on your open orders.

Available Balance = Margin balance — order margin — position margin.

Depositing Funds:

To deposit funds on Bitmex, first set up an account on their website

Then Click on the Account Tab, and click deposit. This will display your Bitmex public key, which you can enter into your Bitcoin wallet to send Bitcoin to your bitmex address.

Bitmex only accepts Bitcoin, do not attempt to send ETH, LTC or any other crypto to your Bitmex address, it will be lost.

Viewing your positions:

Toward the bottom of the Bitmex trading page, you will be able to view your open positions. This section contains relevant information regarding your trades’ performance, liquidation price, mark price (used to calculate Unrealized-PNL), symbol, value, entry price, margin, etc.

There are also tabs which allow you to view closed positions, active orders, stops, fills, and your order history.


Charts on Bitmex:

Contract price chart

Depth chart

Auto Deleveraging:

In the above example, all “lights” are lit, which would mean your position is in the top percentile. In the case of a liquidation that is not able to be caught in the market, you may be deleveraged.


Other Bitmex Rules:

This concludes the basic overview of the BitMEX trading site, while none of the above content is intended to be investment advice or trading tips, the author hopes that it will provide beginner level traders with a comprehensive overview of the site’s functionality and features.

Interested in Philosophy, Capital Markets, Economics, Bitcoin.