EtherMium Review: A New Type of Decentralized Exchange
October 26, 2018
Exchange | Latest News | Reviews
Due to the increasing popularity of decentralized exchanges, many exchanges like EtherMium aim to offer more features than your standard DEX. With so many “non-feature rich” decentralized exchanges like EtherDelta and IDEX, which provide a very limited amount of features, EtherMium’s primary goal is to allow the same features found on a centralized exchanges within a decentralized platform, thus creating the best possible decentralized exchange available.
Like most other decentralized exchanges, they don’t require KYC from their users. You’ll also be allowed to trade within seconds of registering. The company is getting ready to launch their options trading solution as well as allowing the opportunity to invest in ICOs within their decentralized platform.
Regarding safety, Ethermium never holds any of their customer’s funds. These funds stay within their corresponding smart contracts, which if you’re not familiar with, act as independent programmable bank accounts. Due to this technology, customers are able to manage their funds independently without exchange owner intervention.
Regarding cryptocurrency selection, EtherMium offers a wide range of Ethereum ERC20 tokens that can be traded at any given moment. In the near future, the company plans on launching a derivative trading solution which makes it possible to trade non-Ethereum cryptocurrencies (Bitcoin, Ripple, Litecoin, etc) with up to 10X leverage.
EtherMium will also allow the trading of real world assets like commodities, company stocks, and indices. The company believes that a decentralized futures trading platform with the ability to leverage trades, will revolutionize the DEX trading world forever.
Last but not least, EtherMium plans to offer the ability to invest in ICOs while taking advantage of their security, anonymity, and decentralization.
First of all, the company makes it very quick and simple to start trading due to its decentralized nature. No longer do you need to register or complete KYC requirements. Simply create a new Ethereum based wallet, deposit your Ethereum into it, and start trading in minutes.
As you can see from the screenshot below, the EtherMium trading screen is very well-designed. It offers more trading options than any other current decentralized trading platform like stop limits and market orders.
The platform also offers extremely competitive trading fees along with no withdrawal or deposit fees. Their current trading fee model allows market makers to trade with 0% fees while takers only pay 0.2%.
The most revolutionary feature EtherMium plans to release is the ability to trade leveraged futures on a decentralized platform. This is currently unheard of! This will allow investors to bet on the prices of certain assets including cryptocurrency, stocks, and other commodities.
The company currently plans on offering leverage up to 10X for starters, however this will most likely increase as the platform expands and gains more popularity. Their goal is to start leverage trading with available assets such as Bitcoin, Dash, Litecoin, and Monero. After such, they will deploy other trading channels with a focus on company stocks. After that, commodities will be added such as oil, gold, and other tradable assets.
Another noteworthy feature of EtherMium will be the ability to short an ICO. This is a feature that no other exchange can currently provide. This is yet another feature that will “game changing”, not only with decentralized exchanges, but within the crypto trading community.
EtherMium will soon release a mobile application which allows users to trade on any mobile application like Android and iOS devices.
EtherMium will most certainly change the way decentralized exchanges are perceived. Users will be able to secure their funds on smart contracts as well as the ability to trade other “non-cryptocurrency assets” you can’t currently find on other exchanges. With game changing features like DEX futures leverage trading and the ability to both invest in ICOs as well as short them, will undoubtedly create a frenzy of new users to their platform.
At the moment, the exchange currently has one of the most intuitively designed and easy to use decentralized trading platforms available today. With their soon to be released mobile app looking equally as appealing, I’m quite sure that the company will experience a flood of new traders that will look forward to trading on a decentralized exchange like they’ve never experienced before.
Terrexa is a new face on the scene, only operating since the first half of 2018, but it’s starting to create some interest. Based in Cyprus and backed by Prime Marshall CY, the exchange platform tech is powered by Leverate, a fintech software company. The new service isn’t well-known at all, but that may be about to change as the platform matures.
What’s Terrexa all about?
Unlike most of the large-scale exchanges out there, Terrexa doesn’t operate like a traditional exchange platform. You don’t transfer your funds, onto the platform, whether they are fiat or cryptocurrency, so Terrexa never really has your money. The exchange of funds happens “on the spot”. There is no trading of currencies; it is a straight exchange with funds going directly from bank to a wallet or from a wallet to a bank.
Terrexa has also released a Bitcoin wallet app that’s available for iOS and Android. As far as wallets go, it’s a pretty good hot wallet. If you’re using the Terrexa platform to purchase Bitcoin, there’s an integrated feature that connects you straight from your mobile wallet app to the platform. It’s not an essential tool; you can use whichever wallet suits you. However, you don’t have to use the Terrexa exchange to use the wallet.
At present, there are only two cryptocurrency coins to trade with using EUR or USD, which are Bitcoin and Ethereum.
There are fees on this exchange, much like any other. When you see the price to buy, it is not the market price at that time there is a 5-6% markup*. The fees marked by the payment options for credit card and bank transfer are 4% and 2% respectively and are subject to banks and card provider’s fees.
When selling Bitcoin, the same fees apply. You can’t have the fiat transfer sent directly to a credit card, so a bank transfer is the only option available and the 3% transfer fee applies. There is also the 5-6% markup on the selling price.
This markup is the same as charges at foreign exchange desks in Forex trading. Those places aren’t there for charity; they need to generate profits, so they can do this by charging a commission or covering a spread between the buy and sell price.
It’s best to purchase BTC or ETH with local currency (EUR or USD) as a starting point for new traders . They also get the opportunity to sell it back.
Terrexa is not available for customers in the US. However, it is open to users in most of the rest of the world, excluding risky countries such as North Korea, Syria, Cuba, Iran, and any other country that’s designated as an increased risk by International law.
Chances are, whether you’re a new or more experienced trader, you’ve a fallen victim to over-leveraged trades. Subsequently, you’ve been liquidated due to the overwhelming urge to 50X-100X your money. Like a moth to a flame, the urge is just too powerful of a force for some to resist.
There’s no worse feeling in the world than having all your Bitmex funds liquidated (AKA REKT), but I’m here to tell you that you can put a stop to that here today, by following a few simple guidelines.
But first, let’s take a more in-depth look at what a leverage trade really looks like from the inside out for all you less experienced margin traders out there.
A Little Background About Leverage Trading
When traders talk about using leverage, their simply implying the ability to multiply their initial investment (AKA – initial margin requirement) in order to produce a more size-able profit with less capital. So if you have $600 in your Bitmex account and would like to trade with $6000, you’d be using a leverage amount of 10X. This concept is fairly easy to understand for most.
If you make 2% on your trade, you’re profiting off that $6000, thus 10Xing your profit. It’s just an easy way for people to profit (or lose) within a shorter timeframe.
This is what initially drew me to margin trading on Bitmex, as well as many others just like me. The potential for quick profit is a powerful force that resides deep inside the human psyche. However, if you can’t control your risk and emotions, it’s a pipe dream that will quickly turn against you.
Now let’s dig a little deeper into a little something called “Maintenance Margin”.
What is Maintenance Margin
Futures Risk Management Systems like Bitmex require that your initial margin (your Bitcoin contracts that you hold inside your account) requires you to have a minimum amount of equity in order to keep your position active.
Unlike traditional stock market venues, where a broker liquidates you at market price once you reach your maintenance margin, Bitcoin derivative exchanges are a bit different. Exchanges like Bitmex want to make sure that you’re able to pay the profits of the person on the other side of the trade (hence why this is called a swap contract) to ensure that they are not left holding the bag in case your position quickly moves against you.
When trading futures on Bitmex, you’re actually trading what’s called a Limited Risk Futures Contract. This basically means that you can view the value of your initial margin as the trade progresses.
The company’s pay profile is a huge reason why Bitmex is the “go to”choice for traders who seek to exponentially increase their profit, with limited downside. However, the pay profile looks almost exactly like any other financial option, as you can see from the illustration below.
So then why would Bitmex allow you such an accommodating position? There has to be something in it for them right? Of course there is! They’re not in it for charity, that’s for sure.
Their “house edge” is determined by the maintenance margin requirement (MMR) which is a part of their proprietary Liquidation Engine you might have heard so much about.
This automated system is a way to close out positions that have moved against the trader and have started to eat away at their initial margin. The liquidation engine takes into account the relationship between the MMR and initial margin which will vary according to the amount of leverage that the trader is taking on.
Let’s explore this a little further…
Bankruptcy Price and Liquidation Price
Bitmex utilizes 2 determining factors for its liquidation engine. The bankruptcy and liquidation price.
The bankruptcy price is when your initial margin has been completely eliminated so that your loss for the position is at 100%. The liquidation price is when you have exhausted your MMR and the price at where your position will be closed. This is primarily used to protect Bitmex from potentially quick moves in the price action of Bitcoin.
You’re most likely already aware that your liquidation price is given to you within the order form popup that displays right before you place a trade. You can also find it located inside their handy-dandy calculator so that you can properly calculate your risk before placing your order.
So what about bankruptcy price? Where’s that at?
It’s hidden and for good reason (well at least to Bitmex that is). By hiding the bankruptcy price, you’ll never truly know how much room your trade has to move before your initial margin is completely exhausted. Bitmex is now able to keep you in the dark with regard to how much of your initial margin will be eaten up before your trade is liquidated.
Please note: the bankruptcy price is only hidden from the Bitmex calculator. Once your order has been executed, your liquidation price is given to you. This price is static (unless you add or remove from your order), so there’s no need to worry about surprise liquidations.
Let’s delve a little deeper and take up closer look at this statistical edge and how to calculate it before placing an order.
The Bitmex Statistical Edge
Once your position is close to being liquidated, you will be denied extra “price participation”(placing another order), thus giving you a chance for market recovery. In this scenario, Bitmex has the statistical edge over the long haul.
In order to give this a bit more context, let’s take a look at a few calculations below regarding the bankruptcy and liquidation prices and the result on your margin rates.
BTW, you can come up with these rates yourself utilizing this handy tool over at AntiLiquidation.com
The image shows the amount of “Theoretical MMR” you’ll have when trading on Bitmex as well as how large it is compared to your initial margin. When viewing over these 2 columns, can get an idea of how much initial margin and MMR are being applied to each trade.
Take a look at the column labeled “Maintenance Margin” and how much it increases as you take on more leverage (this should be expected). However, what’s surprising here is the amount of MMR that makes up it up. It exponentially increases the percentage of your initial margin when trading with a higher leverage.
For example, if you were to trade at 100X, you would only have to move $35 away from the current price before you you’re completely liquidated. When trading with an initial deposit of $70, you’ll quickly be liquidated when only moving at half that position to $35 MMR.
On the other hand, when taking a look at a trade with 10X leverage you’ll see that this calculation is much less pronounced. For example if you have an initial margin of $640, you won’t be liquidated until you’ve reached $610 from your initial margin. This is more than 10 times below what is required of the initial margin when using 100X leverage. That’s quite the difference.
In summary (as if it weren’t blatantly obvious), the odds have greatly turned against you when using 50X to 100X leverage. As you can see, it’s not the most efficient way to trade and isn’t the most probable one to win either.
Your take away from all this should be to never trade anything over 25X, unless of course, you enjoy the gamble, because that’s exactly what you’re doing with any leverage higher than that.
When trading anything over 10X, you always want to make sure that you’re using a well-placed stop loss, which covers the next segment of this guide.
Why You Should Use a Proper Stop Loss
No matter how you slice it, trading on Bitmex is a risky endeavor. What makes it exponentially more risky is failing to use a stop loss or exit a losing trade via a mental stop loss (for some of you more experienced traders).
As I’m sure you’re already aware by now, trading within the crypto market comes with extremely volatile swings. You can be trading between 1 to 6% swings one day, and 10 to 20% swings on another. This makes it damn near impossible to gauge a consistent range when swing trading. These massive swings are not only reserved for low market cap tokens, but are also found within the top 10 cryptocurrencies as well.
Personally speaking, I’ve fallen victim to trading without stop losses more times than I’d like to admit, however with as many losses as I’ve taken throughout the years, I simply don’t trade without them anymore (for a more detailed guide on stop losses, click here)
I don’t care how impressive your win/loss streak is, it only takes one bad trade to lose it all.
With that said, let’s go over the stop loss strategy you should be using on all your Bitmex trades.
Preventing Liquidation with the Market Stop Loss
Preventing liquidations are not only a great trading practice, but can save you from losing your ass when used wisely. Chances are you’ve already been there done that (hence why you’re reading this article) and have the T-shirt to prove it.
What most people don’t realize is, Bitmex will hit you with a liquidation penalty as opposed to getting out on a margin call (like a stop loss). Let’s go through a scenario with 100X leverage, which is obviously not advisable, but for the sake of demonstration, let’s take a look.
In order to actively fill the requirements of the trade you’ll need 1.1 BTC, which is a little more than 1%. You’ll also have to cover an exit fee on the position for the potential funding. Your liquidation price for this long trade is $1044.78 which is slightly more than $5 dollars below your entry.
Once this price has been met…. welcome to “liquidation street”, home of the bitter and REKT.
However, you don’t have to be another victim. If you simply set a stop loss right before your liquidation price and sell out of your position at $1045, your loss would only amount to -0.456 BTC.
So by utilizing your stop loss, you still have 0.65 BTC left to trade with. That’s better than being left with a big fat 0 after being liquidated right?
Leverage trade responsibly by taking maintenance margin into account so that you can manage your own risk before placing a trade. However this doesn’t necessarily equate to systematically placing the odds in your favor. More times than not, your trade will get liquidated if you decide to use a leverage higher than 50X.
Use the AntiLiquidation tool to figure out exactly where you should be on your trade and the exact amount you’re risking.
Always, always, always use a stop loss. Whether it’s a hard stop or mental stop loss, you need to make sure it’s in place and stick to it! Trends can reverse “at the drop of a dime” and you don’t want to be caught on the other side of that emerging trend waving your profits goodbye.
Utilize the market stop loss as it ensures you exit the trade when you need to most. Dips and spikes can happen quickly. If you insist on trying to save yourself that taker fee, use the limit stop loss, and at least be close to your computer in case your order doesn’t get filled.
If you find yourself feeling lucky, and have still rationalized your way into trading with high leverage, use 25X and below with a tight stop loss. This will, at the very least put the odds (somewhat) back in your favor. Trading above 25X greatly puts the odds back in favor of Bitmex.
As always, if you have any further questions, leave a comment below.
Best of luck and happy trading!
If you’d like to read more about Bitmex trading strategies, check out our other guides…
Warning: margin trading is not suitable for beginners. If you’re new to margin trading on Bitmex, make sure to initially read over our guide “The Idiots Guide to Margin Trading on Bitmex” first. The guide covered here is for more advanced Bitmex trading topics.
Bitmex has long been the “go to” platform for margin trading Bitcoin and other various altcoins. If you don’t already have an account, well you probably shouldn’t be reading this guide now should you? 😉 However, if you’re looking to run before you walk, you can proceed to read over this guide (like anyone’s going to stop you), but I recommend you at least sign up for an account before you do.
You can click here and get a 10% discount on your transaction fees for the first 6 months. There’s no cost to you and it really does benefit the both of us.
So let’s start off with a few advanced features that you may not be too familiar with on the Bitmex exchange.
Stop Limit, Stop Market, and Trailing Stop Loss
If you have any trading experience whatsoever, you should already know what a stop loss is so I’ll skip the formal introduction. If you’re not too familiar with stop losses, I highly recommend you check out this guide “Stop Losses VS Mental Stop Losses”.
Let’s take a look at the 3 stop losses that Bitmex provides for you and when you should use each one.
Stop Limit– when setting a stop limit on long trades, you always want to make sure that your “Stop Price” is lower than your “Limit Price”. Do the exact opposite for your short trades. This ensures that you exit your trade at the proper price point. By how much is up to you, but I do recommend a decent range between your stop price and your limit price. The closer these two numbers are to each other the less likely your order will get filled.
I personally recommend using a stop limit when you’re close to your computer. This way you can at least keep an eye on things, pay lower fees, and exit out of your trade in case your stop limit gets skipped over. If you’re not by your computer and still insist on using this feature, make sure to use a broad range between the limit and stop prices.
One of the key benefits to utilizing a stop loss limit is the fact that you’ll be paying minimal fees on your trades. Sometimes you can even receive a rebate on your funding fees depending on if you’re going long or short during an opposing bullish or bearish market. I’ll cover more about this below under “Fee Calculations and Funding Rates”
Stop Market– I don’t think it takes a genius to figure this one out. Stop market stop losses are the exact opposite of stop limits. Unlike the stop limit mentioned above, using this feature will ensure that you exit a trade and don’t suffer any more losses then you need to. This is a true “fail safe” stop loss as it will never get skipped or unfilled.
The main take away to utilizing the stop loss is the fact that it guarantees you an exit out of a trade. The downside to using the stop market is that you’ll pay more in fees. You may also exit a trade at a higher or lower price than the actual “stop price” you originally set if the market is moving at an extremely fast pace during this time.
This can be a great solution for those who have a lot of money on the line and need a guaranteed way out of a bad trade. I’m not one to tell you which one to use, as that’s more of a personal preference (it can be situational one as well).
Trailing Stop Loss– a trailing stop loss is an advanced trader’s best friend as it dynamically moves according to the current price movement.
A trailing stop loss will follow the current price action by a designated set price. This is best explained with a few examples.
You’re currently trading BTC at an entry of $7500 and set a “Trail Value” of $100. The market moves up to $7700 and then dips to $7600. You’d be stopped out at this point. You would have also made $100 profit as opposed to losing your funds if the dip kept moving past your entry point.
As you can see, this is a highly effective feature that Bitmex gives you which no other cryptocurrency exchange offers. This will allow you to keep your losses to a minimum. It’s also great for those more riskier traders who like to use higher leverage (above 20X).
The key takeaway to this type of stop loss is that it allows the Bitmex system to constantly babysit your trade by following the price point around like an angry cobra. The moment the price dips, the trailing stop loss quickly snaps it up and exits you out of the trade.
The downside to this is that you may be stopped out before a major rally in price. However this goes for any stop loss you may choose to use. The feature will also stop you out at the market price, so you’ll be paying a bit more on fees.
Now that we’ve covered all the stop loss features, let’s discuss the “Place Order” features you may not be familiar with.
A pretty simple and useful feature, the “Reduce Only” tickbox will allow you to close out your trade without opening up a new position on the opposite side of the market (I call this inverse trading). This is best explained with an example. <image>
Let’s say you start a long position for $1000 at entry price $7500 and set a sell limit to exit out of your trade at $7600 for $1000 (using the sell/short button). However, in your haste, you accidentally input an additional zero, thus opening a short for $9000 ($10,000 sell/short quantity – your long trade of $1000). This type of mistake could have dire consequences on your trading account funds.
When checking the “reduce only” feature, the Bitmex system will not allow you to execute the trade and will immediately cancel out the additional $9000 that would have put you in a short trade. The feature will still execute the trade but only utilize $1000 worth to exit you out of it.
This is an extremely useful feature that can get you out of trouble and should be checked unless you actually plan on opening an immediate “inverse trade” upon your exit (long to short or short to long). I cover more on this within the advanced Bitmex trading strategies below.
This feature should be used at all times. When checking this box, only limit orders will be allowed to execute your trades, thus saving you a ton on fees. Look at this feature as a safety precaution from accidentally creating a market order (being a taker, and not a maker).
Using Cross Margin
Leaving the leverage margin bar to the far left will allow you to utilize the Cross margin feature. Unlike isolated margin, where you have to manually input the amount of leverage you would like to use for your trade, cross margin uses your entire Bitmex balance as collateral.
This also saves you the time of inputting a leverage amount and calculating a quantity that corresponds to this leverage. These are two key aspects to isolated margin trading that you’ll have to take into consideration. Simply adjusting the leverage slider will not change the amount of contracts that you’re actually trading. It will only raise or lower the limit that you’re allowed to trade with. This is better explained with an example.
Let’s say you have $500 in your Bitmex account, and you want to trade with $5000 worth of BTC contracts. With isolated margin, you would have to move the leverage slider to 10X and then input the quantity to $5000 (this figure would be a little lower due to trading fees).
With cross margin, all you would need to do is input the $5000 into the quantity box and Bitmex will calculate it as 10X leverage off of your $500 account balance.
Most of the time, you want to use cross margin for your trades. Make sure that you never go over 10X leverage (20X is pushing it). For beginners, I highly recommend you keeping it to 2-5X.
However, there are occasions where you want to use isolated margin. Let’s say you like to put in a few day trades but only want to risk $100 of your account balance at 10X leverage for a total of $1000. Seeing that you have $500 in your Bitmex account, you would merely move the slider to 2X. This way if you get liquidated, you only lose $100 off your total account balance.
Personally speaking, I don’t trust myself to only use a set amount within my account balance, so I only fund my Bitmex accounts with an amount I’m willing to lose when using cross margin trading. This is because cross margin won’t get you liquidated as easily as isolated margin, as long as you’re not too crazy with that leverage. This is also the leverage type that most professional traders use for that exact reason.
Tip: I recommend opening 2-3 Bitmex accounts, since all of them are anonymous (no KYC needed) and fairly easy to start up. Fund each account with $500 to $1000. This way, if you’re having a bad day and there’s a massive swing against you (like 8-15% in the opposite direction of your trade), your entire t uprading capital doesn’t get annihilated.
Unrealized and Realized PNL
Unrealized PNL is related to the Mark Price. The Mark Price is what determines your risk management of your position on Bitmex. This means that when you get liquidated due to the price going against you, it’s due to the fact that Mark Price has crossed the liquidation price threshold. This will prevent you from getting liquidated from a sudden price swing on Bitmex’s local platform as the Mark Price is comprised of several other exchange values.
Bitmex has a reasonably complex way of calculating the Mark Price which can be found here. It uses a combination of Bitcoin to USD Spot Index (which is 50% Bitstamp and 50% GDAX) as well as the depth of the order book.
Realized PNL is simply what your current profit and loss is according to Bitmex. You’ll receive this figure by hovering your mouse over the Mark Price. This is the real price that showcases your real profit and loss.
Fee Calculations and Funding Rates
Bitmex calculates these much differently than any other cryptocurrency exchange. When looking at the Contract Details box, if the fee is displayed in red, long positions will have to pay the fee. This means that there are more long positions than short at that moment.
On the other side, if the fee is displayed in green then Long positions receive the fee. When you hover your mouse over the “funding rate” you’ll see a predicted rate for the next eight hour period.
This rate is in regards to the funding rate and does not take into account the maker or taker fees for placing the trade. If you exit your trade within this eight hour period, you will not have to pay the funding fee.
Tip: keep an eye out when this fee is about to go into effect. Many traders will exit the market (thus shorting) around 30 minutes or so before the fee hits their account. This would be a great opportunity to buy in and take advantage of a long trade as soon as the fee period ends. When time properly, this can be easy money.
Bitmex Advanced Trading Strategies
1. Scaling In and Out of Your Position – no matter if you’re going long or short with your trade, scaling in and out of position is highly recommended and utilized by most advanced traders.
In order to get the very best possible position for your entry and exit positions, you need to layer them (aka scaling in and out). Let’s say you’re trading with $1000 and want to take a long position at $7500 on Bitcoin. The current position is at $7800.
Instead of watching the chart all day and trying to time that five minute window in order to get the closest price to that $7500, you would simply set 3-4 entries on the way down.
This would look something like: $250 at $7700, $250 at $7600, $250 at $7500 and $250 at $7400 in case you catch a long wick down. Now, all the entry points may not get filled as the price may only reach $7600, however you’ll be at an advantageous entry point with capital in the trade.
The opposite goes for your exit positions. Let’s say your ideal exit position is at $8000. You currently have $1000 in the trade at an entry position of $7500. You can scale out of your position by setting exit points at $7700 exiting with $500, $7850 with $300 and then $800 with $200. Again, this will allow you to both enter and exit the market at the most advantageous price points as well as accumulating the most profit along the way.
Note:this is not only a margin trading strategy, but a typical advanced trading strategy that you can use for any cryptocurrency exchange.
2. Use stop losses when trading top and bottom ranges – this essentially means that if your trading at a top or bottom of a particular price range, you want to ensure that you have a stop loss in place in case your strategy is not fulfilled.
To put this into perspective…
Let’s say you spot an inverse head and shoulders, however it’s located near the top of a 3 day price range. You want to set a stop loss at a key level to where you don’t get stopped out before a major rally, however still within range to exit you out of the trade if the market turns against you.
Using the stop loss will allow you to take advantage of the charting patterns while still giving you a safety net in case the strategy doesn’t end up going the way you had planned.
The same goes for entering a trade with a short when you’re at the bottom of a 3 to 7 day average. Make sure you place a stop loss above your short, but at a price level that you know won’t get prematurely stopped out before a major dip ensues.
This is best illustrated with a chart…
3. When to Use Market & Limit Orders– for an overwhelming majority of your trades, you’re going to want to use limit orders with the “post only” feature checked. However, there are occasions where you’re going to want to use market orders.
For example, utilizing “stock market” stop losses are highly recommended when using one of the strategies above, but especially when you’re not close to your computer or watching the market.
For everything else, stick to limit orders and keep those fees to a minimum.
4. Using Inverse Trades– the beauty behind margin trading on Bitmex is that you can immediately cash out of a long with an immediate inverse short trade.
For example: let’s say the current 3 day price range for Bitcoin is between $6200 and $6800. You’re currently exiting a long trade with $1000 at $6800 from an entry of $6600. Instead of exiting the trade with a short of $1000, you can input $2000 into the quantity box and immediately start a short trade upon exiting your long.
I only recommend doing this when you’re at the bottom or top of a 3 to 5 day price range. The chances of your trade reaching a peak and reversing is much more likely than creating a new ATH (all-time high). This is best outlined with an illustration below.
5. Playing Both Long and Short Trades Simultaneously– A strategy that some of the more advanced traders use on certain occasions is to set both a short and long limit. This can be used in times where you’re unsure which direction the market is about to break out to. It’s also good to use for trading patterns like a symmetrical triangle.
In these cases, you’ll need to have 2 Bitmex accounts available. On one account, you’ll set up a long entry point above the potential breakout. On the other account, you’ll set up a short entry point below the potential breakout. This way you’re setting yourself up to take advantage of the breakout in either direction.
Another similar scenario you could use this strategy is…
If the price movement reaches a high from a 3 day moving period (like the $6800 price point covered in the example above). You can place an inverse trade to short at this peak as well as set a limit order to go long on the trade in case of a major breakout. Again, you’re covered on both sides of the spectrum.
Great Job! We’re Done Here…
I hope you enjoyed my advanced Bitmex trading guide. Using just a few of the strategies I covered above will allow you to create an incredible income for yourself in a much shorter time frame than it would typically take trading on any other cryptocurrency exchange. This is due to the fact that you’ll not only be able to multiply your trading capital with leverage, but also have access to both long and short trades as well.
Remember, initially trade with small amounts until you get acclimated to the platform. Print this guide out and keep it close by for when you need it.
Warning: margin trading is not suited for beginners. You should have at least several months of trading experience before attempting to margin trade. Note that using the information below is done at your own risk. This is not financial advice blah blah blah….
Ok, now that we got that out of the way…
Let’s get you started making some of that Bitmex “short trade with 100X leverage” money you’ve heard so many people talking about (btw, never do that…and if you do, you’re an idiot).
Whether you love em or hate em, Bitmex has the potential to take you from zero to hero faster than any other trading method out there. This is potentially the biggest draw to the Bitmex trading platform.
If you have a solid understanding of technical analysis, a trading strategy with a proven track record, and lots of trading experience under your belt, Bitmex may be your “go to” cryptocurrency exchange for some of that quick crypto cashflow.
However, if you’ve only traded for a few weeks and don’t have a solid understanding and proven game-winning trading strategy, Bitmex will wreck you faster than Mike Tyson on acid.
This is for heavyweights only. If you haven’t been through a few battles yet, don’t step inside the ring.
How to Get Started Trading on Bitmex
I highly recommend you open up your Bitmex trading account by using the link here in order to register. You receive a 10% discount on all your transaction fees for the first six months at no additional cost to you. Now do it!
For US Residents…
If you’re a US resident, you need to make sure that you’re either using a UK VPN or private proxy when signing up. I recommend you use BuyProxies.org and purchase their lowest tier package which is $10 per month.
Once you’ve completed your registration, you no longer need the proxies (or VPN if you decide to go that route). You can sign in with your standard US IP (no proxy or VPN) from there on out.
Ok, now that we got that out of the way, let’s get you started with the fundamentals…
Bitmex Margin Trading In Plain English
I’ll start off by defining a few terms that you’ll need to be familiar with in your early stages ….
Margin trading – this is the method of conducting a purchase using cash that is provided to you (the trader) as a loan. In reality, you’re not really “borrowing funds” from any centralized entity, you’re merely swapping out “contracts” with others utilizing the platform.
If you’re shorting, you’re swapping out with someone going long. If you’re going long, you’re swapping out with someone that is shorting.
That’s the gist behind it all. For the sake of this guide, I’ll loosely use the term borrowing.
Leverage – the amount of funds that you decide to borrow. The higher the leverage, the more funds you borrow, and the more risk you take at getting liquidated.
Example: $1000 with 5X leverage = $5000 your trading with. Your liquidation price is given to you before and during your transaction, so you should never be surprised at where it’s at.
<image: the power of leverage.png>
Liquidation price – this is the price at which your account balance (or amounts of funds you’re using) is completely wiped out.
Example: $100 with 25% leverage at BTC entry price of $7500 = $6002 liquidation price.
Don’t worry about calculating all this stuff by yourself. Bitmex was nice enough to provide you with a calculator. You’ll never be left in the dark when it comes to your profit, loss, or liquidation price.
Long position – betting that price movement will increase.
Short position – betting that price movement will decrease.
Limit order – (aka market maker) set a price and have it filled once the market reaches your set price. 9 times out of 10, you should be using this for all your trades to prevent paying high fees.
Market order – (making you the market taker) this is where you’ll immediately exit your trade. For having this convenience, you pay 3X the fee (%0.0075 as opposed to %0.0025).
Take Profit – like the name implies, this is where you start taking profits as the price value increases. The opposite applies for shorts. You want to start taking profit below your entry price.
Stop Loss Limit – this is to prevent you from completely losing all your capital from a sudden drop (for longs) or sudden spike (for shorts) in price action. Once a stop loss trigger has been reached your trade initiates your stop loss limit price. Once this limit price has been reached, you’re exited out of the trade. This will ensure that your loss is minimized.
Stop Loss Market – the same as stop loss limit, however your trade will be “immediately exited” at the market price. I highly recommend using this over the stop limit when you’re not close to your computer (or on any occasion for that matter).
When price drops, it drops fast. There’s a good chance that your stop limit price will not activate and you’ll be left holding the bags (debt). Using the stop loss market, ensures you that during a strong dip, you keep your losses to a minimum. You’re guaranteed an exit out of the trade, which again, is not always likely with stop loss limits.
Trailing Stop – think of this as a “moving stop loss” that follows the current price by a set value.
Example: $1000 at BTC entry price of $6500 with a trailing stop loss of $250 would mean that if the price action decreases to $6250, you would be stopped out (exit the trade).
However, if your price increases to $7000 and then drops $250, it would be stopped out at $6750. This is a great feature to use when you’re trade is already in profit. Trailing stops will ensure that you take advantage of quick spikes in price if you’re not by your computer.
Bitmex not only allows you to trade with borrowed money, but enables you to make a profit on both an uptrend or downtrend. No longer will you be confined to bull markets once your familiar with this trading platform. Hell, you might actually look forward to bear markets. You can make just as much during these periods of margin trading than you can within bull markets, if you play your cards right.
Now let’s look at the various ways to leverage your trades on Bitmex…
Leverage Trading on Bitmex
The cryptocurrency exchange allows you to create anonymous accounts without giving your real name or information. In order to start trading on Bitmex, all you really need to do it is deposit Bitcoin into your account. No other currency is accepted as a deposit, so don’t send you’re Ethereum, Litecoin, Ripple, or any other altcoin for that matter. Deposits are fairly quick, but this is highly dependent upon how busy Bitcoin miners are. I typically receive my deposited funds within 15 to 30 minutes.
Be aware that Bitmex doesn’t actually trade in Bitcoin, it trades in contracts. Contracts are an agreement to buy or sell an asset (in this instance cryptocurrency) without actually owning the actual currency. Once you withdrawal your funds, your contract for those funds are awarded to you and therefore “real Bitcoin” is sent to your destination address.
Bitmex offers two types of contracts…
Created specifically by the Bitmex team, this type of contract is also known as a “perpetual swap”. This is the type of contract you’ll be primarily trading when you’re first starting out, especially when you’re day or swing trading on a shorter timeframe (like 4 hour and below).
These contracts don’t have a specific date at which they will expire, so they are great for short term trading. They have a variable interest rate where cash flow is added or subtracted from your current equity. For more detailed information, click here.
As the name suggests, these contracts are continuously renewed. Perpetual contracts are also known supposed to be less volatile; however you wouldn’t think that’s the case when looking over their charts.
For having the ability to use these contracts, you’ll pay a fee every 8 hours of 0.0015% for longs and you’ll actually get a rebate of 0.0015% for shorts. Ethereum fees are much higher at 0.1562% for longs, but you receive a much larger rebate at 0.1562% every 8 hours.
For more detailed explanation of fees, click here.
This is basically an agreement between a buyer and seller to exchange a currency at a defined date in the future for an agreed upon price. Futures contracts tend to have a fixed interest rate which makes them great for longer term trading, like swing trading (using the 4 hour charts) or shorter term investing.
The great thing about these contracts is that they have a fixed interest rate which doesn’t fluctuate over time.
Now that you have a basic concept of margin trading terms, let’s move on to the next step and cover short trades.
How to Short Cryptocurrency on Bitmex
Bitmex offers quite a few cryptocurrencies to short as of the release of this guide. The altcoins they include within their platform change constantly. At the present moment you can short these altcoins with the corresponding leverage.
Ethereum (ETH) up to 50X leverage
Litecoin (LTC) up to 33.3X leverage
Ripple (XRP) up to 20X leverage
Cardano (ADA) up to 20X leverage
Bitcoin Cash (BCH) up to 20X leverage
EOS (EOS) up to 20X leverage
Tron (TRX) up to 20X leverage
Bitcoin (BTC) is the only crypto that you can leverage up to 100X leverage, which I would not recommend. When you’re leveraging past 50X, you’re essentially gambling. With that being said, if you have spare change laying around and are feeling lucky, go ahead and roll the dice. Just know, the odds aren’t in your favor. With $100 at 100X leverage, you can make $1000 in less than a few minutes (or lose it). You obviously don’t want to do this with rent money!
Back to short trading…
Shorting works in the same way as a long position except you’re placing trades on the decrease in value of a particular currency. This would’ve been the ideal way of taking advantage of the extended bear market this year (2018 and still continuing).
As an example, if you kept $2000 in a longer term short with Bitcoin on January 6th where the price of BTC was ~$17,000, till today,, without touching it, you would have $3280 (64% gain + a rebate on your fees) during this period. Remember, that doesn’t account for all the times you might have cashed out of the short due to intermittent bullish trends, which would have potentially left you with 2-5X your profit…easy. A few of my friends made over 700% during this period, shorting BTC and made 3X as much shorting altcoins.
So just remember the wise old saying…. “The trend is your friend till the end”.
As a general rule of thumb, if Bitcoin moves up, then altcoins move down. If Bitcoin moves down, altcoins move down. If Bitcoin consolidates (moves sideways) then altcoins move up. If you can follow the simple rule, you’ll have no problem knowing when to short or go a long with margin trading altcoins.
Tip:TradingView will show you the altcoins that are moving with or against Bitcoin under the comparisons feature.
You can use this highly useful feature in order to view which altcoins are about to drop or rally before it happens. Bitcoin typically leads the way as far the trend so, for example, if you see Bitcoin starting to quickly drop and know which altcoin(s) move in the opposite direction, you can set up a long trade for those altcoins before it happens.
However, make sure to always keep a tight stop loss in case the altcoin decides to move in the same direction as Bitcoin.
How Much to Leverage: A Warning to All Newcomers
One of the more significant facets to margin trading with Bitmex is that you can leverage your trades with as much capital as you want. With that said, I highly recommend you keep the leverage to around 3X-10X to start. Anything above this and you’re risking liquidation. One false, call with a bit too much leverage, and your account can be wiped out in no time. If you’re trading with 20X and over on a longer term trade, you’re just looking for trouble.
If you do decide to leverage more than 20X, make sure you do it with a small amount. Experienced traders who scalp trade with 20X-40x are typically watching the charts like a hawk for any dramatic movements. If or when the trade moves against the trader, with strong full-bodied candles, stop losses are typically put in place. Never try this unless you have at least several months of Bitmex trading experience.
No matter what, remember to…
Always plan your trades out ahead of time and never trade in a rush. Typically, when you try to “catch a falling knife” or “catch a moving rocket”, things don’t end up going very well for you. The more adrenaline coursing through your body, the more idiotic your decisions become.
The Difference Between Isolated and Cross Leverage
You have two types of leverages with Bitmex, Isolated and Cross. You can switch between one or the other by simply adjusting the leverage slider on the “Your Position” box located on the left hand side of your trading panel. Use Cross leverage by moving the slider all the way to the left (obviously where it says “Cross”). Use isolated leverage for the remaining numbers (2x,3x,5x,10x,etc)
Now bear in mind….Isolated leverage does not automatically multiply your position. No one on YouTube seems to be explaining this properly. Once you move the leverage slider, this merely adjusts how much margin you can use. You still need to manually change the quantity yourself.
For example: if your account contains $1000 and you move the leverage slider to 3X, then you’re capable of trading with $3000. You need to manually input $3000 into the quantity box.
Regarding cross margin…
You no longer need to worry about moving the leverage slider. Cross will simply use all the funds available in your Bitmex account for the margin. Just think of it as an automated way of Bitmex calculating the margin for you.
Now, read this sentence carefully… your profit is determined by the quantity and not the leverage itself. Leverage has nothing to do with profit. The amount of profit that you make is dictated by the size of your position. The leverage simply sets a limit on how much you can borrow for the quantity of your position.
Here are a few examples of Cross margin…
Your account contains $1000 and you want to use 3X leverage. All you need to do is input $3000 into the quantity box and your account is automatically at 3X leverage. If you wanted to 10X your leverage, you would simply input $10,000 into the quantity box.
By using cross margin, you’re eliminating one step from the process of manually inputting the leverage (moving the slider). The only thing you need to worry about is inputting the amount into the quantity box. However, if you don’t want to utilize your entire Bitmex balance, isolated margin may be the right choice for you.
I personally recommend using cross margin and only deposit a limited amount of funds into my account so I’m not tempted to lose it all in one trade.
Beginner Bitmex Quick Tips & Trading Strategies
Trading on Bitmex can be extremely fun or depressing depending on what strategy you decide to use. Here are a few tips I picked up along the way to help maximize my gains and lower the chances of losing a trade.
Be the Market Maker, Not the Taker – don’t waste so much money on fees. If you’re using “Market” with most of your trades, you’re getting killed here.
If you’re not familiar with the terms market maker and market taker, simply put… a market maker creates limit orders within the order book (thus waiting for his trade to execute). A market taker uses the “Market” button when buying or selling into a position (thus executes a trade immediately at market price).
Always use limit orders (you’re the market maker) for your trades. The fees are 1/3 the price of a taker fee (market taker). Also make sure to click on the “post only” tick box so you’ll only be able to use limit orders.
Many times, depending on the market, you’ll receive a rebate on your fees. While the fees seem small at first glance (0.0075% taker fee), this adds up to a lot when considering that this fee includes your leveraged amount and not the actual funds in your account. For example, if you’re on cross margin at 100X, then you would be paying 7.5% on the total amount.
The only time I recommend using market is during stop losses. Use the stop market feature when setting your stop losses. The market moves so fast that most of the time, if you set a stop limit, it won’t get filled. You’ll be left holding the bags or worse, getting liquidated.
Use Cross Leverage – I covered this above, but it’s worth repeating. Most of the professional traders use this leverage type because it helps guard against those crazy Bitmex fluctuations where you might have the right call, however you get liquidated right before that major pump.
For example: If you have 1 BTC and you open a position worth .1 BTC, on normal 100x leverage, your liquidation would be ~$60 away from your entry price. With Cross, you have .9 BTC as margin, meaning your liquidation would be about $600 away from your entry.
You’re risking your entire account balance with this margin type, however it’s well worth it considering all the major fluctuations (most notably Bitcoin). I recommend using a stop loss or better yet, only funding your Bitmex account with amounts that your willing to lose ($200 – $1000).
Pay Attention to Contract Details: Funding Rate – you notice of the bottom left-hand corner Bitmex, there is a contract details box. Inside that box is your “funding rate”. This plays a massive part with the trading landscape. This fee will get to be extremely high if everyone is longing and very few are shorting.
If this fee is positive and you have a long open, you’ll pay for that fee every eight hours on a perpetual swap. If you have a short opening that situation, you would receive that fee.
Beyond the fee aspect to this, there’s a pump and dump associated with it as well. Roughly around 30 minutes before the funding time, everyone will be closing their longs in order to avoid the fee. Once the funding has completed, the price will skyrocket. Position your trades around this time and you can make a quick daily profit.
Be Patient with Entry. Setup Limit Orders – never ever try to catch you can. By the time your order is filled, too late and you’re likely to get stuck with a horrible entry.
Set up various limit orders at key positions before a rally (or short) begins. The best way of doing this is scaling in and out of the position. I cover more on this within my swing trading guide located here.
In short, if you want to take a position at $7500 with $1000, then you want to scale in your orders at $7200 with $250, $7300 with $250, $7400 with $250, and $7500 with $250. This is the easiest and most effective way of gaining a good entry and exit positions up. Even outside of larger pumps, jumping into a massive rally is almost always a bad idea.
If you miss an entry, just be patient as another one is around the corner. It’s a lot better to miss an entry than lose money.
Stop Losses or Scaling In/Out – use one of these 2 strategies for protecting your capital. Here is my recommendation.
a) If you plan on using higher leverage (20X+ riskier approach) then use tight stop losses. This will prevent you from losing all your Bitfinex funds in one bad trade.
b) If you plan on using lower leverage (20X and below – less risky) then you can afford to scale out of a bad trade. I would highly advise initially testing this strategy with smaller amounts until you get a feel for it. Scaling out of a trade takes experience, but one where, if you master it, will allow you to walk away from most trades without a loss.
Neither one of these strategies is right or wrong. It’s a matter of personal preference and which one suites certain situations over others. If you’re more of a risk taker, you may prefer scaling. If you like to keep things conservative, then stop losses may be your “bread and butter”. Each one has their pros and cons.
Let’s Wrap This Up..
Bitmex allows traders to make money on bull and bear markets. This is why I highly experienced traders love it so much. The exchange has gained a ton of popularity this year due to its enormous volumes and rich array of features
This is a great exchange when you don’t want to risk too much of your own money trading, however would like to utilize the trading leverage (thus more capital) for higher profits.
Personally speaking, I like to fail fast. Time is too precious of a commodity to waste away trading $100 at a time for possible $5-$10 profits.
If you’re looking for reliable, secure exchange, look no further than Bitmex. It offers large leverage positions as well as a ton of functionality that other cryptocurrency exchanges don’t offer.
Both amateur crypto traders and retail investors alike are starting to lose interest within this booming cryptocurrency industry due to the rather lengthy and painful decline of the market. In spite of all this, cryptocurrency as a business continues to scale and evolve, especially cryptocurrency trading platforms.
New players to the cryptocurrency marketplace like Goldman Sachs and Intercontinental exchange (ICE) who is the parent company of the New York Stock Exchange (NYSE) are planning to allow their customers to trade Bitcoin futures. ICE on the other hand will offer swap contracts to banks so that clients can obtain their cryptocurrency the day following their purchase transaction.
While it seems some of the lower skilled investors are starting to leave the market the big players are starting to enter, which represents a huge potential for cryptocurrency trading. It’s more likely than not that cyber criminals will continue to target this industry more heavily now and in the near future.
Several security analysts have come up with a list of techniques that cyber hackers have utilized in order to hack user’s cryptocurrency trading platforms. The list below also includes some of the most common attack methods and highlights countermeasures used to combat these situations.
Phishing Emails Tactic
This includes a scenario where a security system message is sent from a cryptocurrency exchange letting you know that suspicious activity has been detected on your account. In response to this activity, the service send you a notification to your email along with a hyperlink and recommendation to change your password immediately in order to prevent your funds from being stolen.
Despite the simple scheme setup, many novice traders continue to fall for this as they click on the reset link and fill out several fields in order to change the old password to a new one. As you can imagine, once the old password field is completed, this information is transferred over to the hacker where he can readily access your account.
Here are a few rules that you need to follow in order to keep your accounts safe:
Always inspect the email address sent to you from the exchange. Official emails are always sent from the official domains. If the email address is different than the one from the actual exchange’s domain, delete and the/or report the email to the official exchange.
Double check the URL of the password reset link within the email. The password reset page should always reside on the actual cryptocurrency exchange website. Hackers are very sneaky when it comes to choosing their spoofed domain name, which typically is one or two letters off from the original.
Most cryptocurrency exchanges will not send you a password reset email in the first place, unless you’ve logged into their exchange from a different IP. Obviously, if this never occurred, then delete or report the email.
Phishing Site Tactic
Even the most savvy cryptocurrency trader will input the occasional typo when typing out their favorite cryptocurrency exchange into the address bar. Many have overlooked misspellings and security verification icons within their browser, which lead unsuspecting traders to input their username and password into a fake exchange.
In order to avoid this easy to make mistake be sure to:
Bookmark your cryptocurrency exchange trading platforms and only visit the bookmarked link.
Always look out for the “padlock symbol” within the address bar of the site you’re visiting. All cryptocurrency exchanges are secured via SSL.
Email Hacking Tactic
The email link to your cryptocurrency exchange tends to be targeted just as much as your account itself. Once the hacker takes control of your email, he can then initiate a password reset from your cryptocurrency exchange, click the password reset link inside your email account, change your password, and then access your exchange.
This is where the two factor authentication method comes in handy. It’s the most effective protection mechanism to prevent unsuspecting attackers from accessing your account.
If you’ve managed to install the Google Authenticator on your computers web browser, then you effectively opened yourself up to a potential attack and rendered this protective measure useless.
With TeamViewer installed, the attacker can access your computer in real time and hack into your exchange utilizing the Google authenticator embedded on your browser.
The 2FA is only effective if it’s installed on another device like your smartphone. This reduces the risk of being hacked considerably. You might find that the two factor authentication is a bit redundant, but you should keep in mind that hackers can outwit even the most successful traders.
It’s extremely crucial to follow these basic and simple guidelines which will significantly reduce the risk of you losing your valuable cryptocurrency in a potential hacking attempt.
With recent changes in regulation as well as customer sentiment rapidly shifting, it’s no surprise that cryptocurrency exchanges are embracing changes within this constantly fluctuating industry.
It’s important to note that there are only a few key players that handle the overwhelming bulk of crypto trading volume.
There are 3 types of cryptocurrency exchange groups. Custodial, noncustodial, and decentralized exchanges (also known as DEXs).
Custodial exchanges are those that act as a crypto wallet managers. They maintain user assets through an internal ledger. Customers therefore don’t have direct access to their wallets that the exchange holds for them. Only when the user decides to transfer his currency does he have a resemblance of control.
An example of these exchanges would be Coinbase, Bitfinex, Gemini, Bittrex, Bitfinex, etc. These are, by nature, centralized exchanges. An overwhelming number of trading volume (73%) runs through these custodial exchanges.
One of the most notable advantages of using these exchanges is the ease of use at which they come with. Nonetheless, this still provokes concern over the exchanges centralized nature. With hackers breaching their internal systems and attaining private keys to the exchanges, a user’s funds can be lost overnight.
It’s worth noting that more exchanges these days have been proactively taking measures to store funds in “cold storage” (storage without connection to the Internet) which provides an extra layer of security. However, what happened with the infamous Mt. Gox, Bitfinex, and recent CoinCheck hacks still have users weary when it comes to storing large amounts of cryptocurrency on their chosen exchange.
These types of exchanges also face a major concern over price manipulation as reflected in the recent probe by the US Department of Justice.
– Pros: easy to use interface, instant fiat to cryptocurrency conversion, customer support
– Cons: lack of privacy, high fees, and major target for hackers.
Most of these concerns over the custodial exchanges have prompted many users to push for more decentralized exchanges.
These exchanges, although still centralized, do not manage user wallets. They simply match orders through an internal order book and then take a fee on top for providing their services.
Some of the more popular noncustodial exchanges are Changelly and ShapeShift. The more popular exchange of the 2, Shapeshift, roughly takes in around 15,000 orders a day and averages around $10-$15 million in transaction volume.
The exchange’s internal mechanics are still not transparent, which is why they are still considered centralized. Foul play is still possible within these exchanges. Also worth noting, non-custodial exchanges tend to have low liquidity which scares away more sophisticated investors.
Last but not least, we have the decentralized exchanges, also known as DEXs. Many within the crypto community are rooting for their success. After all, isn’t the whole appeal behind cryptocurrency the idea of having a decentralized currency as well as a platform that no single party controls?
If that’s the case why do centralized platforms control so much of our crypto assets? On paper, decentralized exchanges are the perfect solution for concerns raised over centralized exchanges. They are extremely light in fees (if there are any fees at all), they are transparent in nature, and are highly secure as they allow you to control your own wallet.
There are several DEXs which execute orders under smart contracts. The chart below lists some of the current players in the space including companies that are building protocols around decentralized exchanges.
There are a few downsides to decentralized exchanges in their current state. Many of these downsides mimic the challenges of non-custodial exchanges.
No inter-chain trading (like ETC to ETH)
Inability to convert from fiat to cryptocurrency
Hybrid Exchanges – The Best of Both Worlds
Many within the crypto community agree that decentralized exchanges will take a more prominent role in the future. Megan Hernbroth, Head of Communications for Coinbase, stated that the decentralized exchanges are “very important to the ecosystem of cryptocurrency trading by acting as a middle ground”.
Also note, custodial exchanges play a major role in the future of crypto trading as they offer more convenience for the casual trader. Many enthusiasts believe that the future of crypto will contain more of a hybrid approach in which both centralized and decentralized exchanges are combined. These newly developed hybrids will utilize the benefits of both exchanges.
It’s inevitable that decentralized exchanges will continue to rise in popularity. With that said, it’s highly doubtful that they match the scale and popularity of custodial exchanges anytime soon. If the awareness of security and privacy continues to grow, we may witness the birth of these “hybrid solutions”.
With regulation concerns looming over the industry, presently those within the crypto community should not entirely comfortable with storing or trading their cryptocurrency with one particular exchange.
I think if there’s one thing that we can all agree on it’s that fees suck!
With that said, when it comes to the world of cryptocurrency exchanges, fees really aren’t all that bad. Especially when you compare them to your typical bank fees, smart phone fees, cable fees, and the list goes on. They’re not even close to the fees that you would pay to a traditional stock exchange brokerage. These fees are simply the cost of doing business and an inherently low cost at that.
Even though exchange fees are nominal, you’d rather save as much as possible, right? That way you can spend it on more important items like a drone selfie camera or glow-in-the-dark underwear. You know….the stuff that really matters. 😉
Before we dive into these “low fee” exchanges, let’s take into consideration what type of trader you are. You can generally categorize yourself into three types: the investor, swing trader, or day trader.
If you fall into the first 2 categories you really have no reason to sweat exchange fees. The difference between 0.10% and 0.25% is almost microscopic when trading once a month or twice a week. You’re really not producing enough trades for these fees to really make a difference.
Now if you’re a masochist like myself, and have chosen the world of day trading, then these fees will quickly add up. They do actually matter when it comes down to your bottom line.
With that said, let’s have a closer look at some of these low fee exchanges…
Binance is the largest cryptocurrency exchange by trading volume. It didn’t get there by some stroke of luck. The combination of their referral program, intuitive interface, amazing community, and you guessed it… low trading fees, put them at the top of the heap. At 0.10% on both buy and sell orders, it just doesn’t get any cheaper than this (well other than free I suppose).
Considering their popularity, vast array of altcoins to trade, their top-notch security protocol, as well as customer support, this is my number one place to go for low fee crypto trading.
If you want a more detailed review on Binance, I highly recommend you check out our article located here.
The Coinbase owned exchanged is one of the most popular cryptocurrency exchanges in the world as of December 2017. You can place order that will immediately get filled for as low as 0.10% (you would be considered a taker). Limit orders are free (you’re considered a maker).
That’s right, I said it, FREE! However, this all depends on if you’re a maker or taker on the order book. If you’re not familiar with maker and taker fees, let me explain. If so, then just skip past the highlighted section.
In essence, a maker fee is when a trader places a bid on a coin and waits to get it fulfilled by another trader within the exchanges order book. A taker fee is where a trader immediately accepts the highest bid (either buy or sell order) within an exchanges order book.
If you’re still confused, I highly recommend you check out our article here for a more detailed explanation.
With GDAX’s low to free fee structure, there is one caveat to trading within the exchange. You’ll only be able to trade Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
This may be a deal-breaker to some, while others that are new to the trading scene may only care to get started with the select few pairs. Either way, the fees are some of the lowest in the industry so this may be a great place to get your feet wet when starting out on your cryptocurrency trading journey.
While HitBTC is not one the most popular exchanges, it is one of the cheapest. HitBTC has also been around for a very long time (since 2013 to be exact) thus has a long-standing track record.
Like Binance, HitBTC only charges 0.10% on both buy and sell orders. I wouldn’t necessarily recommend this exchange when transferring your countries fiat over to crypto, however they are a great cryptocurrency trading exchange for those looking for a beginner friendly solution.
For a more detailed review on this exchange, please check out our review here. We give you all the details on what makes this exchange stand out from the crowd.
This UK based exchange charges a little more than the two mentioned above, however is still relatively cheap when compared to the average fee of most exchanges in the market today.
CEX.io charges a 0.20% fee across-the-board (both maker and taker fees). This is still 0.05% under the standard trading fee for most exchanges which is 0.25%.
This trading platform has also been around or quite some time. They were established back in 2013 as one of the first cloud mining providers. Since then, they’ve become a multifunctional cryptocurrency exchange with millions of users worldwide.
Bitfinex is also fairly cheap when compared to the standard the structure of most cryptocurrency exchanges. They offer 0.10% maker fees and 0.20% taker fees.
If you’re not familiar with maker and taker fees, let me explain…
They also offer a tiered fee structure. This means that their maker and taker fees are lower the more you trade, however don’t get too excited. The lower tiers don’t start until you start trading $500,000 or more.
NOTE: I don’t recommend this exchange unless you’re an experienced trader with over a year of experience. Margin trading can be a dangerous for novice traders. I only recommend traders with at least a years’ worth of experience to potentially dabble in margin trading.
For International Traders
Any of the exchanges mentioned above will work for international traders (meaning you don’t live in the US), however if you’re looking for a more local exchange to support, you may find the exchanges below more accommodating.
Austrailia – CoinJar and Coinspot are two low fee exchanges that are located “down under”.
Europe – CEX.io is mentioned above and is a great low fee exchange, however if you’re looking for another alternative Bitpanda has received a lot of great reviews as well.
China/Japan – Huobi is the 3rd largest exchange in the world by trading volume. This is the most widely accepted exchange among easterners.
Now Choose One and Start Trading!
There you have it folks! The lowest fee crypto exchanges to date. I’ll continue to keep this article updated as newer “low fee” exchanges are released.
Feel free to chime in to the comments below and let me know what other cheap exchanges you’ve used, so we can add them to the list.
Now get out there and start trading. Make sure to buy me something nice with all that money I saved you on fees. 😉
HitBTC is one of the older cryptocurrency exchange platforms which has been operating since 2013. It’s based out of Estonia and was developed by a man by the name of Dave Merrill. It’s the largest European cryptocurrency exchange, however is still not as widely known as some of the other larger exchanges like Coinbase, Bittrex, and Binance.
What’s HitBTC All About?
Many previous users tend to claim that HitBTC is one of the easiest and quickest exchanges to get started on. Personally, I didn’t find it any more convenient than any of the other cryptocurrency exchanges I’ve used. However, that doesn’t take away from the vast array of features that this exchange offers its users.
To start things off, there trading fees are at a low 0.10% (that’s 0.10 of a percent). If you’re a market maker, then you get a rebate of 0.10% back on your fees. There currently one of the only exchanges that are doing this at the moment.
These low fees might not seem like a lot at first, but it certainly adds up, if you’re day or swing trading (as opposed to investing long-term).
Additionally, , HitBTC lets you trade in various currencies like ETH, USDT, and of course BTC.
Another great benefit to using HitBTC is the fact that you can remain completely anonymous on the platform. This is important for many individuals as many users prefer to keep their privacy intact for various reasons.
The exchange even has a “Favorites” tab where you can save your favorite trading pairs and find them from this easy to find location. Many traders appreciate this feature along with the wide array of cryptocurrency pairs the trade with.
HitBTC is one of the more beginner friendly exchanges, however if you’re new to cryptocurrency trading, there may be a small learning curve. This goes for just about any exchange you get started on. I personally didn’t find it any easier or complicated than some of the other popular exchanges I have reviewed.
Another cool beginner feature that HitBTC allows individuals to take advantage of is demo trading. This enables you to gauge whether or not you’re cut out for crypto trading. This is one of the reasons why the exchange is a great place to start for beginners.
Free demo trading is unheard of within most cryptocurrency exchanges. If others offer it, they tend to request you make a trade of at least $5 or more (which really isn’t a true demo). This isn’t the case with HitBTC as they allow you to trade with the full demo whenever you like.
The only minor drawback that I could find with HitBTC is that they don’t offer a mobile app. This really isn’t that big of a deal, as many other exchanges don’t offer this as well (Binance has a mobile app and that’s the only one I’m aware of). You can still login to the site via your mobile phone web browser and make trades that way, but it’s just not as intuitive as a mobile app.
Like most other exchanges, you’ll need to go through a verification process if and only if you intend on depositing fiat currency into the exchange from your bank account. The process usually takes around 3 to 5 business days and will require you to upload a photocopy ID. This is the same process on all cryptocurrency exchange platforms.
After you’ve been verified, you are limited to trading $2,000 per week and $10,000 per month. One of the great aspects to HitBTC is that they let you increase this trading limit if you put in a request. You’ll be happy to know, they tend to always gets accepted.
When it comes to fiat transfers from your bank account to the exchange, HitBTC only accepts cryptocurrency transfers. In order to trade on HitBTC, you need to transfer your cryptocurrency from your crypto wallet to the exchange. I recommend these exchanges for fiat to cryptocurrency deposits:
Deposit fees can vary greatly depending on the cryptocurrency you decide to deposit. At the time of posting this, BTC fees are very high, however LTC is very low. I highly recommend you check out your deposited crypto fee before initiating a transfer. Click the image on the left for reference.
Deposits are not the only time a fee is charged. Each time you make a withdrawal, a fee is charged as well. A network fee is also charged for cryptocurrency and 2% flat fee is applicable with fiat. As I mentioned above, you want to check the withdrawal fees calculated by HitBTC before you decide to initiate. You should never be surprised over transfer fees after a transfer has been completed.
PRO TIP: I typically use LTC, BCH, or Dash when transferring cryptocurrency in and out of HitBTC. They are known to have the lowest fees. Once your currency has reached HitBTC, you can then transfer it over to BTC, ETH, or USDT in order to trade pairs.
HitBTC Security Features
The security features delivered by the exchange are quite generic and are delivered by all other exchanges. They include the industry standard two-step authentication process (2FA). This authentication is completed for all withdrawals and logins. 2FA is optional, however I highly recommend you enable it for all cryptocurrency exchanges you currently trade on.
The second essential security function they include with all accounts is their proprietary encryption technology. This is to protect your account from hacking attempts. HitBTC has an outstanding track record of protecting accounts from hackers.
The exchange has a system in place to let you know if someone else has been trying to access your account from another location. You’ll receive a notification to your email address if this occurs.
The interface of this exchange will either be the best thing you come across or the worst. Your take on it will depend on your level of expertise. They do a great job on explaining every little feature when you hover your mouse over the question mark bubble. Each tab and dropdown menu includes one to get you up to speed.
For the professional, HitBTC offers a wide array of features like stop losses, stop limits, and a newer feature you won’t find anywhere else…the “Scaled” tab. This feature allows you to set multiple orders at designated price points. This is also referred to as scaling in and scaling out of a trade. For more information on this topic click here.
The price charts for this exchange aren’t as nice as some of the other exchanges like Binance and Bittrex, however they do give you an option of utilizing the TradingView charts which I highly recommend over the standard charts.
There is also a unique feature called the “Trollbox” which works in the same way as a typical chat room. This allows you to chat with other traders and possibly gain insight into a particular cryptocurrency that’s gaining momentum. At the same time, be careful with all the FUD and shilling going on in there, as the place is a hotbed for that sort of activity.
The demo feature is unique and highly useful for beginners.
Low trading fees at 0.10% (that is 0.10 of a percent and not 10%). If you’re a market maker, you receive a 0.10% rebate on fees.
You can trade in numerous cryptocurrency pairs like BTC, ETH, and USDT.
There are various advanced tools available for trading like the aforementioned “Scaled” tab.
Great security features and encryption to keep your account from being hacked.
Easy to get started, as long as you don’t need to deposit fiat funds into your account.
You can stay anonymous as long as you are only trading and not depositing fiat into the exchange.
[UPDATE] HitBTC now offers margin trading to their selection of features.
You can only deposit cryptocurrency. This exchange does not offer a way to deposit fiat currency.
Withdrawel/deposit fees can be high if you don’t transfer with the right cryptocurrency. Make sure to follow my “Pro Tip” above and inspect all fees before initiating.
The cryptocurrency volume is not as high some of the other exchanges.
HitBTC Tutorial for Beginners Video
Let’s wrap this up…
HitBTC does deliver some features that are not found within other exchanges. Whether it be the demo version of trading or its ability to use “Scaled” trading, the exchange has succeeded in standing apart from the crowd for many years now. We can’t tell you whether the exchange platform is perfect for you, however I will tell you that it is worth signing up for.
Rather than relying on someone else’s experience, you can try it out for yourself using the demo version. If you enjoy your experience or find it useful, please leave a comment below and let others know what you think.
Ever since it was launched back in 2014, Bittrex has succeeded in gaining popularity among all the various cryptocurrency exchanges to this day. The company originated in the US and was founded by Bill Shihara, Richie Lei, Ryan Hentz and Rami Kawach.
It has been steadily growing over the last few years. One of the biggest reasons for its popularity can be traced back to its enhanced security features. This was made evident by the founders who are security professionals.
This area of expertise is a highly regarded profession within the crypto sphere. Hackers are always looking for new schemes and methods to infiltrate these high value exchanges. The team over at Bittrex allows cryptocurrency investors to rest assured that they won’t someday wake up to an empty online wallet.
Available Cryptocurrencies on Bittrex
Whether an exchange platform is worth using depends on the number of cryptocurrencies available for investors to trade with. After all, what is the point of using an exchange when your favorite or most popular cryptocurrencies are not listed? Believe me, Bittrex does not disappoint in this area.
The exchange includes a vast array of cryptocurrencies at well over 300 and counting at the time of this release. These include some of the more popular currencies like Bitcoin, Zcash, Ethereum, Litecoin, Cardano, Stellar, NEO, just to name a few. Moreover, the exchange platform lets you trade with BTC, ETH pairs as well as and Tether (the cryptocurrency equivalent to the US dollar). If you ever wish to secure your cryptocurrency investment from volatile swings, USDT (Tether), is the currency you want to secure your currency in.
[UPDATE] Bittrex is now one of the only cryptocurrency exchanges that is now offering US dollar to cryptocurrency trading. This is currently being tested in a select few states. For more information click here.
Signing up to the Bittrex exchange is a piece of cake. For those of you who wish to trade cryptocurrency pairs, it’s one of the best places to get started.
The platform does not require you to share a ton of information to sign up. All you need to provide is a name, email address, phone number, date of birth, and voila, you’re done! Your basic account will be ready to use.
However, if you wish to utilize other various services of the platform, you’ll have to go through Bittrex’s process of enhanced account verification and purchase a minimum of $10,000 worth of cryptocurrency. A high-tier account also allows you to make withdrawals higher than $10,000.
Account Limitations of Bittrex
When we say Bittrex is one of the most secure exchanges out there, we weren’t joking. The platform has taken many measures to ensure its security. This also means that you might face a few inconveniences along the way. Just remember, it’s for your own good.
For instance, if you change your password, you won’t be able to withdraw money from your account for 24 hours. This helps the exchange make sure that you’re not a hacker who is able to access your account and withdrawal funds.
Also worth noting, Bittrex encourages its users to utilize the 2FA (two factor authentication) added to your account for more enhanced security. For those of you who choose not utilize this feature, you’ll be able to withdraw 1 BTC per day. Individuals who opt for the basic account (and basic safety features) will be able to withdraw 3 BTC per day.
If you wish to withdraw 100 BTC per day, you need to choose the enhanced account. It’s also not necessary for you to withdraw to BTC. You can withdraw any equivalent cryptocurrency amount to your soft or hard wallet.
When it comes to trading fees, you’ll find that Bittrex is a little more expensive compared to other exchanges within the industry. There are no discounts for those who trade high volume. So if you’re a baller, don’t expect Bittrex to cut you any slack as far as fees are concerned.
Regardless of your trading volume, or if your considered a market maker or taker, a 0.25% commission is charged across the board. Regardless of having a comparatively higher fee than a few other newer trading platforms, the number of users on Bittrex continues to rise. This is attributed to the secure nature of the exchange platform as well as its many years of stability. Bittrex’s fast withdrawal services along with its reliability have been a huge reason for its success.
Ever since its release in 2014, it has succeeded in attracting a high volume of traders. It’s only competition; with regard to longevity is Poloniex. Bittrexs volume of traders are still nearly double of what Poloniex has to offer. Their customer support is far more superior to Poloniex as well. A great achievement considering it has only been operational for 4 years.
Bittrex vs. Poloniex
In terms of customer support, the clear winner is Bittrex. This is because Poloniex is flooded with a large number of user complaints. A glimpse over various forums will reveal many dissatisfied Poloniex customers.
On the other hand, Bittrex answers queries on social media, posts updates and gets back to its users comparatively quick. While Bittrex is not perfect regarding their support, I’m sure you’ll find a few complaints about any cryptocurrency exchange.
Trading pairs offered by Poloniex are around 100. Compare this to Bittrex who deliver over 300+ trading pairs and growing, every single month. Now, if you’re only interested in trading popular cryptocurrencies, this might not matter to you, but for those of you who enjoy having a lot more choices to trade, Bittrex, is by far the better exchange.
Even though Poloniex has been operating a little longer than Bittrex, when it comes to delivering value, support, and selection, Bittrex emerges as the true winner.
Customer support of the platform is exemplary.
A basic account is easy to acquire.
The exchange is one of the most secure, thereby building trust in investors.
There are over 300 trading pairs available.
If you’d like to purchase cryptocurrency with fiat, you’ll need to make a purchase order for $10,000+. However, this is not required, as you can purchase any small amount of crypto from the exchanges mentioned above (look under Available Cryptocurrencies on Bittrex).
Bittrex is primarily used for trading only and not for exchanging your fiat currency (like USD or EUR) to crypto.
The verification process can be a bit daunting for enhance accounts, however this is typical within the industry.
Is Bittrex A Good Choice for You?
Bittrex is an excellent choice for all you traders who are on the lookout for a secure platform to trade on. The enhanced security offered by this exchange makes it an excellent option for anyone.
The exchange delivers on with a ton of benefits, stability, longevity, selection, and security . This makes it one of the best platforms you can currently trade in.
Detailed Video Tutorial on How to Trade with Bittrex
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