First of all, what are Bitcoin futures and swaps? A futures contract – as the name suggests – is a way of agreeing to purchase or sell a specific product at a specific price on a future date. Futures agreements typically trade on an exchange and can be used by many kinds of investors and speculators.
A swap is an agreement between two parties to exchange financial assets on a determined date or in many cases multiple dates. A Bitcoin swap is a P2P swap between Bitcoin and other cryptocurrencies without a middleman. Two people can swap digital coins without trusting each other.
Trading Bitcoin Futures and Swaps on Bitmex Exchange
Let’s now look at how to trade these instruments at BitMEX – a peer-to-peer trading platform that provides leveraged contracts that are bought and sold in Bitcoin. Financial experts and bankers Arthur Hayes, Ben Delo, and Samuel Reed manage the Bitcoin derivative exchange. BITMEX allows its users to trade with up to 100:1 – the highest leverage on the market.
If you have an account balance of 2 BTC and you want to place a trade with a leverage of 100:1, you’re able to open a position worth 200 BTC. Thus, if the market moves in your favor, you will be able to access 100x the returns. Nevertheless, it also has the effect of increasing losses when the market shifts against you.
All margin values on BitMEX are denominated in Bitcoins, thereby allowing traders to speculate on the future value of a contract – using only BTC. So how do I trade Bitcoin futures and Swaps on BitMEX?
Registration on BITMEX
Create a BITMEX account. Like most cryptocurrency exchanges out there, BITMEX does not require an approval process. You can start trading immediately after signing up. Once you’ve set your account, you need to keep it secure. Set up a two-factor authentication to protect your account from hackers. Also, remember to use strong passwords.
The success of Bitmex and its constant growth in the world of cryptocurrencies has increased thanks to the ability to keep its customers satisfied, with an extremely fast and transparent communication and support and offering a strong security system within this highly advanced platform and convenient in its use. Read more about the BitMEX crypto trading platform in our BitMEX review.
After registration, you will direct to Dashboard where you will check and manage all your orders.
Balance: At the top right corner of the dashboard you will see your current balance.
Market Selection: In this section, you have to choose the market in which you want to operate. Clicking on each of the markets will load all relevant market information.
Order square: This space will be where you place your orders (Market) by entering the total quantity (Quantity) in USD. For example: if you open a position with $100 with lever x10 you will have a position from 1000 contracts equal to 0.0236XBT.
Buy market (green button) = open LONG position
Sell market (red button) = open SHORT position
You will also find the value of the order you wish to open in XBT and the available budget.
Leverage: In the “your position” section, where there will be the number of entry contracts, the ROE% (Return on Equity), and the selection of the lever (Leverage available from 1x up to x100).
Contract details: Within it, you will find all the additional information on your contract based on the market on which you want to operate.
Select contract type
This selection is valid only for XBT and will be selected among the following types of contracts available:
- XBTUSD / Perpetual Swap (100x): The value of each contract is $1 of Bitcoin. The rollover will be paid every 8 hours.
- XBTZ18: It is a traditional futures contract which expires at the end of 2018. The contract is recommended for speculators. Available leverage is 100x.
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