There is a lot of confusion about the BitMEX in the crypto space due to its wrong listing on many exchanges. It has happened because only a handful of people understand the complete workings of the BitMEX exchange.
Here is a complete guide about BitMEX which will make you understand completely what BitMEX is and how it works.
It should be useful to you as the advantages of crypto and it’s utilizing platforms are spreading at an enormous rate. Not many people know that now you can even get to book a Function venue using this priceless currency.
What does BitMEX stand for?
BitMEX is a peer-to-peer trading platform on which leveraged contracts of bitcoin can be sold and brought. It stands for Bitcoin Mercantile Exchange.
Like a derivative in the stock market, BitMEX acts as a derivate in the crypto instruments market. A derivative as per definition is an instrument whose value is derived from one or more underlying instruments. These underlying instruments can be commodities, currency, precious metals, stocks, bonds, stock indices, etc. In the stock market, Futures, options and swaps are the derivatives.
In the same way in BitMEX, crypto derivate instruments whose value is derived from the value of the Bitcoins is sold and brought with the help of margin trading.
Margin trading refers to the leverage you get for the amount of money invested by you. For example, you have $100 to invest in BTC and you want to trade for $200, so you will use margin trading of 2:1 where for every dollar you are investing, you will get one extra dollar to invest. This is known as leverage or margin.
Types of contracts on BitMEX
There are 4 different types of contracts available on BitMEX which are as follows:
- Perpetual Contracts: It is similar to a Future contract and a margin-based spot market. It is only available for BTC and there are no expiry or settlement. These contacts trade close to the underlying Index Price.
- Traditional Contracts: It is the agreement to buy or sell a specific commodity, currency, bond etc. at a predefined price at a specific time in the future using BTC.
- BitMEX Downside Profit Contracts: It allows the traders to participate in the contracts of the potential downside of an instrument.
- 4. BitMEX Upside Profit Contracts: It allows traders to participate in the potential upside of the instrument.