BitMEX has pioneered many trading innovations, starting with the perpetual swap which it literally invented back in 2014. This mechanism is now the means by which crypto futures work across both centralized and decentralized exchanges. But it’s impossible for any exchange, no matter how innovative, to pioneer everything: most of the time it’s merely implementing features that were popularized elsewhere.
So it is with copy trading, which BitMEX rolled out this summer. By this point, it had already been widely adopted by scores of centralized exchanges, allowing less experienced users to follow professional traders and replicate their trades in the hopes of tapping into their superior market knowledge. This setup essentially allows beginners to piggyback on the pros, and in the process boost their own PnL all going well.
What BitMEX may have lacked in speed with its own copy trading program, however, it’s more than made up for in power. Because BitMEX’s derivatives exchange offers something that arguably no other CEX can match. The killer feature BitMEX boasts isn’t copy trading – it’s the traders you copy. Because BitMEX’s OGs aren’t just good at what they do – they’re the best.
Traders Worth Copying
BitMEX has long attracted traders of a higher caliber. There are various reasons for this, including the fact that it was the first exchange to offer perpetual swaps, at a time when retail scarcely touched leverage. As a result, it attracted the first wave of professional traders that were entering the cryptosphere in the mid-2010s, having cut their teeth on TradFi. Many of these traders have stuck around, having liked what they found with BitMEX and crypto in general.
While perps is still not for the faint-hearted, it’s a lot less daunting than it once was. You had to know your way around an order book back then, understanding concepts such as margin and funding rates which had yet to really enter the crypto lexicon. To this day, BitMEX users tend to be drawn primarily from the pro and semi-pro ranks of crypto trading, leaving less experienced users to seek out more beginner-friendly platforms on which to learn the ropes.
Up until now, the incentives for making BitMEX your first exchange, as a new trader, were comparatively low. Aside from its attractive trading fees, which at 0.05% are half those offered by most spot exchanges, BitMEX has not gone out of its way to target beginner-intermediate traders. But its launch of Copy Trading has changed all that by allowing such users to tap into some of the best traders in the biz and to mirror their moves in single click.
Learning From Legends
BitMEX hasn’t just provided a platform for some of the industry’s best traders to make millions – it’s also provided the podium. BitMEX Legends, as they’re known, are celebrated in their own hall of fame, which includes such notable names as Arthur Hayes, KDJ, and Romano. To say that BitMEX incubates great traders would be an understatement. Of course, this doesn’t mean that every trader on BitMEX is highly profitable – markets don’t work this way – but the top percentile are some of the deadliest in the game.
Which is why BitMEX’s design to launch copy trading is such a big deal. It’s easy to sign up to a mid-tier exchange and start blindly following traders whose abilities are scarcely more developed than your own. But on BitMEX, it’s possible to copy experienced operators whose PnL speaks for itself. “Copy OG crypto traders in one click” is the exchange’s slogan and it’s one that’s hard to argue with.
Within its copy trading marketplace, you can search for the pest performing BitMEX traders over the last 24 hours, 30- or 180 days, with a risk grading alongside each one, which is often high but in some cases there are also moderate risk traders. In fact, the best performing trader over the last six months has generated 156% ROI without resorting to high risk. BitMEX’s copy trading dashboard also shows the capital each user is trading with. This is useful because anyone can take risks with pocket money, but it takes balls – and skill – to do the same with serious size.
What’s In It for Pros?
It’s easy to see why copy trading, particularly on an exchange that attracts traders of the caliber of BitMEX, is attractive to amateurs. Why wouldn’t you want to outsource all the chart-reading, TA, and timing to a pro who specializes in such things? But what’s in it for professional traders? Why should they allow their every move to be scrutinized and to give away their alpha?
The answer, of course, is that they’re not giving it away. They earn a 50% profit share, providing a nice way to boost their trading profits. In other words, they receive a share of the profits from the traders who’ve successfully copied them. Any time a follower closes out a position they’ve copied profitably, a slice of the proceeds goes to the trader in question.
This is incentive alignment in action. Pro traders are incentivized to keep their trading activity public and amateurs are incentivized to copy them in the knowledge that they’ll only be obliged to pay a cut when they generate a profit. It’s a win-win situation that simultaneously recognizes the BitMEX Legends and “Future Legends” – those up-and-comers who are fast making a name for themselves – while teaching less experienced users the art of the craft. Because if copy traders are smart, they won’t just be copying – they’ll also be learning.
Copy trading isn’t for everyone: many traders prefer making their own decisions, mistakes and all, and being able to own them, using each loss as an opportunity to reflect on what they did wrong, and each profit as a chance to grow their capital and start putting more money on the line. But for traders who are just getting started in the daunting world of derivatives, copy trading fast-tracks their ascent, allowing them to grow PnL by leaning on and learning from the best of the best.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
