How to trade on Bitfinex Crypto Exchange?

Bitfinex (go online) is cryptocurrency exchangewhich offers trading in various digital assets. It provides financial services to both traders and liquidity providers. The company has developed a user-friendly terminal and several offers for its users. For example, there are spot and margin trading, exchange, over-the-counter (OTC) financing and derivatives.

Exchange trading

The exchange has an order book for exchange transactions cryptocurrencies. You can buy and sell different digital assets, deposit and withdraw coins. To start trading, you need to deposit funds in supported cryptocurrency or fiat money. To make a trade, you need to go to the “Trade” page, select a currency pair and go to the “Trade” tab in the “Order Form” window. After selecting the order type, size and price, you should click on “Buy” or “Sell”. You can specify a market order to execute the order at the current price.

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A limit order is also available, which allows you to determine the exact price and amount. The sent order will appear in the window under the diagram. After its execution and crediting, information about it will go to the window with the history. The minimum amount is different for each currency pair. They are periodically adjusted depending on the price of the asset. Bitfinex also offers these types of orders:

• Stop. It is used when placing a market order to sell, when the price decreases to the set users, and to buy, when the value increases to the one assigned by the trader. It is triggered as a market order when the market reaches a set price threshold.
• Stop Limit. When placing it, the user specifies a stop price to trigger and a limit value to sell. When the trigger on the stop price is triggered, the limit order is automatically placed.
• Trailing Stop. This order gives more flexibility compared to a Stop. It is executed when the market moves in the opposite direction by the value of the price distance. This order is often used to save the received income. The stop price is on the specified distance from the most profitable price, reaching the price distance. When the trigger is triggered, a market order is placed.
• Execution or Cancellation (FOK). Such an order must be executed immediately and in its entirety at the price specified by the user or the best price or canceled.
• Execution at once or cancellation (IOC). The order requires partial or full execution instantly or cancellation of the unexecuted part. The difference from FOK is that the order can be partially executed.
• Scalable. Such an order uses an algorithm to save time on order placement. It allows you to focus more on the choice of strategy. With the algorithm you can create many limit orders within a certain price range. Such a tool on Bitfinex allows you to monitor the degree of order allocation within a selected price range.

The additional options available depend on the type of order in the “Form” tab:

• Reciprocal order (OCO). Allows you to place a pair of orders when one of them is fully or partially fulfilled, the other is canceled.
• Hidden order. Ensures that the order does not appear in the order book and does not affect other users.
• Visible in performance. Available only for hidden orders. When such an order is partially executed, the balance becomes visible in the book.
• Limit order Post-Only. The order will be added to the order book and will not be merged with an existing offer. If the order is merged with an already placed order, it will be cancelled. This type of order ensures that the user pays the commission of the maker, but in the case that the order will not be merged with a hidden offer.
• Order to reduce the position. Allows you to place orders to reduce the current position. The size of the order, which is executed in the opposite direction, cannot be larger than the size of the open offer.
• Time in Force (TIF). The option is available for Trailing Stops, Stops, Stop Limit and Limit Orders. You can specify the period during which the order can be open. It will be open until it executes or the specified time expires.

Margin Trading

On Bitfinex you can trade with 10x leverage. The user receives collateral through a peer-to-peer funding platform. When opening a position, traders can apply for funding by specifying the amount, percentage and term. It is also possible to open a position so that the system automatically selects the one who can give their funds at the best rate.

Margin Maintenance

Margin peer-to-peer financing allows lenders to earn interest by lending assets to borrowers who want to use them in trading. Suitable for those who are interested in low-risk investments. Borrowed funds can be lent through a peer-to-peer funding platform. Bitfinex allows you to lend your assets in different currencies that are available on the exchange for margin trading. With funds in your funding wallet, you can place offers on your own terms, specifying the rate, duration and amounts. Offers are executed like other orders in the order book when there are buyers for them. Interest will be paid until the borrower pays the money back.

OTC trading

OTC on Bitfinex is used to conduct transactions for large amounts directly with counterparties. Such orders are not included in the general order book. With this tool, traders gain access to large volumes of liquidity. At the same time, there is no influence on the current price. To use the platform for OTC, you need:

• Login to your account. Create a nickname for OTC trading, so that other users can use it to find a trader. Go to “Account – Account Information – OTC Nickname”.
• Select the “OTC Trading” tab at the top of the navigation bar.

Two ways to use the platform are available:

• Instant access to liquidity. To do this, you need to email: [email protected] and specify the following information: average deal size, weekly trading volume, list of currencies ranked by importance, time in which you will work, verification level, availability of counterparties for trading, bank location, whether the withdrawal of digital assets to fiat is planned.
• Trade directly with other traders.

If the second option is chosen, it is possible to request a transaction using another participant’s nickname. It is necessary to create an order, enter the user’s nickname, choose a trading pair and specify parameters of operation (quantity and cost). After pressing the button “Request to make a transaction”, you should also enter the 2FA code. The counterparty will receive a request by e-mail. To complete the transaction, he must accept the offer. The orders that are waiting for confirmation are located on the OTC page in the “Active Orders” tab. The price spread should not be more than 10% from the current price. Such trades are carried out with funds from the exchange wallet. The minimum for the order is the equivalent of $50. The total amount will be displayed in a special field at the bottom.

Derivatives

Users who have passed the Bitfinex verification procedure can trade derivatives. Leverage is available for this – up to 100x. It determines the amount of collateral. Derivatives is a financial instrument whose price is determined by the underlying asset. By trading with it, you can speculate on the future price by buying/selling contracts to earn more profit than if the underlying asset were bought directly. Derivatives trading is available to those who are verified to intermediate or full level.

The collateral for such trading must be U.S. dollars or Bitcoin in the derivatives wallet. It must be at least 1% of the value of the position the user is about to open. Unlike a margin trading platform, the derivatives platform uses isolated margin. It is possible to allocate a portion of the margin amount to a position rather than all of the funds in the wallet to cover active positions.

Honey

Bitfinex has developed the Honey algorithmic trading tool, with which you can implement your order types and strategies. It allows you to run algorithmic orders from your browser. No installation is needed, you can get to work right away. Honey Framework includes the whole set of libraries for algorithmic trading in the application. The tool uses built-in algorithmic orders. The web version includes a number of built-in orders, including Ping/Pong, MA Crossover, Iceberg, TWAP, and a trading terminal for executing orders. The service allows you to create your own layouts of market data, choosing from a large number of custom widgets (tables, order book, charts, etc.).

Traders can execute algorithmic orders, which are created by Bitfinex, or develop their own with the Honey library. Algorithms that are suitable for market making and large order execution help to automate trading and execute many orders simultaneously from the exchange interface. The Honey libraries allow you to create trading bots, test and implement ideas in the market in current time and on historical data. The bots are available for Python and JavaScript and include over 45 indicators. To use the tool, you can go to the “Honey” section of the Bitfinex website from your personal account, read details about the service, and click on the “Try” button. It will redirect to the page with the terminal for placing orders.

Paper Trade

The exchange also offers the use of paper trading, which helps to test different strategies in a simulated market. Test tokens are used for work, so there is no need to deposit real funds. These tokens have no value and are not withdrawn from the platform. Paper Trading is a market simulator with which you can learn to develop different strategies. Such a service helps test strategies for exchanges, margin trading, and the derivatives market. Other features include margin financing, which allows you to place or reserve test assets, and the Bitfinex Borrow platform for testing fund borrowing. You can also practice increasing positions. An over-the-counter market is also available for this type of trading, allowing you to experiment with large orders that don’t go through the order book.

To use paper trading, you must create a sub-account. When filling out the form to register such an account, the user should tick the box “Account for paper trading” at the bottom of the window. Once it is created and activated, it cannot be switched to another type of trade. Creating a paper trading account is also available on the Honey platform. The feature gives you the ability to create custom order types or automatic strategies for trading in sub-accounts. On Honey, you can test market data to get a better understanding of algorithmic strategies. To create such an account, you need:

• Create an API key on a sub-account for paper trading.
• Open the Honey app.
• In the menu, select the “Paper” option and add the key that was created on the settings page.

Bitfinex terminal

The exchange offers a P2P data exchange service – the Bitfinex terminal. It is built on technology that transmits historical and current data over P2P networks. Synchronization helps retrieve Market Data frames, which makes it an affordable way to test MarketData. There is support for micropayments with digital assets to pay hourly rates for accessing Market Data. The information that is provided through the terminal is non-refutable and can be obtained using cryptographic methods. Most of the data is available for free, but there are advanced sets that use pay as you apply.

Historical Market data, historical candlestick market data and FRR are available on the terminal. This data is provided free of charge. Additionally, historical snapshots of order books and financing are available. Searches through the Dazaar network, a protocol for selling, buying and exchanging data using a peer-to-peer network, are also used. The terminal is available through the Node.js SDK. To use it, you need:

• Install or update Node.js LTS.
• Agree to Bitfinex’s terms of service.
• Choose between basic (free) and advanced features.

The free data sets have a selection of real-time and historical candlestick and trading information, as well as financing statistics. The sets are indexed so that the user can select and download portions of interest. The data can be stored locally so the information can be accessed and studied offline. The advanced pay-per-use kit gives historical snapshots of order books and access to funding books from the GitHub page. Payment is 2 cents per hour, 0.0015 UNUS SED LEO or 100 satoshi. This version provides fast transfer and storage space with an information compression algorithm with which you can quickly find any order book snapshot without downloading the entire dataset. Payment is accepted in BTC, USDT and UNUS SED LEO.

Bitfinex Borrow

The exchange offers Bitfinex Borrow, a peer-to-peer funding platform where you can borrow money from other exchange customers using cryptocurrency or fiat as collateral. To get a loan through the platform, you need to log in to your Bitfinex account (the account must be verified to the Basic+ level or higher), transfer funds or fund a margin wallet to use assets as collateral. Once you go to Bitfinex Borrow, you can customize your loan request. You have to specify the term and amount in the suggested window. The minimum that can be borrowed is 175 USD. The next step is to select the currency to be pledged. The required amount will be updated according to the size of the loan. After clicking on “Borrow” the pledge will be blocked. Loan funds can be withdrawn to the margin wallet.

Creating a credit will allow you to open a long and short position with a collateral amount that is determined based on the liquidity of the collateral and the assets received. If cryptocurrency is used for collateral, a long position can be opened, if fiat – a short position. The collateral must remain above the minimum margin in order not to be liquidated. This position depends on profits and losses, commission and interest are charged. To repay the loan, the position can be withdrawn. If the position is closed, a trade will be made against the open position, which means that your collateral will be used to trade on the loan proceeds. It is possible to return an asset by depositing borrowed coins or fiat currency into a margin wallet. In this case, the funding that was allocated to the position will be terminated.