Crypto CFDs: bitcoin without a wallet
What you learn in 3 minutesThis lesson shows how a crypto CFD works: you trade the price of bitcoin without owning or storing any coin. You will see what a small position costs in peso margin, how a weekend move changes the result, and what the broker adds on top.
0.01 lots of BTCUSD: margin, swap and a weekend move
| Step | Amount | Note |
|---|---|---|
| Position size | 0.01 lots | one lot of BTCUSD is a fixed contract size set by the broker, so 0.01 lots is one hundredth of it |
| Notional value | ₱58,000 | 0.01 lots at a BTCUSD price of 100,000, converted at ₱58 per US dollar: 0.01 x 100,000 x 58 |
| Margin required | ₱5,800 | a 10 per cent margin rate on the notional value: 58,000 x 0.10; the rate varies between brokers |
| Price move over the weekend | ₱2,900 | a 5 per cent fall in the BTCUSD price: 58,000 x 0.05, against a long position |
| Swap for holding over the weekend | ₱174 | three days of funding at 0.10 per cent a day on the notional value: 58,000 x 0.001 x 3; the rate varies between brokers |
| Result before other costs | ₱3,074 loss | 2,900 + 174, because both the price move and the swap went against the long position |
The broker may round the swap, charge a wider spread on crypto CFDs than on EUR/USD, and add a commission. The margin rate, the funding rate and the contract size are set by each broker and are not the same everywhere.
The mistake people make here
People treat a crypto CFD as if they had bought the coin, then hold it over the weekend and are surprised by the funding charge. The chart keeps moving when the coin market is open, but your position is a contract with a daily cost. Check the contract size and the funding rate before you open, and decide in advance whether you plan to hold through a weekend. If you only want the price move, close before the charge is applied.Check yourself
On EUR/USD, one pip on one standard lot is 10 units of the quote currency. At a rate of ₱58 per US dollar, what is one pip worth in peso?
10 x 58 = ₱580.
You hold 0.01 lots of BTCUSD with a notional value of ₱58,000. The funding rate is 0.10 per cent a day and you hold for three days. What is the swap?
58,000 x 0.001 x 3 = ₱174.
A long position of 0.01 lots on BTCUSD has a notional value of ₱58,000. The price falls 5 per cent. What is the loss from the price move alone?
58,000 x 0.05 = ₱2,900.