Cryptocurrency CFDs
A trader sells Bitcoin at $17,000, anticipating it to reach $16,000. To prevent excessive losses, they set their stop loss order at $17,700. The margin requirement for the Bitcoin CFD contract is only 5%.
Outcome A: Bitcoin sell-off continues
Bitcoin continues to depreciate and reaches the $16,000 target price. As the trader sold one contract of BTC/USD at $17,000 and bought it at $16000 - netting a profit of $1000.
Outcome B: Bitcoin jumps
The trader underestimated Bitcoin's resilience, and the cryptocurrency gains further momentum, eventually reaching the stop loss level of $17,700. As the trader sold one contract of BTC/USD at $17,000 and bought it back at $17,700, they were left with a loss of $700 on their position.
Buying Bitcoin Example
BTC buy Price —16500 * 1 = $16,500
BTC sell Price — 17100 * 1 = $17,100
Profit on trade: $17100 - $16500 = $600
Cryptocurrency Financing Example
Short Position
Daily financing charge or credit = size of position x applicable funding rate/365
A customer is short one lot (one contract) opened at 17:00 ET Monday
Financing cost (Swap) = 16500 x 1 lot x 6 *1/365 = -$2.75
The charge or credit will always be in counter currency
Long Position
Daily financing charge or credit = size of position x applicable funding rate/365
A customer is long one opened at 17:00 ET Monday
Financing cost (Swap) = 16500 x 1 lot x 8 *1/365 = -$3.61
The charge or credit will always be in counter currency