Crypto CFDs: bitcoin without a wallet
What a crypto CFD does not give you
A bitcoin CFD gives you no coin. There is no wallet to open, no address to copy, and no transfer to wait for. What changes hands is a contract whose value follows the bitcoin price. That contract sits with your broker, not on a blockchain. Because of this, nothing about the trade depends on network fees or block times.
This matters for cost. When you buy bitcoin itself, you pay a network fee and you wait for confirmations. With a CFD you pay none of that. Instead you pay the spread, the funding charge, and any commission the broker lists. Those three costs are the whole bill. There is no fourth cost hiding in the background.
The price you see is the broker's price, not an exchange price. It is built from exchange prices, but the broker sets the spread around it. Two brokers can show different bitcoin prices at the same moment. Neither is wrong. The difference is the spread, and the spread is what you pay to enter and to leave.
How the weekend changes the cost
Crypto trades every day, including Saturday and Sunday. A bitcoin CFD follows that schedule, so your position stays open through the weekend. Most other markets close. This one does not. That sounds convenient, but it means the funding clock keeps running on days when you cannot react to news.
Liquidity is thinner at weekends. Fewer participants means wider spreads. A spread that is tight on a Tuesday morning can be several times wider on a Sunday evening. The cost of closing your position rises with it. If you open on Friday and close on Monday, you may pay a wider spread at both ends.
Some brokers also charge a larger funding rate over the weekend, or roll three days of funding into one charge. The amount varies between brokers, so read the contract specifications. The point is simple: a position held across a weekend can cost more than the same position held across a weekday. Plan for that before you open it.
Why the notional value decides your risk
Bitcoin is priced high, so even a small lot size carries a large notional value. One lot of BTCUSD is 1 BTC. At ₦60,000,000 per bitcoin, 0.01 lots is 0.01 BTC, which is ₦600,000 of notional value. That is the number your margin and your funding are calculated from. It is not the amount you deposit.
Margin is a fraction of that notional. If the broker asks for 10 percent margin, you set aside ₦60,000 to control ₦600,000. The rest is borrowed, in effect, and the funding charge is the rent on it. A move of 1 percent on the notional is ₦6,000, which is 10 percent of your margin. Small price moves move your margin a lot.
Funding is charged on the notional, not on your margin. At 0.2 percent per day, ₦600,000 of notional costs ₦1,200 a night. Three nights cost ₦3,600. That is 6 percent of the ₦60,000 margin you set aside. If the price does not move, you still owe that. Work out the notional first, then the margin, then the daily funding.
BTCUSD at 0.01 lots: margin, funding and a weekend move
| Step | Amount | Note |
|---|---|---|
| Contract size | 0.01 lot | One lot is a fixed number of bitcoin set by the broker. For this example, one lot is 1 BTC, so 0.01 lot is 0.01 BTC. This varies between brokers. |
| Bitcoin price | ₦60,000,000 per BTC | A round figure used only for arithmetic. The live price changes constantly. |
| Notional value | ₦600,000 | 0.01 BTC x ₦60,000,000 = ₦600,000. |
| Margin at 20 percent | ₦120,000 | ₦600,000 x 0.20 = ₦120,000. Margin rates vary between brokers and can be higher at weekends. |
| Spread cost | ₦3,000 | If the spread is 0.5 percent of price, 0.005 x ₦600,000 = ₦3,000. Crypto spreads are often wider than those on EUR/USD. |
| Funding charge for one night | ₦1,200 | If the daily funding rate is 0.2 percent of notional, 0.002 x ₦600,000 = ₦1,200. The rate varies and can be charged or paid. |
| Weekend price move | ₦9,000 | A 1.5 percent move against you on ₦600,000 is 0.015 x ₦600,000 = ₦9,000. Crypto trades at weekends, but spreads and funding often change. |
Your broker may round the funding charge, apply a wider spread at weekends, or add a separate commission. Check the contract specifications before you trade.
Doing it once, step by step
You will work through one bitcoin CFD position from the notional value to the total cost, in the order a broker calculates it. Do each step with the numbers beside it before you move to the next.
- 01
Write down the lot size and the price
Start with the contract size. One lot of BTCUSD is 1 BTC. Note the bitcoin price your broker shows, in naira. Use ₦60,000,000 as the example. Write both numbers down before you calculate anything.
- 02
Work out the notional value
Multiply the lot size by the price. At 0.01 lots and ₦60,000,000, the notional is ₦600,000. This is the value you control, not the money you deposit. Every later cost is built on this figure.
- 03
Find the margin you must set aside
Check the margin rate in the contract specifications. If it is 10 percent, multiply ₦600,000 by 0.10 to get ₦60,000. That is the cash you need in the account. A different broker may ask for a different rate.
- 04
Calculate the funding for each night
Take the daily funding rate and apply it to the notional. At 0.2 percent, ₦600,000 times 0.002 is ₦1,200 a night. Multiply by the number of nights you expect to hold. Three nights give ₦3,600.
- 05
Add the spread and any commission
The spread is the gap between the buy price and the sell price. It is wider at weekends. Add the spread cost and any commission to the funding. The total is what the position costs before the price moves at all.
- 06
Compare the total cost with your margin
Put the total cost next to the margin you set aside. If the funding alone is a large share of that margin, the position is too big or too long. Reduce the lot size or shorten the holding period before you open it.
The mistake most people make here
The common mistake is to treat a crypto CFD like buying bitcoin, and to ignore the funding charge that is taken every day the position stays open. People also forget that a small lot size can still carry a large notional value, because bitcoin is priced high. Instead, work out the notional value first, then the margin, then the daily funding, and only then decide whether the trade is worth the cost. If you would not pay that funding charge in naira for several days, the position is probably too big or too long.Check yourself
If one lot of BTCUSD is 1 BTC and bitcoin is ₦60,000,000, what is the notional value of 0.01 lots?
0.01 x 1 BTC = 0.01 BTC. 0.01 x ₦60,000,000 = ₦600,000.
At a funding rate of 0.2 percent per day on a ₦600,000 notional, what is the charge for three nights?
One night: 0.002 x ₦600,000 = ₦1,200. Three nights: 3 x ₦1,200 = ₦3,600.
Questions that come up next
How much is the funding charge in naira on a small bitcoin position?
It depends on the notional value, not on the money you deposit. If 0.01 lots is 0.01 BTC and bitcoin is ₦60,000,000, the notional is ₦600,000. At a funding rate of 0.2 percent per day, one night costs 0.002 x ₦600,000 = ₦1,200. Three nights cost 3 x ₦1,200 = ₦3,600. The rate itself varies between brokers, so check the contract specifications.
How much margin does a bitcoin CFD need?
Margin is a fraction of the notional value, and the fraction varies between brokers. On a ₦600,000 notional, a 10 percent requirement means ₦60,000 set aside. A 20 percent requirement means ₦120,000. The margin is not the cost of the trade; it is money held while the position is open.
How much does a wider weekend spread cost?
The spread is the gap between the buy price and the sell price, and you pay it when you enter and when you leave. At weekends there are fewer participants, so the gap widens. A spread that is tight on a Tuesday can be several times wider on a Sunday evening. The exact figure varies between brokers and between hours.
How much does a crypto CFD cost compared with buying bitcoin itself?
A CFD has no network fee and no waiting for confirmations. Instead you pay the spread, the funding charge for each night held, and any commission the broker lists. Buying bitcoin itself carries a network fee and a wait. Which is cheaper depends on how long you hold and on the broker's spread.
How much can I lose if the price moves against me?
Your loss follows the notional value, not your deposit. On a ₦600,000 notional, a 1 percent fall in the bitcoin price is a loss of 0.01 x ₦600,000 = ₦6,000. A 5 percent fall is ₦30,000. A small lot size does not make the position small.
How much does it cost to hold a position over a weekend?
Funding is charged every day the position stays open, and the weekend is included. Some brokers charge a larger rate over the weekend, or roll three days into one charge. If three nights at ₦1,200 each is ₦3,600 on a weekday, a weekend roll can be more. The amount varies between brokers.
The words used on this page
- Notional value
- The full value of the position, not the money you deposit. It is the lot size multiplied by the price. Margin and funding are both worked out from this figure.
- Funding charge
- A fee taken for each night a position stays open. It is a percentage of the notional value, so a larger position pays more. The rate varies between brokers.
- Spread
- The gap between the price you buy at and the price you sell at. You pay it when you open and when you close. It widens when fewer people are trading, such as at weekends.
- Margin
- The money your broker holds while a position is open. It is a fraction of the notional value. It is not a fee and it is not the most you can lose.
- Liquidity
- How many buyers and sellers are active at a given time. Thin liquidity means wider spreads. Weekend crypto markets are thinner than weekday markets.
- Lot size
- The size of the contract you trade. One lot of BTCUSD is 1 BTC. A small lot size still carries a large notional value because bitcoin is priced high.
What to take away
- A crypto CFD follows the bitcoin price but gives you no coin, no wallet and no transfer.
- The bill is the spread, the funding charge for each night held, and any commission the broker lists.
- Funding runs every day, including weekends, when spreads are also wider.
- Work out the notional value first, then the margin, then the daily funding, and decide only after that.