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The New Micro Contract - MICRO BITCOIN coming May 2021


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The New Micro Contract - MICRO BITCOIN coming May 2021

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  #1 (permalink)
 SMCJB 
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Micro Bitcoin futures coming May 3rd 2021.

edit At 0.1 Bitcoin and $60k it's a $6k notional contract (vs MES at 20k, MNQ 25K, M2K 10k, MGC $17k, SIL $13k)
(originally said it was 0.5 Bitcoin)

https://www.cmegroup.com/trading/micro-bitcoin-futures.html

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SMCJB View Post
Micro Bitcoin futures coming May 3rd 2021.

At 0.5 Bitcoin and $60k it's a $30k notional contract (vs MES at 20k, MNQ 25K, M2K 10k, MGC $17k, SIL $13k)

https://www.cmegroup.com/trading/micro-bitcoin-futures.html

I believe its 0.1 bitcoin. so $6k notional.

.
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 SMCJB 
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@addchild corrects me before I can even correct myself!

I talked to CME and can confirm it is 0.1 Bitcoin, so 1/50th of a Full Size Contract.

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 FuManChou 
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Looks like it is $0.50 per tick per contract. This should be awesome!

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 SMCJB 
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Question will be.
a) Can you find a broker that will let you trade it (a surprising amount will not)
b) If so what will their margin requirement be (a surprising amount charge double CME margin)
c) and what will they charge to trade it?

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 jokertrader 
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An additional question would be regarding margining of spreads and their viability...would be interesting to see if we can model spread behaviour based on historic full size BTC future spreads
SMCJB View Post
Question will be.
a) Can you find a broker that will let you trade it (a surprising amount will not)
b) If so what will their margin requirement be (a surprising amount charge double CME margin)
c) and what will they charge to trade it?

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 jokertrader 
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A 5 dollar move on the outright is $0.50 - does that mean 58800 to 58805 is 1 tick or 1 step on the DOM and correlates to $0.50 gained or lost?

FuManChou View Post
Looks like it is $0.50 per tick per contract. This should be awesome!

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 SMCJB 
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jokertrader View Post
An additional question would be regarding margining of spreads and their viability...would be interesting to see if we can model spread behaviour based on historic full size BTC future spreads[/URL]

For all the other micros, the micro is completely fungible with full size contract. Even though products like SIL and MGC are physical delivery contracts, you can offset 10 MGC against 1 GC and have no physical obligation. So margin is offset able as well. edit: Spreads on full size are about $2k-$3k/contract so would expect micro to be about $40-$60. Problem is the spreads don't trade much AND the implication is switched off. So its just a bunch of Algo's ticking it each other trying to rip off the unsuspecting trader of a few ticks. edit2: Also commissions are so high on the full size that even with the reduced tick, the amount you need to make to cover commissions gets prohibitive.


jokertrader View Post
A 5 dollar move on the outright is $0.50 - does that mean 58800 to 58805 is 1 tick or 1 step on the DOM and correlates to $0.50 gained or lost?

Tick on the full size is $5 x 5 coins = $25
Tick on the Micro is $5 x 0.1 coins = $0.50
So 58800 to 58805 on full size is $25 and on micro will be $0.50

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 Big Mike 
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https://cointelegraph.com/news/cme-group-set-to-launch-micro-bitcoin-futures


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Hey traders,

Although I would welcome any micro-product in futures to help traders deleverage and reduce risk, I would draw your attention to the fee structure for this product before you decide to go scalp it or even trade it intraday.

Just as @Big Mike is, I'm an advocate for the independent trader and want to make sure folks are aware.

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 SMCJB 
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And before anybody asks, margin on the full-size contract is currently 42% of notional (has ranged from 35% to 42%), assuming these contracts are fungible it would be the same for the micro.

So Bitcoin $60k, CME Micro 0.1 Bitcoin = $6k Notional, with margin requirement of $2520,

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 SMCJB 
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FuturesTrader71 View Post
Although I would welcome any micro-product in futures to help traders deleverage and reduce risk, I would draw your attention to the fee structure for this product before you decide to go scalp it or even trade it intraday.

Unless I'm missing something the CME FAQ refers you to a CME Fee File that is effective 4/1/21 and as such does not have the Micro fees in it??

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 FuturesTrader71 
 
 
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Unless I'm missing something the CME FAQ refers you to a CME Fee File that is effective 4/1/21 and as such does not have the Micro fees in it??

I see the same. I'm sure some more details are forthcoming. I simply didn't want FIO traders to believe that the cost structure supports scalping this product. I may be wrong.

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 SMCJB 
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Good Advice @FuturesTrader71. With the wide Bid/Ask (often 8/10 ticks on full size) it may look attractive, but it moves/gaps quickly, and Exchange and Broker fees are higher than most contracts. (At least for the full size).

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Nothing (futures related) is worth scalping unless one holds a seat and gets reduced fees.

Folks are kidding themselves like the Robinhood crowd that is trading commission-"free".

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Nothing (futures related) is worth scalping unless one holds a seat and gets reduced fees.

Folks are kidding themselves like the Robinhood crowd that is trading commission-"free".

And what about guys who trade on 100 lots and scalp 10-15-20 points a day SUCCESSFULLY?

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 Tripken 
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lightsun47 View Post
And what about guys who trade on 100 lots and scalp 10-15-20 points a day SUCCESSFULLY?

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Yep, and can be done with a lot less contracts and a bit fewer points per day...just gotta know how!!

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lightsun47 View Post
And what about guys who trade on 100 lots and scalp 10-15-20 points a day SUCCESSFULLY?

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100 lots @10-15-20 points a day is not scalping.

That is called highly improbable to it day after day.

Don't believe everything you see on youtube.

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Totally agree spreads and fees will make all the difference, otherwise I think it is an great idea

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SunTrader View Post
100 lots @10-15-20 points a day is not scalping.

That is called highly improbable to it day after day.

Don't believe everything you see on youtube.

Check your PM.

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 Al3cs 
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lightsun47 View Post
Check your PM.

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Send it to me too please, too courious to miss it

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 kburks 
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So a "BIT" confused, in the MBT (micro contract) what is a tick? A 1 cent move in BTC ?, a 1 dollar move in BTC?, ???
Does anyone know this please.........

Thank You...............

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 SMCJB 
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@kburks one tick on the Micro, is $5 per Bitcoin, so since the Micro Contract is 0.1 coins each tick will be $0.50


SMCJB View Post
Tick on the full size is $5 x 5 coins = $25
Tick on the Micro is $5 x 0.1 coins = $0.50
So 58800 to 58805 on full size is $25 and on micro will be $0.50


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 SMCJB 
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SMCJB View Post
Tick on the full size is $5 x 5 coins = $25
Tick on the Micro is $5 x 0.1 coins = $0.50
So 58800 to 58805 on full size is $25 and on micro will be $0.50


FuturesTrader71 View Post
Although I would welcome any micro-product in futures to help traders deleverage and reduce risk, I would draw your attention to the fee structure for this product before you decide to go scalp it or even trade it intraday.


FuturesTrader71 View Post
I see the same. I'm sure some more details are forthcoming. I simply didn't want FIO traders to believe that the cost structure supports scalping this product. I may be wrong.

Well the Fees have been announced, and @FuturesTrader71 warnings were justified. The fees for the Micro Bitcoin, for Non-Members is $2.50/lot which is half the full size contract, even though its 1/50th of the size!. Yes that's 5 ticks (ie $25 price move in Bitcoin) and 25x the fee for the full size assuming equal size. At 10 ticks per round turn, I doubt we will see many scalpers!

While I wasn't crazy enough to thinks fees would be 1/50th the full size, I didn't think they would be half either. For perspective on a relative basis, equity micro fees are just over 200% of the eMini's. Using a similar ratio Micro Bitcoin would have been around 20c vs $2.50 actual (all non-members).

Will be interesting to see what happens. Even if I'm a member, trying to arb Full Size vs Micro, I will have to make $10 to break even. So from an Arbitrage standpoint Bid/Ask will be $20 wider than full size, which is 50+% wider.

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 FuturesTrader71 
 
 
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FuturesTrader71 View Post
Hey traders,

Although I would welcome any micro-product in futures to help traders deleverage and reduce risk, I would draw your attention to the fee structure for this product before you decide to go scalp it or even trade it intraday.

Just as @Big Mike is, I'm an advocate for the independent trader and want to make sure folks are aware.

Cheers!

Hello traders,

The CME fee schedule has been updated with the Micro-Bitcoin Futures rate listed. In my message above, I mention that there are indications that the fee structure is very high for this product and not to expect to scalp it. Well, see the image below to find the rate per contract (now remember that this is a $0.50 per tick product.

Here's what it looks like:


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Thatoneguy
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I was pretty hyped for this contract until the fee structue was announced. The exchange fee is on par with the eminis, which have much higher tick values. Other micro contracts are more reasonable than this, I am not sure what the CME is going for here.

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I also realized that cryptocurrencies will grow at a very high price !

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 SMCJB 
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3750+ contracts overnight on the first day!

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 SMCJB 
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SMCJB View Post
Will be interesting to see what happens. Even if I'm a member, trying to arb Full Size vs Micro, I will have to make $10 to break even. So from an Arbitrage standpoint Bid/Ask will be $20 wider than full size, which is 50+% wider.

Of course I should be thinking a little more outside the box. This isn't like QM & CL or QG & NG, market makers aren't providing liquidity by arbing vs the other futures contracts, they are providing liquidity versus the cash market! Bid Ask on the Micro seems to be consistory $10-$20 which is much better than the full size contract.

So when do we get the Ether Micro? With Ether doubling in the last 40 days/tripling this year the contract size on that is now upto $160k. Not the $290k of Bitcoin but still almost double what is when it launched.

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 stumbras 
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SMCJB View Post
Well the Fees have been announced, and @FuturesTrader71 warnings were justified. The fees for the Micro Bitcoin, for Non-Members is $2.50/lot which is half the full size contract, even though its 1/50th of the size!. Yes that's 5 ticks (ie $25 price move in Bitcoin) and 25x the fee for the full size assuming equal size. At 10 ticks per round turn, I doubt we will see many scalpers!

While I wasn't crazy enough to thinks fees would be 1/50th the full size, I didn't think they would be half either. For perspective on a relative basis, equity micro fees are just over 200% of the eMini's. Using a similar ratio Micro Bitcoin would have been around 20c vs $2.50 actual (all non-members).

Will be interesting to see what happens. Even if I'm a member, trying to arb Full Size vs Micro, I will have to make $10 to break even. So from an Arbitrage standpoint Bid/Ask will be $20 wider than full size, which is 50+% wider.

It is just pure money grab with such fees, hopefully many traders will stay away until fees reduced to the level of other micros.

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 Sandpaddict 
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stumbras View Post
It is just pure money grab with such fees, hopefully many traders will stay away until fees reduced to the level of other micros.

Although I would somewhat agree I would think this is the natural process.

They don't just pull these out of thin air one day and start charging ridiculous fees.

They are a business and this is an offering.

They have put put massive resources behind these. If you want to trade them you should understand what they are good for and not good for.

I too hope though in the long run they will catch on.

There are many micros that are untradeable.

If the demand never materializes it might go into the oblivion like so many others.

Its a chicken and egg thing.

I hope though it does catch on an the fee structure can be reduced eventually to daytrade. Just not in the cards right now for the foreseeable future I'd imagine.

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 masterchanger 
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Very disappointing but expected,
US traders who wish to comply with trading crypto micro futures on US exchanges, this is the only cryptocurrency futures product (along with ether)
I will trade Spot where I can define my tradesize and risk effortlessly and still remain with a US cryptocurrency exchange. There is not a good option for trading us crypto exchanges algorithmically, the futures product would have helped that problem.
One of the reasons so many futures traders blowup accounts is leverage so maybe the CME/brokers not allowing trading these contracts, are doing traders wishing to trade crypto a favor and this will increase their chances of survival overall.

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 SMCJB 
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@Sandpaddict and @masterchanger I think its intentional on their part. The 2.38:1 leverage that you can get on CME Bitcoin futures while low for non-US residents is the only leverage US residents can get trading crypto. (Other than ICE Bitcoin which is even better 2.85:1 or CME Ether which is slightly worse at 2:1). The high margin is for risk reasons. I suspect the high fees are to discourage rampant speculation.

As to success. MBT has traded around 20500 lots today while BTC has only trade about 8000. So even though on a relative value basis BTC is almost 20x BTM notional, from a fee perspective MBT is higher than BTC. They probably consider that a success.

Another question to ask, does the tighter bid-ask spread actually offset the significantly higher fees? Probably not, but it does eat into them.

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 stumbras 
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masterchanger View Post
Very disappointing but expected,
US traders who wish to comply with trading crypto micro futures on US exchanges, this is the only cryptocurrency futures product (along with ether)
I will trade Spot where I can define my tradesize and risk effortlessly and still remain with a US cryptocurrency exchange. There is not a good option for trading us crypto exchanges algorithmically, the futures product would have helped that problem.
One of the reasons so many futures traders blowup accounts is leverage so maybe the CME/brokers not allowing trading these contracts, are doing traders wishing to trade crypto a favor and this will increase their chances of survival overall.

I agree that this might protect some account from blowing up quickly but the high fee will ensure that they will loose for sure(even slowly). The thing is that futures day trading is zero sum so we have to have looser(many times more than winners) in order to have small percentage of winners. The bigger the fees and commissions the smaller percentage of significant winners and at some point, if fees/commissions high enough - nobody wins in a long term.

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 Sandpaddict 
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SMCJB View Post
@Sandpaddict and @masterchanger I think its intentional on their part. The 2.38:1 leverage that you can get on CME Bitcoin futures while low for non-US residents is the only leverage US residents can get trading crypto. (Other than ICE Bitcoin which is even better 2.85:1 or CME Ether which is slightly worse at 2:1). The high margin is for risk reasons. I suspect the high fees are to discourage rampant speculation.

As to success. MBT has traded around 20500 lots today while BTC has only trade about 8000. So even though on a relative value basis BTC is almost 20x BTM notional, from a fee perspective MBT is higher than BTC. They probably consider that a success.

Another question to ask, does the tighter bid-ask spread actually offset the significantly higher fees? Probably not, but it does eat into them.

Intentional yes. They are not stupid and that goes to what I was saying as well, but ya those are some staggering numbers.

They must be calling that a success!

Thank you

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 SMCJB 
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Micro Bitcoin Margin Rates dropping from 42% to 39% which with Bitcoin at 56000 is from $2352 to $2184 effective Friday 7th May.

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2021/05/Chadv21-170.pdf

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 SMCJB 
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Week one trading highlights:
16,112 average daily volume
3,192 average daily open interest
36% of overall volume came from outside the United States
Over 50% of the trades were executed during non-US trading hours with quoting available nearly 24 hours a day
834 unique, active accounts trading

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