Opening the position
| Company |
ABC plc |
| Currency |
Euro |
| Current Quoted Price |
110.80 (sell) – 110.87 (buy) |
| You think the market is going to rise so you ‘Buy at the higher price |
| Number of CFDs |
1,000 |
| Opening the position |
Buy 1,000 CFDs @ 110.87 |
| Total exposure (price x number of CFDs) |
€110,870 |
| Margin rate |
10% |
| Margin requirement (Mid-Price x number of CFDs x margin rate) |
€11,084 |
| Commission Rate |
0.05% |
Commission charged for opening the position
(Total exposure x commission rate) |
€55.44 |
Financing the position
| Financing rate (Libor 3% + Delta Index rate 2.5%) |
5.5% |
| Financing is calculated daily based on the closing price of your CFD |
| Current ABC plc. price |
110.90-110.97 |
Total exposure
(price x number of CFDs) |
€110,970 |
Financing charge
(Total exposure x financing rate)
365 |
€16.72 |
Dividend
| A week after you open the position the underlying share goes ex-dividend |
| Dividend amount per share |
10c |
Dividend value
(number of CFDs x dividend amount) |
€100 |
| For all long positions the net dividend value is credited to your account. |
Closing the position
| Currency |
Euro |
| Current Quoted Price |
113.80 (sell) – 113.87 (buy) |
| Two weeks later the market has risen, you decide to close your position. You ‘sell’ 1,000 CFDs |
| Number of CFDs |
1,000 |
Closing the position
(you must do the opposite trade you did to open the position) |
Sell 1,000 CFDs @ 113.80 |
| Total exposure (price x number of CFDs) |
€113,800 |
| Commission Rate |
0.05% |
Commission charged for closing the position
(Total exposure x commission rate) |
€56.90 |
Calculating Profit
| Profit on trade |
| Difference between closing and opening price |
| Closing price |
113.80 |
| Opening price |
110.87 |
| Difference |
2.93 |
|
Profit on trade
(Difference x number of CFDs) |
€2,930 |
| Gross Profit |
| Profit of trade |
€2,930.00 |
| Total commission (opening and closing) |
- €112.34 |
| Financing charge for 10 days |
- €163.10 |
| Dividend |
+ €100 |
| Gross Profit (before tax) |
€2,754.56 |
Our example highlights the advantages offered by margin trading. In this case only 10% of exposure had to be made available by the investor in order to be able to make the trade.
When trading CFDs, costs are composed of daily financing charges and commission charges. Find detailed information on costs by clicking here
Please keep in mind that the results of our trading example are based on the assumption that the price moves in your favour. If an adverse price movement occurs your trade may result in a margin call. Depending on the nature of your trade your losses may be unlimited. You should only trade if you are prepared to accept that degree of risk.