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Example Trades
We have set out below some examples of CFD trades, to help you to understand how CFD trading works:
1. Equity CFD
Day 1
On Day 1, Citigroup is trading at 2.60-2.65. You decide that you wish to buy 1000 Citigroup CFDs.
| Contract | Buy / Sell | Quantity | Price | Trade Value | Margin Requirement (5%) |
| Citigroup | Buy | 1000 | 2.65 | US$2,650 | US$132.50 |
You keep the position open for 1 night. Because you are long, this means that you are therefore charged 1 day's financing. Citigroup closes at 2.70 on day 1.
| Overnight Financing Rate | Value Of Position | Financing Charge |
| 2.55% (US LIBOR +2%) | US$2,700 | 0.19125 |
Day 2
On day 2, Citigroup is trading at 3.10 – 3.15. You decide that you would like to sell the position you’re holding.
| Contract | Buy / Sell | Quantity | Price | Trade Value |
| Citigroup | Sell | 1000 | 3.10 | US$3,100 |
| Contract | Buy / Sell | Quantity | Price | Value |
| Citigroup | Buy | 1000 | 2.65 | US$2,650 |
| Citigroup | Sell | 1000 | 3.10 | US$3,100 |
| Trade profit / loss | US$450.00 | |||
| Finance charge | -US$0.19 | |||
| Total profit / loss | US$449.81 |
2. Index CFD
Day 1
US500 Index is trading at 800.70/80. You decide to sell 10 US500 CFDs.
| Contract | Buy / Sell | Quantity | Price | Trade Value | Margin Requirement (1%) |
| US500 | Sell | 10 | 800.70 | US$8,007.00 | US$80.07 |
You hold the position for 1 night and therefore receive 1 day's financing. US500 closed at 810.50 on day 1.
| Overnight financing rate | Value Of Position | Financing Income |
| 0% (US LIBOR -2%) | US$8,105.00 | US$0 |
Day 2
US500 Index is trading at 815.50/60 and you decide to close the position.
| Contract | Buy / Sell | Quantity | Price | Trade Value |
| US500 | Buy | 10 | 815.60 | US$8,156.00 |
| Product | Buy / Sell | Quantity | Price | Value |
| US500 | Sell | 10 | 800.70 | US$8,007.00 |
| US500 | Buy | 10 | 815.60 | US$8,156.00 |
| Trade profit / loss | -US$149.00 | |||
| Finance charge | 0.00 | |||
| Total profit / loss | -US$149.00 |
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RISK WARNING: Contracts for Difference, margin Foreign Exchange trading and Spread Betting carry a high degree of risk to your capital and it is possible to lose more than your initial investment. Only speculate with money you can afford to lose. These products may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary. Please see the Risk Warning.