CFD Trade Examples
CFD Trade Examples - Simple CFD calculations
Trading CFDs is exactly like trading shares except you need a small amount of money up front to
control the whole position.
The CFD trade examples below are easy to understand enabling you to go on to the business of
trading CFDs profitably. The one stand out feature you’ll find in the CFD trade examples below is the return you
make compared to your capital outlay and it’s for this reason that traders love CFDs.
CFD Trade Examples here
Long CFD trade (profit) – CFD trade example 1
Purchase 1,000 FMG shares at $10.00
|
Action
|
How to calculate
|
Result
|
|
Total Exposure
|
1,000 CFDs @ $10.00
|
$10,000
|
|
Initial Margin
|
$10,000 * 5%
|
$500
|
|
Brokerage
|
Total exposure * 0.1% or $10
|
$10
|
|
Total Outlay
|
Initial margin + brokerage
|
$510
|
FMG rises over a 5 day period to $10.50 and you lock in profits via a limit to sell (profit target)
|
Action
|
How to calculate
|
Result
|
|
Sell price
|
$10.50 * 1,000
|
$10,500
|
|
~Brokerage
|
$10,500 * 0.1%
|
$10.50
|
|
^CFD Finance
|
Total Exposure * ((RBA + 2%)/365)
10,000*(7.25%+2%)/365)
5 days
|
Approx $2.53 per day
Approx $12.67 for 5 days (debit)
|
Calculating your CFD Profit/Loss
|
Action
|
How to calculate
|
Result
|
|
CFD Profit
|
(number of shares*(exit-entry)) – trading costs
|
|
|
(1,000 * ($10.50 – $10.00 (profit)) - $20.50 (brokerage) - $12.67 (CFD Finance)
|
|
|
CFD Nett Profit/Loss
|
Profit $466.83
|
|
Return on Investment
|
(Nett Profit or Loss / Margin) * 100
|
91.54%
|
 Long CFD trade (loss) – CFD trade example 2
Purchase 1,000 FMG shares at $10.00
|
Action
|
How to calculate
|
Result
|
|
Total Exposure
|
1,000 CFDs @ $10.00
|
$10,000
|
|
Initial Margin
|
$10,000 * 5%
|
$500
|
|
Brokerage
|
Total exposure * 0.1% or $10
|
$10
|
|
Total Outlay
|
Initial margin + brokerage
|
$510
|
FMG falls over a 5 day period to $9.70 and your stop loss gets hit.
|
Action
|
How to calculate
|
Result
|
|
Sell price
|
$9.70 * 1,000
|
$9,700
|
|
Brokerage
|
$9,700 * 0.1% or $10
|
$10
|
|
^CFD Finance
|
Total Exposure * ((RBA + 2%)/365)
10,000*(7.25%+2%)/365)
5 days
|
Approx $2.53 per day
Approx $12.67 for 5 days (debit)
|
Calculating your CFD Profit/Loss
|
Action
|
How to calculate
|
Result
|
|
CFD Profit
|
(number of shares*(exit-entry)) – trading costs
|
|
|
(1,000 * ($9.70 – $10.00 (loss)) - $20.00 (brokerage) - $12.67 (CFD Finance)
|
|
|
CFD Nett Profit/Loss
|
Loss $332.67
|
|
Return on Investment
|
(Nett Profit or Loss / Margin) * 100
|
-65.29%
|
Short Sell CFD trade (profit) – CFD trade example
3
Short Sell 1,000 FMG shares at $10.00 – Looking to profit from a
falling share price
|
Action
|
How to calculate
|
Result
|
|
Total Exposure
|
1,000 CFDs @ $10.00
|
$10,000
|
|
Initial Margin
|
$10,000 * 5%
|
$500
|
|
Brokerage
|
Total exposure * 0.1% or $10
|
$10
|
|
Total Outlay
|
Initial margin + brokerage
|
$510
|
FMG falls over a 5 day period to $9.50 and you lock in profits via a limit to buy (profit target)
|
Action
|
How to calculate
|
Result
|
|
Sell price
|
$9.50 * 1,000
|
$9,500
|
|
~Brokerage
|
$9,500 * 0.1% or $10
|
$10.00
|
|
^CFD Finance
|
Total Exposure * ((RBA - 2%)/365)
10,000*(7.25%-2%)/365)
5 days
|
Approx $1.44 per day
Approx $7.2 for 5 days (credit)
|
Calculating your CFD Profit/Loss
|
Action
|
How to calculate
|
Result
|
|
CFD Profit
|
(number of shares*(entry-exit)) – trading costs
|
|
|
(1,000 * ($10.00 – $9.50 (profit)) - $20.50 (brokerage) + $7.2
(CFD Finance)
|
|
|
CFD Nett Profit/Loss
|
Profit $486.7
|
|
Return on Investment
|
(Nett Profit or Loss / Margin) * 100
|
97.34%
|
Short Sell CFD trade (Loss) – CFD trade example
4
Short Sell 1,000 FMG shares at $10.00 – Looking to
profit from a falling share price
|
Action
|
How to calculate
|
Result
|
|
Total Exposure
|
1,000 CFDs @ $10.00
|
$10,000
|
|
Initial Margin
|
$10,000 * 5%
|
$500
|
|
Brokerage
|
Total exposure * 0.1% or $10
|
$10
|
|
Total Outlay
|
Initial margin + brokerage
|
$510
|
FMG rises over a 5 day period to $10.30 and your stop loss gets hit.
|
Action
|
How to calculate
|
Result
|
|
Sell price
|
$10.30 * 1,000
|
$10,300
|
|
~Brokerage
|
$10.30 * 0.1% or $10
|
$10.30
|
|
^CFD Finance
|
Total Exposure * ((RBA - 2%)/365)
10,000*(7.25%-2%)/365)
5 days
|
Approx $1.44 per day
Approx $7.2 for 5 days (credit)
|
Calculating your CFD Profit/Loss
|
Action
|
How to calculate
|
Result
|
|
CFD Profit
|
(number of shares*(entry-exit)) – trading costs
|
|
|
(1,000 * ($10.00 – $10.30 (profit)) - $20.50 (brokerage) + $7.2
(CFD Finance)
|
|
|
CFD Nett Profit/Loss
|
Loss $313.30
|
|
Return on Investment
|
(Nett Profit or Loss / Margin) * 100
|
-62.66%
|
~ CFD brokerage is paid on the total exposure that you have. For instance in a
$10,000 position you put in $500 which leaves a difference of $9,500. However, CFD
Brokers require brokerage to be paid on the full amount of $10,000.
^ CFD Finance is calculated daily
based on your total exposure on that day. Markets fluctuate daily and as a result your financing amount will vary
depending on how much your position is worth at close of business (usually New York 5pm) that day. Check your CFD
brokers product disclosure statement for further details.
RBA Rate:Please note that the RBA rate can and in fact does change regularly.
The above calculations have taken into account the Australian RBA rate as of July 2008.
The RBA stands for 'Reserve Bank of Australia' and you can get more details here.
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where you can lose more than what you start with. View our full disclaimer here.
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