DMA Examples
Example: placing a long trade on Tesco
Say Tesco is trading at 337.90 / 338.10.
On the Deal Ticket you can see the market depth prices of orders to buy and sell:
Judging from the weight of existing orders, you decide to place a Limit - Day order to buy 1,000 shares inside the market spread at 338.00:
Your order is acknowledged and you become the best bid in the order book. PureDeal highlights your order in blue so that you can immediately see your order level:
Your order can now be seen by other market participants. Once there is sufficient selling interest at your buying level, the order is filled and we immediately replicate this by opening an equivalent CFD position.
You now have an open CFD position long 1,000 shares of Tesco at 338.
Example: placing a long trade on Barclays
Say Barclays is currently trading in the market at 577/578.
You decide to view Level 2 prices for the stock, using L2 Dealer to see the full market depth of orders to buy and sell.
(Click images for full versions)
Judging from the weight of existing orders, you choose to place an order to buy 10,000 shares inside the market spread at 577.5.
Your deal ticket is accepted and the order now appears on the order tracking screen.
Your order is initially flagged as waiting to be filled. After a brief wait the order is filled and a CFD is automatically created to reflect your new position. (Of course there is no guarantee that your order will be filled, and you can cancel a live order from the order tracking screen at any time.)
You now have a position in 10,000 Barclays shares at 577.5, for an initial margin outlay of 10,000 shares x 577.5 x 10% = £5775.00.
Closing your position
Over the following day the market price of Barclays steadily rises and you decide to sell. Using L2 Dealer you see that there is sufficient volume of buying orders for you to sell 10,000 shares at 583. You place an order to sell.
Your order is matched and your corresponding CFD position is automatically closed. You have made a profit on the trade of 583 - 577.5 x 10,000 shares = £550.
To calculate your overall profit you would also have to take account of the commission on your CFD trade and any interest and dividend adjustments while your CFD position is open.