This example takes you through how trading stock index CFDs works.
All of our stock index contracts are commission-free: the only charge is our competitive dealing spread.
Our quote for the FTSE® 100 stands at 5868-5869.
This means you can 'sell' at 5868 if you think the price will fall, or 'buy' at 5869 if you think it will rise.
|You think the market is due to fall, so you choose to 'sell' two contracts at 5868.||You think the market is due a rise, so you 'buy' two contracts at 5869.|
|You need to put down a deposit of £500 (£250 per contract).||You need to put down a deposit of £500 (£250 per contract).|
|One contract is the equivalent of £10 per point, so you'll make or lose £20 for every point the price moves from 5868.||One contract is the equivalent of £10 per point, so you'll make or lose £20 for every point the price moves from 5869.|
|The market rises and a few days later our quote is 5940-5941.||The market rises and a few days later our quote is 5940-5941.|
|You decide to cut your losses and close your trade, 'buying' two contracts at 5941.||You decide to take your profit and close your trade, 'selling' two contracts at 5940.|
Your loss is calculated as follows:
Opening price 5868
Closing price 5941
Loss: 73 x 2 contracts x £10 = £1460
Your profit is calculated as follows:
Opening price 5869
Closing price 5940
Profit: 71 x 2 contracts x £10 = £1420
To calculate the overall profit and loss, you also have to include the accumulated daily interest rate adjustments.
CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.