Sectors Examples
Trading Sector CFDs gives you the opportunity to profit from sector-specific trends. The example below takes you through a simple sector trade.
Selling Retailers
One morning in January, after sharp rises due to positive sales figures being released over Christmas by some of the big department stores, you believe the UK Retailers sector is set to experience a bit of a pullback and the sector’s price will fall.
Opening the position
Our price for the Retailers sector stands at 1796-1804 and you sell one contract (one contract is the equivalent of £10 per index point) at 1796, the bid price. As a Trader Account holder, in order to open the position you need to put down a deposit of 5%, calculated as 1796 opening level x £10 per point x 5% = £898.
Closing the position
As you anticipated, by late January our price for Retailers has fallen to 1657-1665 and you decide to take your profit by buying one contract at 1665.
Your profit on the trade is calculated as follows:
| Profit | |
|---|---|
| Opening level | 1796 |
| Closing level | 1665 |
| Difference | 131 |
| Profit: 131 points x 1 contract x £10 per point = £1310 | |
Of course, had the market moved in the opposite direction, you would have made a loss that may have exceeded your initial deposit.
To calculate the overall result you also have to include interest and dividend adjustments. Interest adjustments are applied daily to sector trades in exactly the same way as to Share CFDs. Dividend adjustments are applied whenever a stock in the relevant index goes ex-dividend. For more information see Contract Details.
Buying Retailers
One morning in January, after positive sales figures being released over Christmas by some of the big department stores, you believe the UK Retailers sector is set to experience a further rise.
Opening the position
Our price for the Retailers sector stands at 1796-1804 and you buy one contract (one contract is the equivalent of £10 per index point) at 1804, the offer price. As a Trader Account holder, in order to open the position you need to put down a deposit of 5%, a deposit of 5%, calculated as 1804 offer price x £10 per point x 5% = £902.
Closing the position
Against your expectations, a few days later our price for Retailers has fallen to 1716-1724 and you decide to cut your losses by selling one contract at 1716.
Your loss on the trade is calculated as follows:
| Loss | |
|---|---|
| Opening level | 1804 |
| Closing level | 1716 |
| Difference | 88 |
| Loss: 88 points x 1 contract x £10 per point = £880 | |
To calculate the overall result you also have to include interest and dividend adjustments. Interest adjustments are applied daily to sector trades in exactly the same way as to Share CFDs. Dividend adjustments are applied whenever a stock in the relevant index goes ex-dividend. For more information see Contract Details.
The Right Choice
- 7000 share CFDs and over 60 forex pairs
- 99.5% of trades executed in 0.1 seconds
- Spreads from just 0.8 pips on forex and 1 point on indices
