Stock Indices Examples
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All of our stock index contracts are commission-free: the only charge is our highly competitive dealing spread.
The examples below take you through how trading stock index CFDs works.
Buying the FTSE
Opening the position
On Monday, 4 January 2010 our quote for the FTSE 100 stands at 5446/5448. You think the market is due a bump and buy two contracts at 5448 (one contract is the equivalent of £10 per index point). There is no commission to pay.
To open your position you need to put down a deposit of £400 per contract* – in this case the total you have to put down is £800 covering your two contracts. You will then make or lose £20 for every point the sell price rises above or falls below 5448.
Closing the position
As you predicted the market rises sharply the next day and continues its climb throughout the week. Our quote rises to 5543/5545 by Friday lunchtime, and you decide to take your profit, so close your position by selling two contracts at 5543.
Your profit on the trade is calculated as follows:
Profit
| Closing level | 5543 |
| Opening level | 5448 |
| Difference | 95 |
Profit: 95 points x 2 contracts x £10 per point = £1900
To calculate the overall result you also have to include interest and dividend adjustments. Interest adjustments are applied daily to stock index 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.
Please note that trading CFDs may not be suitable for everyone, so please ensure that you fully understand the risks involved.
*This example is based on the FTSE 100 margin rate available to Trader Account holders.
Selling the FTSE
Opening the position
On a Monday afternoon our quote for the FTSE 100 stands at 5446/5448. You think the market is due to fall and sell two contracts at 5446 (one contract is the equivalent of £10 per index point). There is no commission to pay.
To open your position you need to put down a deposit of £400 per contract* – in this case the total you have to put down is £800 to cover your two contracts. You will then make or lose £20 for every point the buy price falls below or rises above 5446.
Closing the position
The market rises sharply the next day and then continues steadily upwards towards the end of the week. Our quote rises to 5516/5518 by Thursday morning and you decide to cut your losses and close your position by buying two contracts at 5518.
Your loss on the trade is calculated as follows:
Loss
| Closing level | 5518 |
| Opening level | 5446 |
| Difference | 72 |
Loss: 72 points x 2 contracts x £10 per point = £1440
To calculate the overall result you also have to include interest and dividend adjustments. Interest adjustments are applied daily to stock index 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.
Please note that trading CFDs may not be suitable for everyone, so please ensure that you fully understand the risks involved.
*This example is based on the FTSE 100 margin rate available to Trader Account holders.
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