How CFD Trading Works
CFD trading examples
A Long CFD Position on Daimler (Profit example)
An investor expects the price of Daimler to rally in the short term. He deposits €36,000 in his trading account. This example compares investing in Daimler using CFD trading as opposed to traditional share trading. In this case, this CFD is geared 3 times, increasing his potential investment to €108,000.
Opening Trade
Daimler is quoted at €17.99/18.00
|
|---|
|
Traditional Share Trade |
Equity CFD Trade |
| Deposit |
€36,000.00 |
€36,000.00 |
| Price of Daimler |
€18.00 |
€18.00 |
| Transaction |
Buy 2,000 DAI @ 18 |
Buy 6,000 DAI @ 18 |
| Contract Value |
€36,000.00 |
€108,000.00 |
| Commission* |
-€90 |
-€162 |
Closing Trade
Daimler is quoted at €20.00/20.01
|
|---|
|
Traditional Share Trade |
Equity CFD Trade |
| Price of Daimler |
€20.00 |
€20.00 |
| Transaction |
Sell 2,000 DAI @ 20.00 |
Sell 6,000 DAI @ 20.00 |
| Contract Value |
€40,000.00 |
€120,000.00 |
| Profit on Trade |
€4,000.00 |
€12,000.00 |
| Financing (2 days) |
€0.00 |
-€24 |
| Commission* |
-€90.00 |
-€180.00 |
| Overall Profit on Trade |
€3,820.00 |
€11,634.00 |
| Profit in % of deposit |
10.61% |
32.32% |
*Commission for share trade using Internaxx Standard rate for share trading.
Commission for CFD trade of 0.15% (charged at buy and sell)
Daily Financing for a long CFD
You pay a financing charge for every day that you hold the CFD based on the Inter-Bank Offer Rate for the currency in which the share is traded, plus an add-on determined by Internaxx.
You pay a financing charge for every day that you hold the CFD based on the Inter-Bank
Offer Rate for the currency in which the share is traded, plus an add-on determined by Internaxx. |
|---|
| Your financing rate in this example may be Euro LIBOR + 3% |
| Assume this equates to a financing rate of (1% + 3%) = 4% |
| Assume the opening price of DAI was €18.00 |
| You will pay (6,000 x 18.00 x 4%/360) x 2 days = €24 |
This type of speculation is best suited for short-term trading due to the financing costs related to the geared position you hold when trading CFDs.
A Long CFD Position on Daimler (Loss example)
An investor expects the price of Daimler to rally in the short term. He deposits €36,000 in his trading account. This example compares investing in Daimler using CFD trading as opposed to traditional share trading. In this case, this CFD is geared 3 times, increasing his potential investment to €108,000.
Opening Trade
Daimler is quoted at €17.99 /18.00
|
|---|
|
Traditional Share Trade |
Equity CFD Trade |
| Deposit |
€36,000.00 |
€36,000.00 |
| Price of Daimler |
€18.00 |
€18.00 |
| Transaction |
Buy 2,000 DAI @ 18 |
Buy 6,000 DAI @ 18 |
| Contract Value |
€36,000.00 |
€108,000.00 |
| Commission* |
-€90 |
-€162 |
Closing Trade
Daimler is quoted at €17.00/17.01
|
|---|
|
Traditional Share Trade |
Equity CFD Trade |
| Price of Daimler |
€17.00 |
€17.00 |
| Transaction |
Sell 2,000 DAI @ 17.00 |
Sell 6,000 DAI @ 17.00 |
| Contract Value |
€34,000.00 |
€102,000.00 |
| Loss on Trade |
€2,000.00 |
€6,000.00 |
| Financing (2 days) |
€0.00 |
-€24 |
| Commission* |
-€90.00 |
-€153.00 |
| Overall Loss on Trade |
€2,180.00 |
€6,339.00 |
| Loss in % of deposit |
-6.06% |
-17.61% |
*Commission for share trade using Internaxx Standard rate for share trading.
Commission for CFD trade of 0.15% (charged at buy and sell)
Daily Financing for a long CFD
You pay a financing charge for every day that you hold the CFD based on the Inter-Bank Offer Rate for the currency in which the share is traded, plus an add-on determined by Internaxx.
You pay a financing charge for every day that you hold the CFD based on the Inter-Bank
Offer Rate for the currency in which the share is traded, plus an add-on determined by Internaxx. |
|---|
| Your financing rate in this example may be Euro LIBOR + 3% |
| Assume this equates to a financing rate of (1% + 3%) = 4% |
| Assume the opening price of DAI was €18.00 |
| You will pay (6,000 x 18.00 x 4%/360) x 2 days = €24.00 |
This type of speculation is best suited for short-term trading due to the financing costs related to the geared position you hold when trading CFDs