FOLLOW MARKETMOVES

CFDs - a worked example

In this worked example we show how you could trade Vodafone with CFDs

Opening the position
It is the morning of 1 July 2009 and you decide to open a position on Vodafone. The stock is quoted at 126.85/126.95 in the market, and you buy 10,000 shares as a CFD at 126.95p, the offer price.

As a Trader Account holder instead of putting up the full value of the shares (126.95p x 10,000), you need only supply a deposit of 5% or £634.75.

Closing the position
It is near the end of the day, and Vodafone has risen to 129.25/129.35 in the market and you decide to take your profit. You sell 10,000 shares at 129.25p, the bid price.

Your profit on the trade is calculated as follows:

Profit on trade
Closing level 129.25p
Opening level 126.95p
Difference 2.30p
Profit on trade: 2.30p x 10,000 = £230

To calculate the overall result on the transaction you would also have to take into account the commission you have paid and the interest and dividend adjustments.

Of course, had the market moved in the opposite direction, you would have made a loss that may have exceeded your initial deposit.

This example is based on the Vodafone margin rate available to Trader Account holders.

For a free CFD demo trading account please visit IG Markets

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CFDs - a worked example

In this worked example we show how you could trade Vodafone with CFDs

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