Index CFD Examples

FTSE INDEX TRADE

The Spread:
Imagine the FTSE is quoted at '4438-4440'. This quote represents the bid/offer spread for the FTSE, and is only 2 points.

The Offer:
The offer price of 4440 is the price at which you can buy FTSE contracts.

The Bid:
The bid price of 4438 is the price at which you can Sell FTSE contracts.

Going Long:
You believe that the FTSE will strengthen, and decide to BUY or 'go long' 250 FTSE contracts @ 4440 (the offer price).

Opening Buy:
Customer BUYS 250 FTSE contracts @ 4440

Quote (bid/offer)	4438-4440
Buy Price	4440
Size of Position	250 x 4440 = £1,110,000
Initial Outlay (using 1% margin)	£11,100

Later:
Your prediction is correct and the FTSE Index rises. The quote on the FTSE is now 4482-4484. You decide to close your FTSE position @ 4482 (the bid price).

Closing Sell:
Customer SELLS 250 FTSE contracts @ 4482

Quote (bid/offer)	4482-4484
Sell Price	4482
Size of Position	250 x 4482 = £1,120,500
Profit/Loss	£10,500
Costs (at 10 basis points) =	£1,110 (entry trade) & £1120 (closing trade)

Profit/Loss Calculation:

Size of trade x (sell price - buy price)	=	profit or loss
250 x (4482-4440)	=	£10,500

Profit	=	£10,500

Total Costs	=	£2,230
By closing your position to realise a net profit of £8,270 This is obviously a favourable outcome, had the price moved against you would have incurred an equivalent loss. Blue Index strongly recommend the use of stop losses on every trade to mitigate potential downside. For further information on Index CFD Trading please call the trading desk on +44 (0) 20 7398 2553 Back to top

SHORT S&P

The Spread:
Imagine the S&P Index is quoted at '1112-1112.5'. This quote represents the bid/offer spread for the S&P, and is only ½ a point.

The Offer:
The offer price of 1112.5 is the price at which you can BUY S&P contracts.

The Bid:
The bid price of 1112 is the price at which you can SELL S&P contracts.

Going Short:
You believe that the S&P will come down, and decide to SELL to 'go short' 1000 S&P contracts @ 1112 (the bid price).

Opening Sell:
Customer Sells 1000 S&P contracts @ 1112

Quote (bid/offer)	1112-1112.5
Sell Price	1112
Size of Position	1000 x 1112 = USD 1,112,000
Initial Outlay (using 1% margin)	USD 11,120

Later:
Your prediction is correct and the S&P Index falls. The quote on the S&P is now 1089.5-1090. You decide to close your S&P position @ 1090 (the offer price).

Closing BUY:
Customer Buys 1000 S&P contracts @ 1090

Quote (bid/offer)	1089.5-1090
Sell Price	1090
Size of Position	1000 x 1090 = USD 1,090,000
Profit/Loss	USD 22,000
Costs (at 10 basis points) =	USD 1,112 (entry trade) & USD 1090 (closing trade)

Profit/Loss Calculation:

Size of trade x (sell price - buy price)	=	profit or loss
1000 x (1112-1090)	=	USD 22,000

Profit	=	£12,222 ($22,000 / 1.80)

Total Costs	=	£1,223 ($2202 / 1.80)
By closing your position to realise a net profit of £10,999 This is obviously a favourable outcome, had the price moved against you would have incurred a loss. Blue Index recommend the use of stop losses on every trade to mitigate potential downside. For further information on Index CFD Trading please call the trading desk on +44 (0) 20 7398 2553

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