Commodity
This page shows an example of Commodities (US Oil) CFD trade.
US Crude Oil CFD Trade Examples
Margin requirement on commodities is 3% of the total contract value.
Contract value is worked using this formula:
((Quantity) x (Price))/ Point= initial margin
So for example, if you buy 10 US Crude Oil at 49.50. Tick size is 0.01. (10 x 49.50)/ 0.01 x 0.03 = $1,485 initial margin.
The exposure per tick is worth 10 USD.
Buying US Light Crude
Imagine US Light Crude is showing a price of 51.68/51.74. You believe the price of Crude will rise so you place a buy 10 CFDs at an offer of 51.74.
Opening Trade
| Price Shown |
51.68 (Bid), 51.74 (Offer) |
| Buy Price |
51.74 |
| CFD Position |
10 CFDs |
| Margin Required (3%) |
$1552.00 |
| Commission |
$0.00 |
| Initial Outlay |
$1552.00 |
Your judgement was correct and the price of US Light Crude does increase that same day. You decide to close the position at 51.95 to realise your $210 profit from the 21 point movement.
Closing Trade (Profit)
| Price Shown |
51.95 (Bid), 52.01 (Offer) |
| Buy Price |
51.95 |
| CFD Position |
21 points |
| Margin Required (3%) |
21 x $10 = $210.00 profit |
| Commission |
$0.00 |
| Initial Outlay |
$210.00 |
However if the price moves against you and US Light Crude is showing a price of 51.47/51.53, to close the position you would place an equal and opposite trade to realise the $210 loss.
Closing Trade (Profit)
| Price Shown |
51.47 (Bid), 51.53 (Offer)) |
| Buy Price |
51.47 |
| CFD Position |
21 points |
| Margin Required (3%) |
21 x $10 = $210.00 loss |
| Commission |
$0.00 |
| Initial Outlay |
-$210.00 |
