 # CFD Trading Examples

## Case study of profiting LONG trade

A customer is bullish on XYZ index-component share and decides to buy (LONG) 15000 lots of XYZ share at \$2.30. The customer can alternatively trade XYZ share CFDs. Assume CFD margin requirement for XYZ is 10% with leverage of 10 times. (Minimum example commission of \$25 for CFD or shares). Day 1, XYZ close @ \$2.35
Day 2, XYZ close @ \$2.40
Investor closes out at \$2.50 on Day 3.

### Calculations

 CFD Stocks Initial Capital \$3,450 \$34,500 Opening Contract Value Capital x leverage level= \$3,450 * 10= \$34,500 Capital x leverage level= \$34,500 * 1= \$34,500 Quantity Contract Value / Price= \$34,500 / \$2.30= 15,000 shares Contract Value / Price= \$34,500 / \$2.30= 15,000 shares Opening @ \$2.30: Opening Commission (w 7% GST) Contract Value * Commission= \$34,500 * 0.20% * 1.07= (\$73.83) Contract Value * Commission= \$34,500 * 0.28% * 1.07= (\$103.36) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$34,500 * 0.04% * 1.07) + (\$34,500 * 0.0075% * 1.07)= \$14.77 + \$2.77= \$17.54 Position closed on Day 3 Finance Charges(Day 1) Price * Quantity * FC rate / 365= \$2.35 * 15,000 * 5.5% / 365= (\$5.31) NA Finance Charges(Day 2) Price * Quantity * FC rate / 365= \$2.40 * 15,000 * 5.5% / 365= (\$5.42) NA Total Finance Charges Day 1 FC + Day 2 FC = (\$5.31) + (\$5.42)= (\$10.73) NA Closing @ \$2.50: Closing Contract Value Price * Quantity= \$2.50 * 15,000= \$37,500 Price * Quantity= \$2.50 * 15,000= \$37,500 Closing Commission (w 7% GST) Contract Value * Commission= \$37,500 * 0.20% * 1.07= (\$80.25) Contract Value * Commission= \$37,500 * 0.28% * 1.07= (\$112.35) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$37,500 * 0.04% * 1.07) + (\$37,500 * 0.0075% * 1.07)= \$16.05 + \$3.01= \$19.06 Net Profit / (Loss) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges= [(|\$2.50 – \$2.30|) * 15,000] – \$73.83 – \$80.25 – \$10.73= \$2,835.19 [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Clearing & Access Fees= [(|\$2.50 – \$2.30|) * 15,000] – \$103.36 – \$112.35 – 17.54 – \$19.06= \$2,747.68 Return on Equity (%)= 82.03% Return on Equity (%)= 7.96%

## Case study of losing LONG trade

Day 1, XYZ close @ \$2.35
Day 2, XYZ close @ \$2.40
Investor closes out at \$2.10 on Day 3.

### Calculations

 CFD Stocks Initial Capital \$3,450 \$34,500 Opening Contract Value Capital x leverage level= \$3,450 * 10= \$34,500 Capital x leverage level= \$34,500 * 1= \$34,500 Quantity Contract Value / Price= \$34,500 / \$2.30= 15,000 shares Contract Value / Price= \$34,500 / \$2.30= 15,000 shares Opening @ \$2.30: Opening Commission (w 7% GST) Contract Value * Commission= \$34,500 * 0.20% * 1.07= (\$73.83) Contract Value * Commission= \$34,500 * 0.28% * 1.07= (\$103.36) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$34,500 * 0.04% * 1.07) + (\$34,500 * 0.0075% * 1.07)= \$14.77 + \$2.77= \$17.54 Position closed on Day 3 Finance Charges (Day 1) Price * Quantity * FC rate / 365= \$2.35 * 15,000 * 5.5% / 365= (\$5.31) NA Finance Charges (Day 2) Price * Quantity * FC rate / 365= \$2.40 * 15,000 * 5.5% / 365= (\$5.42) NA Total Finance Charges Day 1 FC + Day 2 FC = (\$5.31) + (\$5.42)= (\$10.73) NA Closing @ \$2.10: Closing Contract Value Price * Quantity= \$2.10 * 15,000= \$31,500 Price * Quantity= \$2.10 * 15,000= \$31,500 Closing Commission (w 7% GST) Contract Value * Commission= \$31,500 * 0.20% * 1.07= (\$67.41) Contract Value * Commission= \$31,500 * 0.28% * 1.07= (\$94.37) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$31,500 * 0.04% * 1.07) + (\$31,500 * 0.0075% * 1.07)= \$13.48 + \$2.53= \$16.01 Net Profit / (Loss) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges= [(|\$2.10 – \$2.30|) * 15,000] – \$73.83 – \$67.41 – \$10.73= (\$3,156.97) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Clearing & Access Fees= [(|\$2.10 – \$2.30|) * 15,000] – \$103.36 – \$94.37 – \$17.54 – \$16.01= (\$3,231.28) Return on Equity (%)= (91.51%) Return on Equity (%)= (9.37%)

## Case study of profiting SHORT trade

Client is bearish on XYZ and decides to short sell 18000 lots of XYZ share at \$1.00. He can trade stocks using Shares Borrowing and Lending (SBL) or use CFDs to ‘short-sell’ XYZ CFD for 3 calendar days. Assuming margin requirement for XYZ is 10% with 10 times leverage. Day 1, XYZ close @ \$0.95
Day 2, XYZ close @ \$0.90
Investor closes out at \$0.90 on Day 3.

### Calculations

 CFD Stocks (SBL) Initial Capital \$1,800 \$6,000 Opening Contract Value Capital x leverage level= \$1,800 * 10= \$18,000 Capital x leverage level= \$6,000 * 3= \$18,000 Quantity Contract Value / Price= \$18,000 / \$1.00= 18,000 shares Contract Value / Price= \$18,000 / \$1.00= 18,000 shares Opening @ \$1.00: Opening Commission (w 7% GST) Contract Value * Commission= \$18,000 * 0.20% * 1.07= (\$38.52) Contract Value * Commission= \$18,000 * 0.28% * 1.07= (\$53.93) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$18,000 * 0.04% * 1.07) + (\$18,000 * 0.0075% * 1.07)= \$7.70 + \$1.44= \$9.15 Position closed on Day 3 Finance Charges (Day 1) Price * Quantity * FC rate / 365= \$0.95 * 18,000 * 8.0% / 365= (\$3.75) Price * Quantity * FC rate / 365= \$0.95 * 18,000 * 8.0% / 365= (\$3.75) Finance Charges (Day 2) Price * Quantity * FC rate / 365= \$0.90 * 18,000 * 8.0% / 365= (\$3.55) Price * Quantity * FC rate / 365= \$0.90 * 18,000 * 8.0% / 365= (\$3.55) Total Finance Charges Day 1 FC + Day 2 FC= (\$3.75) + (\$3.55)= (\$7.30) Day 1 FC + Day 2 FC= (\$3.75) + (\$3.55)= (\$7.30) Closing @ \$0.90: Closing Contract Value Price * Quantity= \$0.90 * 18,000= \$16,200 Price * Quantity= \$0.90 * 18,000= \$16,200 Closing Commission (w 7% GST) Contract Value * Commission= \$16,200 * 0.20% * 1.07= (\$34.67) Contract Value * Commission= \$16,200 * 0.28% * 1.07= (\$48.54) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$16,200 * 0.04% * 1.07) + (\$16,200 * 0.0075% * 1.07)= \$6.93 + \$1.30= \$8.23 Net Profit / (Loss) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges= [(|\$0.90 – \$1.00|) * 18,000] – \$38.52 – \$34.67– \$7.30= \$1,719.51 [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges – Clearing & Access Fees= [(|\$0.90 – \$1.00|) * 18,000] – \$53.93 – \$48.54– \$7.30 – \$9.15–  \$8.23= \$1,672.85 Return on Equity (%)= 95.53% Return on Equity (%)= 27.89%

## Case study of losing SHORT trade

Day 1, XYZ close @ \$0.90
Day 2, XYZ close @ \$0.95
Investor closes out at \$1.10 on Day 3

### Calculations

 CFD Stocks Initial Capital \$1,800 \$6,000 Opening Contract Value Capital x leverage level= \$1,800 * 10= \$18,000 Capital x leverage level= \$6,000 * 3= \$18,000 Quantity Contract Value / Price= \$18,000 / \$1.00= 18,000 shares Contract Value / Price= \$18,000 / \$1.00= 18,000 shares Opening @ \$1.00: Opening Commission (w 7% GST) Contract Value * Commission= \$18,000 * 0.20% * 1.07= (\$38.52) Contract Value * Commission= \$18,000 * 0.28% * 1.07= (\$53.93) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$18,000 * 0.04% * 1.07) + (\$18,000 * 0.0075% * 1.07)= \$7.70 + \$1.44= \$9.15 Position closed on Day 3 Finance Charges (Day 1) Price * Quantity * FC rate / 365= \$0.95 * 18,000 * 8.0% / 365= (\$3.75) Price * Quantity * FC rate / 365= \$0.95 * 18,000 * 8.0% / 365= (\$3.75) Finance Charges (Day 2) Price * Quantity * FC rate / 365= \$0.90 * 18,000 * 8.0% / 365= (\$3.55) Price * Quantity * FC rate / 365= \$0.90 * 18,000 * 8.0% / 365= (\$3.55) Total Finance Charges Day 1 FC + Day 2 FC= (\$3.75) + (\$3.55)= (\$7.30) Day 1 FC + Day 2 FC= (\$3.75) + (\$3.55)= (\$7.30) Closing @ \$1.10: Closing Contract Value Price * Quantity= \$1.10 * 18,000= \$19,800 Price * Quantity= \$1.10 * 18,000= \$19,800 Closing Commission (w 7% GST) Contract Value * Commission = \$19,800 * 0.20% * 1.07= (\$42.37) Contract Value * Commission = \$19,800 * 0.28% * 1.07= (\$59.32) Clearing & Access Fees (w GST) NA Clearing Fee + Access Fee= (\$19,800 * 0.04% * 1.07) + (\$19,800 * 0.0075% * 1.07)= \$8.47 + \$1.59= \$10.06 Net Profit / (Loss) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges = [(\$1.00 – \$1.10) * 18,000] – \$38.52 – \$42.37- \$7.30 < br /> = (\$1,885.49) [(Closing Price – Opening Price) * Quantity] – Opening Commission – Closing Commission – Total Finance Charges – Clearing & Access Fees= [(\$1.00 – \$1.10) * 18,000] – \$53.93 – \$59.32 – \$7.30 – \$9.15 – \$10.06 = (\$1,939.76) Return on Equity (%) = (104.75%) Return on Equity (%) = (32.33%) # Website search

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