CFD Trading | Example

Jasvind currently has a bullish view on Stock A. Stock A is currently trading at a price of $3.00. Jasvind BUYS 5,000 contracts at the Ask Price of $3.00. Below are the details of Jasvind’s trade:

Details of Jasvind’s Trade
Open Price	$3.00
Closing Price	$3.25
Initial Margin	=$3.00*10%*5,000 contracts =$1,500
Profit/ (Loss)	= (Closing Price – Opening Price)*Quantity = ($3.25-$3.00)*5,000 = $1,250
Opening Commission	$19.20
Closing Commission	$20.80
Finance Charges (FC)	Assume Jasvind closes the position on Day 4: Closing Price of Stock A: Day 1: $3.10 Day 2: $3.15 Day 3: $3.20 Day 1 Finance Charge: =$3.10*5,000*2.5%/365 =$1.06 Day 2 Finance Charge: =$3.15*5,000*2.5%/365 =$1.08 Day 3 Finance Charge: =$3.20*5,000*2.5%/365 =$1.10
Net Gain/(Loss)	=1,250-19.20- 20.80-1.06-1.08-1.10 =$1,206.76
Return on Equity	=1,206.76/1,500 =80.45%

*However, if the price went against Jasvind and he closed the contracts at 2.75. He would have made a loss of -$1,250 and a ROE of about -86.22%.

Jasvind currently has a bearish view on Stock A. Stock A is currently trading at a price of $3.00. Jasvind SELLS 5,000 contracts at the Ask Price of $3.00. Below are the details of Jasvind’s trade:

Details of Jasvind’s Trade
Open Price	$3.00
Closing Price	$2.75
Initial Margin	=$3.00*10%*5,000 contracts =$1,500
Profit/ (Loss)	= (Opening Price – Closing Price)*Quantity = ($3.00-$2.75)*5,000 = $1,250
Opening Commission	$19.20
Closing Commission	$17.60
Finance Charges (FC)	Assume Jasvind closes the position on Day 4: Closing Price of Stock A: Day 1: $2.90 Day 2: $2.85 Day 3: $2.80 Day 1 Finance Charge: =$2.90*5,000*2.5%/365 =0.99 Day 2 Finance Charge: =$2.85*5,000*2.5%/365 =$0.98 Day 3 Finance Charge: =$2.80*5,000*2.5%/365 =$0.96
Net Gain/(Loss)	=1,250-19.20- 17.60-0.99-0.98-0.96 =$1,209.96
Return on Equity	=1,209.96/1,500 =80.66%

*However, if the price went against Jasvind and he closed the contracts at 3.25. He would have made a loss of -$1,250 and a ROE of about -86%.

Jasvind currently has a bullish view on Stock A and is contemplating using either CFD or Stocks to execute his trade. Stock A is currently trading at a price of $3.00. Jasvind want to BUY 5,000 shares (stocks) or contracts (CFDs) at the Ask Price of $3.00. Below will be the details of Jasvind’s trade:

N/A

Details of Jasvind’s Trade
	CFDs	Stocks
Open Price	$3.00	$3.00
Closing Price	$3.25	$3.25
Initial Margin/Capital	=$3.00*10%*5,000 contracts =$1,500	=$3.00*5,000 shares =$15,000
Profit/ (Loss)	= (Closing Price – Opening Price)*Quantity = ($3.25-$3.00)*5,000 = $1,250	= (Closing Price – Opening Price)*Quantity = ($3.25-$3.00)*5,000 = $1,250
Opening Commission	$19.20 (GST does not apply)	$20.93 (incl. GST)
Closing Commission	$20.80 (GST does not apply)	$22.67 (incl. GST)
Finance Charges (FC)	Assume Jasvind closes the position on Day 4: Closing Price of Stock A: Day 1: $3.10 Day 2: $3.15 Day 3: $3.20 Day 1 Finance Charge: =$3.10*5,000*2.5%/365 =$1.06 Day 2 Finance Charge: =$3.15*5,000*2.5%/365 =$1.08 Day 3 Finance Charge: =$3.20*5,000*2.5%/365 =$1.10	N/A
Opening Clearing & Access Fees (incl. GST)	N/A	$6.54
Closing Clearing & Access Fees (incl. GST)	N/A	$7.09
Net Gain/(Loss)	=1,250-19.20- 20.80-1.06-1.08-1.10 =$1,206.76	=1,250-20.93- 22.67-6.54-7.09 =$1,189.53
Return on Equity	=1,193.26/1,500 =80.46%	=1,189.53/15,000 =7.93%

 

*However, if the price went against Jasvind and he closed the contracts at 2.75. He would have made a loss of -$1,250 and a ROE of about -86.22% while trading on stocks would result on a ROE of about -8.74%.