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 (incl. GST)	$26.75
Closing Commission (incl. GST)	$26.75
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)	=1,250-26.75- 26.75-1.06-1.08-1.10 =$1,193.26
Return on Equity	=1,183.26/1,500 =79.55%

*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 -80%.

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 (incl. GST)	$26.75
Closing Commission (incl. GST)	$26.75
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)	=1,250-26.75- 26.75-0.99-0.98-0.96 =$1,193.66
Return on Equity	=1,193.66/1,500 =79.58%

*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 -80%.

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 (incl. GST)	$26.75	$26.75
Closing Commission (incl. GST)	$26.75	$26.75
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	Approx. $15
Closing Clearing & Access Fees (incl. GST)	N/A	Approx. $15
Net Gain/(Loss)	=1,250-26.75- 26.75-1.06-1.08-1.10 =$1,193.26	=1,250-26.75- 26.75-15-15 =$1,166.50
Return on Equity	=1,193.26/1,500 =79.55%	=1,166.50/15,000 =7.77%

 

*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 -80% while trading on stocks would result on a ROE of about -8%.