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Index CFDs |
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A look at Index CFD trading, with a comparison of some of the leading CFD brokers, a stock market price guide and worked CFD trading examples.
CFD Stock Market Index Comparison
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| Stock Market Index Commission |
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| FTSE 100 (UK 100) Daily |
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| Dow Jones (Wall St) Daily |
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| DAX 30 Daily |
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| More Indices? |
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CFD Comparison Notes
CFDs Prices: Index CFDs
Index CFDs: FTSE 100
CFD Example: Speculating on the FTSE 100 in Rise
Opening the CFD Trade
You look at the IG Markets FTSE 100 market which shows a quote of: 5448 - 5450.
You believe the market will rise and so you buy one contract at 5450, the offer price. Note that one contract is the equivalent of £10 per point of the FTSE 100 Index. So for each point the FTSE 100 moves up/down you will gain or lose £10.
Your deposit margin payment for one contract = £400.
Closing the CFD Trade
A week later, the IG Markets quote has risen to: 5598 - 5600 and you decide to close your position by selling one contract at 5598.
- Profit on trade
- Closing level: 5598
- Opening level: 5450
- Difference: 148
- Profit on trade: 148 x 1 contract x £10 = £1480.
Of course, if the FTSE 100 market moved in the opposite direction, you would have made a loss which may have exceeded your initial deposit.
To calculate the overall result on the transaction you would need to take into account the commission you have paid as well as the interest and dividend adjustments.
Index CFDs: Wall St
CFD Example: Speculating on the Wall Street Index to Fall
Opening the CFD Trade
You believe that the Wall Street (Dow Jones) Index is set for a fall. You look at the IG Markets website and see that they are quoting the Wall St market at: 10571 – 10575. Therefore you decide to sell two contracts at 10571.
Note that one contract is the equivalent of $10 per point of the Wall St Index. So for each point that Wall St moves up/down you will gain or lose $20.
Your deposit margin payment for two contracts = $1600 ($800 per contract).
Closing the CFD Trade
The following week, against your expectations, the market experiences a resurgence and the IG Markets quote rises to: 10652 -10656.
You are concerned that the rally will continue and decide to close your position by buying two contracts at 10656.
- Loss on trade
- Closing level: 10656
- Opening level: 10571
- Difference : 85
- Loss on trade: 85 x 2 contracts x $10 = $1700
Notes:
- To calculate the overall result on the transaction you would also have to take into account the commission you have paid and the interest and dividend adjustments
- Markets correct as of 21 January 2010
- Margin rates vary between different companies and different CFD account types
Trading CFDs may not be suitable for everyone. Please ensure that you fully understand the risks involved. CFDs are a leveraged product and losses can exceed your initial deposit. If necessary, seek independent financial advice.
For regular CFD trading news also see: CFDs Blog.
Where to Trade CFDs
You can trade CFDs online with:
Contracts for Difference (CFDs), margined forex and financial spread trading are leveraged products and may not be suitable for everyone. Losses can exceed your initial deposit. Please ensure that you fully understand the risks involved and seek independent financial advice where necessary.
Index CFDs, last edited by W.Winter, 22-Dec-11.
For related articles please see:
Index CFDs - last update: 22-December-2011
Index CFDs Trading - How to trade Stock Markets through CFDs. Plus which CFD companies offer Index CFDs with - read more - Index CFDs.
Forex CFDs - last update: 26-April-2012
Forex CFDs – a guide to forex CFDs including a broker commission comparison, a forex price guide, forex trading tips and - read more - Forex CFDs.
CFD Share Trading - last update: 22-December-2011
CFD Share Trading - How to trade shares through CFDs. Plus which CFD companies offer CFD Share Trading with - read more - CFD Share Trading.
Commodities CFDs - last update: 26-April-2012
Commodities CFDs – a guide to Commodities CFDs including a broker commission comparison, a commodities price guide, a look at supply and demand as well as - read more - Commodities CFDs.
US Shares CFDs - last update: 26-April-2012
US Shares CFDs – a guide to CFDs on US shares including leverage, tax, the brokers that offer US shares CFDs and - read more - US Shares CFDs.
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Warning: Contracts for Difference (CFDs), margined forex and financial spread trading are leveraged products and may not be suitable for everyone. Losses can exceed your initial deposit. Please ensure that you fully understand the risks involved and seek independent financial advice where necessary.
The contents of this website are for information purposes only and not intended as a recommendation to trade nor does the content constitute investment advice. All reasonable efforts have been made to present accurate information. Neither CFDs-Online.com nor any contributing company or individual accepts any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.
* Tax law is subject to change. It can also differ if you pay tax in a jurisdiction other than the UK.
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