As with traditional share dealing, CFD prices are quoted as a Bid (the price you can sell at) and an Offer (the price you can buy at). With CFD trading you buy a CFD based on a certain amount of the underlying asset.
The following worked examples show how you can use CFDs to trade a number of different markets. These examples show trades that result in both profits and losses.
CFD trading example (Index) on BMF CFD Pro - Selling the US TECH 100
You believe that the US TECH 100 will fall so you decide to sell a CFD based on 100 underlying futures contracts for that market.
Boston Merchant Financial quotes you a spread of $1280/$1284 for the US TECH 100.
OPENNING TRADE
Price of US TECH 100 is $1,280
1280
Number of underlying contracts
100
Value of total position ($)
128,000
Transaction Fee $.75 per contract
75
Margin requirement @ 5% (US$)
6400
After 2 days the market has fallen and you decide to close your position.
Risk Warning: CFDs are margined products; it is possible to lose more than your initial margin deposit or credit allocation as well as any variation margin that you may be required to deposit from time to time. Therefore you should only speculate with money that you can afford to lose. CFD trading may not be suitable for all customers; therefore please ensure that you fully understand the risks involved and seek independent advice if necessary and prior to entering into such transactions. When trading CFDs with Boston Merchant Financial you are merely trading on the outcome of a financial instrument and therefore do not take delivery of any underlying instrument, nor are you entitled to any dividends payable or any other benefits related to the same.
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