The Basics of CFD Trading
When you buy or sell CFDs, you enter into a contract and agree to exchange the difference in the value of the asset between when your position is opened and when it is closed. If you think an asset’s value will increase, you go long (“go long”). Conversely, if you think it will go down, you go short (“go short”).
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To calculate your profit or loss, simply multiply the difference between the open price and the close price by the size of your order and the value of each contract.
Suppose you buy 10 CFD contracts on France 40 when the price rises to 5000. Each contract is priced at €10 per movement point. So when the market goes up one point, you make a $100 profit. Conversely, if it drops by one point, you lose €100.
If the market moves 25 points when you close your position, your profit will be €2,500 ([25 x 10] x 10). However, if it drops 30 points, you lose $3,000 ([30 x 10] x 10) Time to close your position.
