A Long Trade
Below is an example of an opening trade in Reuters. The first investor is buying traditional shares, the second is using CFD's.
| Opening Trade | Buying Shares | Buying a CFD |
|---|---|---|
| Price of Reuters | 500p | 500p |
| Number of Shares | 2000 | 2000 |
| Value of Position | £10000 | £10000 |
| Stamp Duty (0.5%) | £50 | NIL |
| Commission | £100 (1%) | £50 (0.5%) |
| Deposit Required | £10,000 | £500 |
After 5 days both investors sell their Reuters shares and make a profit.
| Closing Trade | Selling Shares | Selling a CFD |
|---|---|---|
| Price of Reuters | 515p | 515p |
| Number of Shares | 2000 | 2000 |
| Value of Position | £10300 | £10300 |
| Commission | £103 | £51.50 |
| Financing Charges * | NIL | £5.48 |
| Net Profit | £50 | £193.02 |
| Return on Equity | 0.47% | 38.60% |
| Opening Trade | Buying Shares | Buying a CFD |
|---|---|---|
| Price of Reuters | 500p | 500p |
| Number of Shares | 2000 | 2000 |
| Value of Position | £10000 | £10000 |
| Stamp Duty (0.5%) | £50 | NIL |
| Commission | £100 (1%) | £50 (0.5%) |
| Deposit Required | £10,000 | £500 |
After 5 days both investors sell their Reuters shares and make a loss.
| Closing Trade | Selling Shares | Selling a CFD |
|---|---|---|
| Price of Reuters | 490p | 490p |
| Number of Shares | 2000 | 2000 |
| Value of Position | £9800 | £9800 |
| Commission | £98 | £49 |
| Financing Charges * | NIL | £5.48 |
| Net Loss | £448 | £304.48 |
| Return on Equity | -4.48% | -60.80% |
* position held over 5 nights
The CFD investor has paid a standard financing charge of £5.48 for holding the position. Interest is charged on an overnight basis therefore in this example: £10,000 x 4.0% (LIBOR + 2.75%) ÷ 365 over 5 days = £5.48. Commission is charged as a percentage of the total value of a trade.
If the CFD investor takes a short position, they may receive interest in a similar fashion based on LIBOR - 2.75%. Please remember CFDs are a leveraged product and may not be suitable for everyone, and losses as well as profits can be magnified.
Stop losses are not guaranteed and therefore you can lose more than your initial deposit. Guaranteed stop losses are available at an extra cost.

