Complete example for trading a currency CFD

Assume you open a CFD that shorts the EUR/USD. To do so, you sell 10,000 CFD contracts on the EUR/USD pair, which is trading at 1.2156 / 1.2157 (Spread 0.0001). The margin required for this trade is 3.33%.  Therefore, you will have to pay the following margin: 10,000 x 1.2156 x 3.33% = $404.79

Applying an EUR/USD exchange rate of 1.2156, the margin required for the trade will be €333.

Once the 10,000 CFDs are sold at 1.2156, you will have a profit or loss based on the price movement in the market. For example: 

• Trade with a profit:

If the price of the EUR/USD drops to 1.2090 / 1.2091 and you decide to close your position, the result will be as follows:

(1.2156 x 10,000) - (1.2091 x 10,000) = 12,156 - 12,091 = $65, applying an EUR/USD exchange rate of 1.2091, the result of the trade will be €53.75, equivalent to a positive return of 16.14%.

• Trade with a loss:

If, on the contrary, the price of EUR/USD rises to 1.2196 / 1.2197 and you decide to close your position. The result will be as follows:

(1.2156 x 10,000) - (1.2197 x 10,000) = 12,156 - 12,197 = -$41, applying an EUR / USD exchange rate of 1.2197, the result of the trade will be -€33.61, equivalent to a negative return of 10.09%.

• Overnight financing cost

If in either of the two examples above, you keep your position open overnight once the market closes, you will have to add the overnight financing cost to your costs. This cost is calculated as follows:

Short position: Notional amount x (1% - benchmark rate 1 % + benchmark rate 2 %) / 365

In this case, benchmark rate 1 is 1M EURIBOR and benchmark rate 2 is SOFR.

We apply the formula for taking short positions: 10,000 x [1% + (-0.54%) - 0.15%] / 365 = €0.08/day.