Complete example for trading an index CFD

Assume you want to short 10 contracts on the Germany 30 index, which is trading at 13,198.2/13,200 (Spread 1.8). The margin you will have to deposit for this CFD is 5%. Therefore, you will have to pay the following margin: 13,198.2 x 10 = 131,982 x 5% = €6,599.

Once the 10 CFDs are sold at €13,198.2, 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 Germany 30 index drops to 13,148.2/13,150 and you decide to close your position, the result will be as follows:

(13,198.2 x 10) - (13,150 x 10) = 131,982 - 131,500 = €482, equivalent to a return of 7.3%.

• Trade with a loss:

If, on the other hand, the price of the Germany 30 index rises to 13,218.2/13,220, the result will be as follows:

(13,198.2 x 10) - (13,220 x 10) = 131,982 - 132,200 = -218 EUR, equivalent to a return of -3.30%.

• 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 (2.5% - benchmark rate %) / 365

The benchmark rate in this case is 1M EURIBOR.

We apply the formula for taking short positions: 131,982 x [2.5% - (-0.54%)] / 365 = €10.99/day.