CFD
WHAT ARE CFDs
CFD PRODUCTS OFFERED
CFD TRADE EXAMPLES
TRADING WITH BACERA
Forex CFD Trade Examples
The following examples will help you understand how Forex CFD trading works and how to calculate profits and losses. The following examples will also help you appreciate the effect of leverage on your Forex CFD trading results, and see clearly the difference in costs between trading Forex CFDs and traditional commodities.
The EUR/USD rate is quoted at 1.4236/39. This quote represents the bid/offer spread for EUR vs. USD. The offer rate of 1.4239 is the rate at which you can purchase EUR (or BUY EUR and SELL USD). The bid rate of 1.4236 is the rate at which you can sell EUR to buy USD.
Opening position
You believe that the Euro will strengthen against the US Dollar, and decide to BUY or 'go long' EUR 100,000 @ 1.4239 (the offer price).
| Quote (bid/offer) | 1.4236/39 |
| Buy Price | 1.4239 |
| Volume | EUR 100,000 |
| Initial outlay (Bacera Margin Requirement) | $1,000 USD |
In the example above you have purchased EUR 100,000. But because FX is traded on margin with Bacera you will only need $1,000 USD to maintain the same market exposure.
Each basis point, or “pip”, in this example is worth $10 USD. Each basis point is valued at 0.0001. For example if the EUR/USD rate moves from 1.4239 to 1.4240 you will receive a profit of $10 USD.
Your prediction is correct and the Euro appreciates against the US Dollar. The quote on EUR/USD is now 1.4349/52.
Closing position
To close your position, you decide to SELL EUR 100,000 @ 1.4349 (the bid price).
| Quote (bid/offer) | 1.4349/52 |
| Sell price | 1.4349 |
| Volume | EUR 100,000 |
| Profit/loss | $100 USD profit |
Your profit and loss is usually calculated in the secondary, or “quote” currency. Therefore the above EUR/USD trade profit/loss is calculated in USD. You will only be charged a financing cost if you hold your position overnight.
Size of trade x (sell price - buy price) = profit & loss USD
100,000 x (1.4349 – 1.4239) = $100 USD profit
Risk Warning:
Leverage is a double-edged sword. Utilizing leverage results in greater exposure to adverse market movements. Leverage can magnify your losses as well as your profits.
Profit/loss Calculation:
| Step 1 | Short/Long | |
| Step 2 | Choose Forex | |
| Step 3 | Current Price | $ 0.00 |
| Step 4 | Contract Size | $ |
| Step 5 | Closing Price | $ |
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Profit/Loss
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$
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*DISCLAIMER: Provided current prices and pip values may be different than actual current prices and pip values, the profit/loss calculation is only for reference.
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| RISK WARNING: |
