Complete example for trading an index CFD

Example on Indices

  • 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.

Summary of the transaction costs

Notional value of the trade

10 x 13,198.2 = 131,982 EUR 

5% margin

€6,599

Spread

1.8

1M Euribor

-0.54%

Entry cost
10x1.8 = 18/2 = €9

Purchase fee

0
Overnight financing cost*
131918 x [2.5% - (-0.54%)] / 365 = €10.99 
Exit cost
10x1.8 = 18/2 = €9
Sales fee
0
Total costs
€28.99 (equivalent to 0.02% of the initial investment)
*Only if the position is held from one day to another

BBVA Trader CFD