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Appendix No. 1
Trading Examples
Below are some examples to illustrate the variables for a typical Transactions and how they affect the calculations. The variables of your actual Transactions will of course differ, as these examples are for illustrative purposes only. These examples do not reflect any actual Transaction or market conditions and are not forecasts or projections of any particular Transaction.
You opened an account with us, with an opening balance of $10,000 | ||
Day one: | ||
Opening a Position | Calculation | Account Display |
The price of CFD on Facebook share is $120.88 (bid price)/ $121.33 (offer price) You sell 100 Facebook share CFDs at the bid price of $120.88 | 100 x $120.88 = $12,088.00 | $ 10,000 (opening equity) |
The Initial Margin requirement for this trade equals the number of CFDs multiplied by trade price multiplied by the margin rate for this CFD, which is 10%. | $12,088.00 (see above) X 10% (margin rate) = $ 1,208.00 $ 10,000 (opening equity) – $ $1,208.00 (Initial Margin requirement) = $8,792.00 | $8,792.00 (free equity) |
You decided to hold the position overnight. The closing price for Facebook Share CFD for the day was $120.88, the same as your sell price. | ||
Day two: | ||
At 11:30 a.m. New York time, because of worse than expected earnings announcement, the Facebook share had fallen to $111.88 | Unrealised Profit: ($120.88 – $111.88) x 100 =$ 900 New Equity Balance: $ 10,000 + $ 900 =$10,900 | $10,900 (total equity) |
Your open position will remain at the historical purchase price of $120.88; This way you can keep track of your original purchase price at all times. Your free equity is your total equity less your margin requirement. | New Margin Requirement: $100 x $111.88 x 10% =$1,118.80 Current free equity: $10,900 (total equity) -$1,118.80 (New Margin Requirement) = $9,781.20 | $9,781.20 (free equity) |
At 3:45 p.m. you decided to close your position. The market is quoted at $110.43 (bid price) /$110.88 (offer price) | ||
To close your position, you buy 100 Facebook Share CFDs, at $110.88 market offer price | 100 x $110.88 = $11,088.00 | |
Realised Profit | ($120.88 – $110.88) x 100 =$ 900 $10,000 (opening deposit) + $900 (realised profit) = $10,900 (total equity) | $10,900 (total equity) |
You opened an account with us, with an opening balance of $10,000 | ||
Day one: | ||
Opening a Position | Calculation | Account Display |
The price of CFD on Facebook share is $120.88 (bid price)/ $121.33 (offer price) You sell 100 Facebook share CFDs at the bid price of $120.88 | 100 x $120.88 = $12,088.00 | $ 10,000 (opening equity) |
The Initial Margin requirement for this trade equals the number of CFDs multiplied by trade price multiplied by the margin rate for this CFD, which is 10%. | $12,088.00 (see above) X 10% (margin rate) = $ 1,208.00 $ 10,000 (opening equity) – $ $1,208.00 (Initial Margin requirement) = $8,792.00 | $8,792.00 (free equity) |
You decided to hold the position overnight. The closing price for Facebook Share CFD for the day was $120.88, the same as your sell price. | ||
Day two: | ||
At 11:30 a.m. New York time, because of better than expected earnings announcement, the Facebook share had risen to $129.88 | Unrealised loss: (120.88 – 129.88) x 100 = -$900.00 New Equity Balance: $ 10,000- $ 900 =$9,100 | $9,100 (total equity) |
Your open position will remain at the historical purchase price of $120.88; This way you can keep track of your original purchase price at all times. | New Margin Requirement: 100 x $129.88 x 10% =$1,298.80 Current free equity: $9,100 (total equity) – $1,298.80 (New Margin Requirement) = $7,801.20 | $7,801.20 (free equity) |
At 3:45 p.m. you decided to close your position. The market is quote at $129.43 (bid price) /$130.88 (offer price) | ||
To close your position, you buy 100 Facebook Share CFDs, at $130.88 market offer price. | 100 x $130.88 = $13,088.00 | |
Realised Loss: | ($120.88 – $130.88) x 100 = $-1,000 $10,000 (opening deposit) – $1,000 (realised loss) = $9,000 (total equity)* | $9,000 (total equity)* |
You opened an account with us, with an opening balance of $2,000 | ||
Day one: | ||
Opening a Position | Opening a Position | Opening a Position |
The price of CFD on Facebook share is $120.88 (bid price)/ $121.33 (offer price) You sell 100 Facebook share CFDs at the bid price of $120.88 | 100 x $120.88 = $12,088.00 | $2000 (opening balance) |
The Initial Margin requirement for this trade equals the number of CFDs multiplied by trade price multiplied by the margin rate for this CFD, which is 10%. Your free equity is your total equity less your margin requirement. | $12,088.00 (see above) X 10% (margin rate) = $ 1,208.80 $ 2,000 (opening balance)- $ 1,208.80 (Initial Margin requirement) = $791.20 | $791.20 (free equity) |
You decided to hold the position overnight. The closing price for Facebook Share CFD for the day was $120.88, the same as your sell price. | ||
Day two: | ||
At 11:30 a.m. New York time, because of better than expected earnings announcement, the Facebook share had risen to $135.88 | Unrealised loss: ($120.88 – $135.88) x 100 = $-1,500.00 New Equity Balance: $ 2,000- $ 1,500.00=$500 | $500 (total equity) |
Your account is marked to market at the current market price which will change your account balance | New Margin Requirement: 100 x $135.88 x 10% =$1,358.80 Current free equity: $500 (total equity) – $1,358.80 (New Margin Requirement) = -$858.8 | – $858.8 (free equity) |
As your Free Equity has fallen into a debit balance, you would now be on a Margin Call.* | $858.8 margin call* |