HOW TO TRADE INDICES: TRADING EXAMPLES
If you are interested in trading stock indices via contracts for difference (CFDs) or spread betting, the following example will explain how to trade indices and how to calculate your trades:
If UK100 is trading at a selling price of 7,579 and a buying price of 7,580:
UK100: 7579/7580
If you expect the price of the UK100 to move up, you BUY one contract of UK100 (each contract = 10 per point).
Scenario A
You bought at 7,580, the price went up to 7600.00/7603.00 and you wish to take your profits. You sell your position by closing it at the selling price of 7,600.
Your total profit = (7600.00 - 7580.00) x 10 = £20 x 10 = £200
Scenario B
You bought at 7,580.00, the price went down to 7560.00/7563.00 and you wish to limit your losses. You sell your position by closing it at the selling price of 7,560.00.
Your total loss = (7560.00 - 7580.00) x 10 = -£20 x 10 = -£200
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