There’s a reason indices are the most widely traded markets in the world. Readily available market information lets you trade on a macro economic level, diversify your portfolio and reduce your exposure to individual company risk.
Trade indices with City Index commission free, with 1 pip spreads on most major indices, and just 0.5% margin. Our comprehensive range of indices include the Australia 200, UK 100, CMI 300, German 30 and the Dow S&P 500.
Indices Example
Market volatility is causing major fluctuations in stock prices in Australia. Our CFD spread for the Australia 200 is 4079 bid /4080 offer (sell price/buy price).
Going Long
You believe the Australia 200 will rise and decide to buy 10 CFDs at a price of 4080.
Over the course of the week the Australia 200 rallies thanks to some bullish company results. Our new price of the Australia 200 CFD is 4097/4098. Having reached your profit target, you decide to close your position by selling 10 CFDs at 4,097 (our sell price).
Result: The opening (notional) value of the CFD trade is $40,800 (10 CFDs x 4080). The closing (notional) value of the CFD trade is $40,970 (10 CFDs x 4097). This nets you a $170 gain ($40,970 - $40,800).
Alternative scenario: If however the price of the Australia 200 had fallen to 4059, you would have lost $210 (4080 - 4059 x 10 CFDs).
Going Short
You believe the Australia 200 will fall and decide to sell 10 CFDs at a price of 4079.
Over the course of the week the Australia 200 falls after some poor company earnings. Our new price of the Australia 200 CFD is 4056/4057. Having reached your profit target, you decide to close your position by buying back 10 CFDs at 4057 (our buy price).
Result: The opening (notional) value of the CFD trade is $40,790 (10 CFDs x 4079). The closing (notional) value of the CFD trade is $40,570 (10 CFDs x 4057). This nets you a $220 gain ($40,790 - $40,570).
Alternative scenario: If however the Australia 200 had rallied to 4093, you would have lost $140 (4093 - 4079 x 10 CFDs).
For the purpose of simplicity, financing charges and payments have been omitted from these illustrations. Find out more about our financing charges.
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