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 point 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.
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).
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).
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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City Index is a trading name of GAIN Capital Australia Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. GAIN Capital recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.