Forex And Cfds Are Traded On An Exchange
One of the key reasons for the popularity of CFD trading is that information technology allows you lot to become long and short with up to twenty times leverage. That substantially ways that one is able to participate in both bullish and bearish markets while having to deposit only a minor percentage of the contract value in order to open a CFD position.
GOING LONG IN CFD:
Long = Buying base currency and selling term currency
In this example, we use the currency pair USD/SGD CFD. If you expect the USD (Base Currency) to ascent confronting the SGD (Term Currency), you will get Long on USD/SGD CFD past buying the pair at ane.38 and selling the pair in the time to come when the substitution rate increases.
Working Example:
George goes long on one FX CFD contract on USD/SGD @ 1.38000.
Margin Requirements for FX CFD: v%.
Value of 1 FX CFD contract of USD/SGD: USD x,000.
Margin Required: 1.38 X five% X x,000 = SGD 690.
USD/SGD rises.
He subsequently closes his FX CFD position on USD/SGD @ 1.53000.
He earns a profit of:
(one.53000 – 1.38000) 10 10,000 = 0.15000 X x,000 = SGD 1,500
However, if USD/SGD falls below 1.38000, he will make a loss.
GOING Brusk IN CFD:
Shorting = Selling base of operations currency and buying term currency
Conversely, using the aforementioned counter USD/SGD CFD, yous become brusque by selling the USD (Base of operations Currency) and ownership the SGD (Term Currency). If yous await the USD to fall confronting SGD, you will sell the pair at i.38000, and subsequently purchase the pair when the rate drops below 1.38000.
Working Example:
George goes curt on 1 FX CFD contract on USD/SGD @ 1.38000.
Margin Requirements for FX CFD: 5%.
Value of 1 FX CFD contract of USD/SGD: USD 10,000.
Margin Required: 1.38 10 5% X x,000 = SGD 690.
USD/SGD falls.
He subsequently closes his FX CFD position on USD/SGD @ 1.23000.
He earns a turn a profit of:
(i.38000 – 1.23000) x 10,000 = 0.15000 Ten ten,000 = SGD 1,500
All the same, should USD/SGD rising above 1.38000, he volition brand a loss.
Source: https://www.phillipcfd.com/what-is-fx-cfd-why-you-should-trade-them/
Posted by: reedcraver1962.blogspot.com
0 Response to "Forex And Cfds Are Traded On An Exchange"
Post a Comment