Thousands of traders worldwide trade CFDs and Forex with FasTrading as we’re one of the few brokers who are classified as one of the leading brokerages. Why? Because we provide excellent CFD trading conditions and have no hidden fees.
Every Buy and Sell price of all the CFDs available here at FasTrading is displayed on the main page of our trading platform. Another added benefit we’ve added is to easily display the risk management tools for you such as a Stop Loss and Take Profit. By taking advantage of these excellent risk management tools, you can protect yourself and your trades, so use them well. If you need any assistance, reach out to your FasTrading Account Manager.
A CFD Trading Example
In this example, let’s say you’ve signed up for a live FasTrading trading account and made a deposit of $20,000 via your credit card. We accept Visa and Mastercard here at FasTrading.
Your trading account equity now stands at $17,000. The formula for calculating your equity is as follows:
Deposits – Withdrawals + P&L of opened positions.
What’s your “P&L”?. Here’s how we calculate it:
Total profit and loss of all open positions including daily premiums.
Your available balance is $17,000, and we work this out by this simple calculation:
Balance + P&L of all open positions – Initial margins
Let’s say that you’re interested in selling Apple shares because you expect the Apple share price to fall.
At 8.02 pm, you click on the “Sell” button which is next to the Apple stock option in the main trading lobby. The sell price is $100 per share.
Here’s your trading criteria as it stands:
Number of CFD Shares: 2,000
Close at profit rate $90, therefore your profit will be 2,000 x $10 = $20,000
Close at loss rate is $105, therefore your loss will be 2,000 x $5 = $10,000
The total amount of Apple shares you sold short is 2,000 x $100 = $200,000
The initial margin that’s needed for the Apple shares you’re shorting is 5%, which equals to $10,000
The maintenance margin that’s required to keep your Apple shares position open is 2.5%, which equals $5,000
Your trading position now stands at:
P&L = 0. This is usually the spread of Apple shares, which is $1, so you would have a P&L of -$2,000.
Your available balance after you sold your Apple shares is: $7,000. Why? Here’s the formula:
$17,000 – 5% x $200,000 = $7,000.
So you have equity of $17,000 ($17,000 + $0)
At 9.02 pm, the Apple share prices rises to $103. You shorted them at $100, remember?
Now you have a P&L of -$6,000. Here’s the formula:
2,000 shares x $100 – 2,000 x $103
Your available balance is now $1,000. Why?
$17,000 deposit – 5% x $200,000 – $6,000 = $1,000
Now your equity is $11,000 and the formula is:
$17,000 – $6,000
You’re seeing that your short trade isn’t working out the way you wanted it to go, so you decide to cut your losses.
At 9.15 pm, your market buy order executes at $103. This means that you lost $6,000 on this trade of shorting Apple’s shares.
Your equity is now $11,000
Your P&L is 0 as you have no open positions
Your available balance is $11,000