>Example: Buying the Australia 200 Cash
All our stock index contracts are commission-free: the only charge is our highly competitive dealing spread.
Our range of stock index contracts are listed in the Contract Details. You can trade in full or mini contract sizes, and even in fractions of a contract. You can also trade the Australia 200 either as a cash contract (with a 1-point spread) or a futures contract (with a 3-point spread).
Opening the CFD position
It is March and our quote for the Australia 200 Cash is 4795/4796. You think the blue-chips are going to start their recovery and decide to buy two contracts at 4796. (One standard contract is the equivalent of $25 per index point.) There is no commission to pay.
To open your position you supply a deposit of $1,000* per contract = $2,000. You will then make or lose $50 for every point the sell price rises above or falls below 4796.
Closing the CFD position
A week later, the Australia 200 Cash has climbed to 4895/4896 and you decide to take your profit. You close your position by selling two contracts at 4895.
Your gross profit on the trade is calculated as follows:
Profit on trade
| Opening level | 4796 |
| Closing level | 4895 |
| Difference | 99 |
Gross profit: 99 points x 2 contracts x $25 per point = $4,950
To calculate the net result you also have to include interest and dividend adjustments. Interest adjustments are applied daily to stock index trades in exactly the same way as to Share CFDs. Dividend adjustments are applied whenever a stock in the relevant index goes ex-dividend. For more information see Contract Details.
* For Trader Accounts
Limited Risk Trading: Stock Indices
Use Guaranteed Stops to limit your risk on stock index CFD trades. You specify an absolute level at which your position will be closed should the market move against you.
When you use a Guaranteed Stop a premium is added to your opening price as risk protection. The Limited Risk premiums which apply to individual stock indices are listed in the Contract Details.
The margin requirement for a Limited Risk trade is equal to the amount which would be lost if the Stop were triggered.
Example: Shorting Wall Street with Limited Risk
You want to go short but are concerned about the possibility of a short-term rally.
Opening the CFD position
It is 23 June 2009 and our quote for Wall Street is 8300/8304. You decide to sell one contract with Limited Risk protection. (One contract is the equivalent of US$10 per index point.) So your position is opened at 8300 (the bid price) minus 4 (the Limited Risk premium) = 8296.
Placing the Guaranteed Stop
You decide to put your Guaranteed Stop at 8376. So the most you can lose on your position (excluding interest and dividend adjustments) is:
Maximum possible loss
| Stop level | 8376 |
| Opening level | 8296 |
| Difference | 80 |
Maximum possible loss (excluding adjustments): 80 points x 1 contract x US$10 per point = US$800
Triggering the Guaranteed Stop
Steady falls for Wall Street prove your trade correct, but on 25 June 2009 the index rallies and our quote rises to 8480/8484. Your position is automatically closed out at 8376. You have lost $800, but the Limited Risk protection has saved you from a bigger loss, potentially more than $1880.
To calculate the overall result of your transaction, you also have to include interest and dividend adjustments. Interest adjustments are applied daily to stock index trades in exactly the same way as to Share CFDs. Dividend adjustments are applied whenever a stock in the relevant index goes ex-dividend. For more information see Contract Details.