| Share Example |
DMA Share CFD - Long ExampleCraig believes that XYZ share CFD is undervalued and is likely to rally over the next week. XYZ is trading at (bid/offer) $4.99/$5.00. Craig decides to buy $10,000 (2,000 CFDs) worth of XYZ CFDs at the offer price of $5.00 with the view that the share price of XYZ will rise. Open Long Position
A traditional trade with no leverage requires an initial outlay of 100% of the price of 2,000 XYZ shares at $5.00 ($10,000). Because CFDs are a leveraged product, you will typically only need from 5% of the value of 2,000 XYZ Share CFDs ($500) to open the same CFD position. The amount of commission charged is significantly lower when trading CFDs through MF Global. You will pay a minimum commission of $10* per CFD trade compared with approximately $25 per trade with a traditional equity broker who gives you no leverage. The total outlay of this CFD transaction through MF Global is $510 which is $9,515 less than a traditional trade (total outlay of $10,025) for the same exposure in the market.
Close Long Position
^ Based on a MF Global Base Rate of 10.25% (2,000 x $5.00 x 10.25% / 365). Subject to change. By closing your position you realise a gross profit of $400. The net profit received from the CFD trade and a traditional broker trade is calculated by subtracting commission charges and GST from gross profit. The CFD net profit also takes into account any funding or interest charged on the CFD position.Your net profit received from the CFD trade is $376.87. Return on InvestmentCFDs are a leveraged product so your return on investment (ROI) from this trade is 73.87%, which is significantly more than your ROI from a traditional trade with no leverage - which is only 3%. Important note: If the price had moved in the opposite direction by 20 cents you would realise a gross loss of $400 trading either CFDs or through a traditional share trade. Gross loss does not include commissions, funding or GST issues and the percentage of ROI loss compared to the initial investment would also be significantly greater than the ROE from a traditional trade with no leverage. When trading derivatives it is entirely possible for traders to make losses that exceed the value of their initial investment. *Frequent Traders Club. Conditions Apply
DMA Share CFD - Short ExampleSophie thinks that Anglo American (AAL.LSE) is overvalued. The share is quoted at GBP20.50/20.51 in the market and she decides to sell (go short) 2,000 AAL Share CFDs at GBP20.50, the bid price. Sophie sells 2,000 AAL CFDs at GBP20.50, requiring an Initial Margin deposit of 10%. Commission is 0.125%. A funding rate of 3% under the MFGA Base Rate (say, 3.00%) is applied.
Open Short Position
You will pay a minimum commission of $82.00. Sophie holds her position for 3 days and closes her position on the 3rd day. Close Short Position
The total profit on this trade is GBP 3,593.13 (reflecting a return of 87.64% on initial outlay). |
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Disclaimer: This website contains general information only and does not constitute financial product advice. Derivative products can be risky and are not suitable for all investors. MF Global Australia recommends customers seek independent advice. A MF Global Australia Product Disclosure Statement (PDS) is available through the website www.mfglobal.com.au and should be considered prior to trading MF Global's derivative products. Investing in derivatives carries a high level of risk to capital, and due to the potential volatility and fluctuations in value, investors may not get back the amount of their original investment. In certain circumstances an investor may be liable to pay a far greater sum, with losses being higher than an initial deposit.
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