Here is how CFD trading works on iForex’s online platform.
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The iFOREX investment platform automatically calculates all necessary equations, but informed traders understand the detail necessary to carry out successful strategies.
As an example, let’s look at crude oil
Opening a deal size of 380 contracts of oil means that you are buying 380 x oil contracts.
What you will do on the platform?
|Choose the instrument||WTI oil|
|Choose your deal size||380 contracts|
|Choose direction||Buy / Sell|
With an investment of $200, you assume that the price of oil is going to strengthen, and you choose to buy oil.
Let’s say that in this example, the price of a single oil contract is $52.
A click on the “BUY” button will allow you to purchase 380 x oil contracts, using leverage of approx. 100:1.
380 x 52 (ask price) = $19,760
For crude oil, the maximum leverage is: 200.
Your maximum deal size if therefore: your investment x 200.
This allows you to maximize your potential profits.
To demonstrate the calculations we will continue to use the oil example
Let’s say the price of the oil moves up by 20 points from 52 to 52.20.
380 x 52 (ask price) = $19,760 *
380 x 52.20 (bid price) = $19,836 *
19,836 – 19,760 = 76 => The difference is worth $76
A click on the “BUY” button will allow you to purchase 760 x oil contracts, using leverage of approx. 200:1.
760 x 52 (ask price) = $39,520 *
760 x 52.20 (bid price) = $39,672 *
$39,672 – $39,520 = 152 => The difference is worth $152
This calculation will always give you the value of the difference in the quote currency (in this case, US Dollar).