Long Position in FTSE 100
Let’s say the price of the FTSE 100 is currently 6300 – 6302. You want to buy, because you expect the price of to rise.
You buy 1 Lot of the FTSE at 6302. With an account on 100:1 leverage, your margin requirement will be (6302 x 10) / 100 = £630.2. This margin requirement will not be debited from your account, but will be required as a minimum credit balance on your account in order to open the position. When you open the position, this margin is then ‘locked up’ against this position and cannot be used for anything else. The margin requirement may change over the duration of the trade, depending on the movement of the CFD.
Closing the Position and Overall Result
Assume that the price of the FTSE 100 rises to 6390 – 6392, and you decide to take your profit. You sell 1 Lot at 6390, the Bid price.
Your Net profit/ loss on the trade would be:
Net Profit/ loss = (Closing Price – Opening price) x lot size
= (6390 – 6302) x 10 = £880 profit