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Trade the World’s Major Indices with VFS

What is CFD trading on indices?

CFD trading is a popular form of financial trading because it allows investors to profit from rising or falling markets. CFD trading on indices is a relatively simple concept in that your exposure per point of movement on the index in question will generally be one of the currencies of the index. Online CFD services, such as those provided by VFS, make it possible to trade on markets around the world.


Cash Index & Futures Index CFD examples

When you open a CFD you can choose to either go “long” or “short” depending on whether you expect the price of the instrument to rise or fall.

A ‘LONG’ TRADE – YOU EXPECT THE PRICE TO RISE

UK100 Cash Index is trading at 6000 – 6001.

You think that the outlook for the UK economy is good and the share index will rise so you decide to place an order to buy 5 CFDs at 6001. This means that for every point the price of UK100 moves, you will make a profit or loss of £5.


SCENARIO A

Your prediction was right and the price of the UK100 Cash Index rises to 6019-6020. You close your position at 6019. The difference between your buy price 6000 and your sell price of 6019 is 19 points; therefore you make a profit of £95 (19 x your 5 CFDs trade size).

SCENARIO B

Your prediction was wrong and the price of the UK100 Cash Index falls to 5979-5980. You close your position at 5979. The difference between your buy price 6000 and your sell price of 5979 is 21 points; therefore you make a loss of £105 (21 x your 5 CFDs trade size).

Scenario Opening Price Closing Price Difference Trade Size P&L
A 6000 6019 +19 5 CFDs +£95
B 6000 5979 -21 5 CFDs -£105

A ‘SHORT’ TRADE – YOU EXPECT THE PRICE TO FALL

The US500 Cash Index is trading at 16502 – 16506

You think that the outlook for the US economy is poor and the share index will fall so you decide to place a trade selling 10 CFDs at 16502. This means that for every point the price of the US500 Cash Index moves, you enter a profit or loss of $10.

SCENARIO A

Your prediction was right and the price of the US500 Cash Index falls to 16376-16380. You close your position at 16380. The difference between your sell price 16502 and your buy price of 16380 is 122 points; therefore, you make a profit of $1220 (122 x your 10 CFDs trade size).

SCENARIO B

Your prediction was wrong and the price of the US500 Cash Index rises to 16544-16548. You close your position at 16548. The difference between your sell price of 16502 and your buy price of 16548 is 46 points; therefore, you make a loss of $460 (46 x your 10 CFDs trade size).

Scenario Opening Price Closing Price Difference Trade Size P&L
A 16502 16380 -122 $10 +$1220
B 16502 16548 +46 $10 -$460