You decide to purchase Microsoft (MSFT) shares, which are quoted at 23.97 (BID) - 24.00 (ASK), so you buy 100 shares at the ask price of $24.00:
| Price of 1 Microsoft share | $24.00 |
|---|---|
| Number of CFDs | |
| Number of lots on MT4 | |
| Trade size | $2,400.00 |
| Commission (2 cents per lot) | -$2.00 |
| Margin (5%) | $120.00 |
To fund this position you will need $122.00 (Margin + Commission) available in your trading account. When the trade is closed, the funds used for margin purposes will be credited back to your account. Commission charges are not paid back.
Overnight financing is applied each time you leave your position open until after the end of the trading session. Financing is calculated by using the USD Libor rate (for US Stocks) and the closing price of the share.
For example: The USD Libor rate is 0.174%; Alpari (UK)'s fee is 2.25% and the closing price of the Microsoft share is $25.00. So, your trading account will be adjusted as follows:
Number of CFDs X Closing Price X Interest/Days in a calendar year (US)
= 100 x $25.00 x (0.174% + 2.25%) / 360 =
= $0.16
When you leave your position open from Friday to Monday, the deducted amount will be three times higher. Both long and short CFD positions are debited due to financing charges.
Three days later Microsoft shares are quoted at $25.50/25.53, and you chose to close your position by selling at the bid price of $25.50:
| Price of 1 Microsoft share | $25.50 |
|---|---|
| Number of CFDs | |
| Number of lots on MT4 | |
| Trade size | $2,550.00 |
| Profit | + $150.00 |
| Commission (2 cents per lot) | $0 |
| Overnight financing (3 days) | - $0.48 |
| Profit less commission and overnight financing | $150.00 – $2.00 - $0.48 = $147.52 |
At the end of the trade you have a 120.91% return on your initial investment.
Please note that if your account is in GBP, EUR, CHF or JPY, all calculations will be converted from USD to your base account currency at live inter-bank rates. This is also the case if you trade FX with Alpari (UK). Also note that if you trade UK shares, the overnight financing rates will apply to the GBP Libor rate rather than the USD Libor rate. For European shares, Euro Libor rates will be used. For more information on global Libor rates.
Risk warning: This example shows a favourable outcome. If the share price had moved against you, you would have realised a loss instead of a profit. In the above example, if you had sold 100 Microsoft 100 CFDs, you would have realised a $145.52 loss.
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