Let’s look at your trading account and imagine that you’ve just invested $4,000.
In this case, let's use, for example, leverage of 20:1. This means that you can now open trades of up to $80,000 (see below):
|Your investment||Leverage||Your trading power|
As you know, there are many commodities, currency pairs, cryptocurrencies indices, shares and ETFs that you can trade in the form of CFDs. Let’s take an example of a popular commodity: Gold.
Now let's say that one CFD on gold is currently trading at $1,000. Your intuition tells you that gold prices will move up, and therefore you’ve decided to buy 50 CFDs on Gold.
50 x 1,000 = $50,000
After a while, you look at your trading account and see that you were right: the price of the CFD on Gold has gone up and is now trading at $1,020!
It means that your 50 CFDs are worth now:
50 x 1,020 = $51,000
You decide to close your trade.
Your total profit from this trade is:
51,000 – 50,000 = $1,000
A $1,000 profit for a $4,000 investment… Not bad right?
Note that the same logic of calculation applies to all the instruments.
- In this example, we did not include the potential rollover, overnight financing and spread in the calculations.
- The same calculation process applies to losing deals
- For the exact leverage offered by iFOREX Europe, please refer to our Trading Conditions page.