4. Profit and loss
To calculate the profit or loss earned from a CFD trade, you multiply the deal size of the position (number of contracts) by the value of each contract (per point of movement). You then multiply that figure by the difference in points between the price when you opened the contract and when you closed it.
Profit or loss = (no. of contracts x value of each contract)
x (closing price - opening price)
For a full calculation of the profit or loss from a trade, you’d also remove any charges or fees incurred. These could be overnight funding charges, commission or guaranteed stop fees.
Say, for instance, that you buy 500 contracts of HSBC when it was trading at 500p per share. A single HSBC contract is equal to a single HSBC share, or one penny of movement in its share price. So for each point of upward movement you would make £5 (500 * one penny per point contract).
If you sell when HSBC shares are worth 525p per share, your profit would be £125.
125 = (500 x 0.1) x (525 - 500)