Let’s say that you bought some CFDs when its price was $10.00.

With a trade size of $10 000, this means that the number of CFDs bought would have been 1000, that is 10 000/10.00 = 1000.

And let’s say that our stop loss was set at $9.50, which means that if the price falls to or below $9.50, then we would exit this trade at a loss.

Then finally the CFD price exiting price is at $10.50.

The whole trade took 14 days.

The difference in the price from entry to exit = $10.50 - $10.00, which comes to $0.50.

Thus our gross profit = (difference between entry and exit price) x (number of CFDs) = $0.50 x 1000 = $500.

The applicable interest rates will be set out in your account opening letter. Dividend adjustments are applied at the amount of the net dividend, if you have an open position in a share on the ex-dividend date.

So we've calculated our gross profit. Let’s now calculate our costs, to work out the net profit.

Our costs = commission + interest. Let's calculate each in turn:

1. Let’s assume our CFD provider’s commissions are $20 in and $20 out.

Commission = $20 + $20 = $40

2. And let’s also assume that our provider’s interest rate charge for long positions held overnight is 7.5% or 0.075 per annum. To calculate how much this is for our trade, we need to make it “pro rata” (times it by the days in trade, then divide by 365), and then multiply it by the trade size.

Interest = (interest rate for long position) x (days in trade/365) x (trade size).

= 0.075 x 14/365 x 10000 = $28.76

Thus our net profit = gross profit - (commission + interest)

= $500 – (40 + 28.76) = $431.24

That’s a pretty awesome result in such a short time.

So there you go, your first CFD trade in entirety!

Note here, that for short positions, interest costs are paid to you, not charged, so will offset rather than contribute to the costs. Also note that the exact figure for the interest payment is a bit more complex that the above example, as the interest is calculated daily from the value of the trade size at market value, rather than from the value of the trade size when entering or exiting the position. If we calculated the interest cost using the final position size of 10050, the interest would be $34.28, which is very similar. So the real interest cost would be between $28 and $34.