CFD trading sectors enables you to take a broader position on the direction of entire sectors such as oil, banks or miners, without having to take a position on the performance of an individual company within the sector.
At City Index, we offer competitive futures spreads on more than 25 sectors including banks, miners, real estate, pharmacy and more. Our sector markets are open to trade from 9am and our spreads start from just 0.4%.
Concerns over the pace of growth in China is causing fluctuations in the mining sector. Our CFD spread for the mining sector is 22124/22213.
You believe the mining sector will rise and decide to buy 1 CFD at 22213 (our buy price).
In order to open the position you need to put down a margin of 12.5% of the notional value, which is 22213 x 1 CFD x 12.5% = £2776.62.
Over the next few days, worries have subsided over the China’s growth. This leads to a rise in the mining sector.
Our CFD spread for the mining sector has risen to 22413/22502. You decide to close your position by selling 1 CFD at 22413 (our sell price).
Result: The opening value of the CFD trade is £22213 (1 CFD x 22213). The closing value of the CFD trade is £22413 (1 CFD x 22413). This gives you a £200 profit.
Alternative scenario: If the price had fallen to 22013, you would have lost £200 (22213 – 22013 x 1 CFD).
You believe the mining sector will fall and decide to sell 1 CFD at 22124 (our sell price).
In order to open the position you need to put down a margin of 12.5% of the notional value, which is 22124 x 1 CFD x 12.5% = £2765.50.
Over the next few days, media reports that China’s growth will slow even further. This leads to a fall in the mining sector.
Our CFD spread for the mining sector has fallen to 21835/21924. You decide to close your position by buying 1 CFD at 21924 (our buy price).
Result: The opening value of the CFD trade is £22124 (1 CFD x 22124). The closing value is £21924 (1 CFD x 21924). This gives you a £200 profit.
Alternative scenario: If the price had risen to 22324, you would have lost £200 (22324 – 22124 x 1 CFD)
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Trading CFDs and FX on margin carries a high level of risk, that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
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