Ultimate magazine theme for WordPress.

Spot vs. Futures Prices and Markets: What Are the Differences?

Example of futures trading

For example, let’s say the current market level for US crude oil – our WTI market – is £ 6,500. We are offering a sell price of £ 6497 and a buy price of £ 6503 due to the six point spread that we wrap around the underlying level.

You believe the market is going to rise and you decide to buy ten Oil – US Crude Oil (£ 1) futures CFDs. Each is worth £ 1 per movement point and expires at the end of the month. Since CFDs are leveraged, you only need to deposit a 10% deposit to open this position. In this example, you are paying £ 6503 for a £ 65,030 position. on [(6503 x 10 futures CFDs x £1 per point) x 10%]. Please note, however, that while leverage can increase your profits, it can also amplify your losses.

Some of our oil futures CFDs are quoted in US dollars. In these cases, your profits or losses will be realized in dollars and then converted into pounds using the current exchange rate

At the end of the month the oil price had risen by 50 points to 6550 – with a selling price of 6547 and a purchase price of 6553. You decide to close your trade. If the price has gone up, you will make a profit of € 440 [(6547 – 6503) x 10 contracts x £1].

However, if the price of oil had fallen 20 points, you would have lost £ 260 [(6477 – 6503) x 10 contracts x £1] = -260 lbs.

Comments are closed.