use a case study to illustrate how CFD’s (Contract’s For Difference) work

use a case study to illustrate how CFD’s (Contract’s For Difference) work. So lets take UK listed Tullow Oil (TLW) and assume the price is at £50. After our technical or fundamental analysis we have decided whether we want to sell (going short) or buy (going long) the stock (or the CFD). Say we go long (buy the stock) and decide to risk £1 on each point of fluctuation in the share price. (A point is worth a cent in this context) This means for every cent that the TLW shares move, the trader either gains or loses £1. Now the way you decide this £1 risk per point depends on the leverage (CFD dealers usually have a 3%, 5%, 10% or 20% options available on the amount of leverage) and the size of your contract with your CFD dealer. So if the WPL shares have gained 10 pence and want to take profits your profit would be 10 x 1 = £10 or if the share lost 10 cents then you lose £10. Trading CFD at times can be unpredictable. There are some cases that the sum of holding costs can exceedrelated articles: