CFD Foundations · CFDs Trading Guide

Buying and selling a CFD reverse the direction of exposure. Work from actual opening and closing prices to avoid confusing a falling market with a losing trade.

Start with the direction

A long position benefits from a higher closing sale price. A short position benefits from a lower closing purchase price. Neither direction makes the trade safer by itself. The size of the exposure, volatility and exit conditions determine how much the account can lose. A short CFD is a contract with the provider, not a personal sale of shares you already own.

Use the correct subtraction

For a long position, subtract the opening buy price from the closing sell price. For a short position, subtract the closing buy price from the opening sell price. Multiply by units and any contract multiplier. Then include commissions, funding and other entries. These calculations use executable bid and ask prices, so do not subtract the spread a second time.

Compare both outcomes

Consider 25 units sold at $82 and bought back at $78. The short price gain is $100. If the closing buy price is $86, the price loss is $100. With $12 of total additional charges, the two net results become a profit of $88 and a loss of $112. Fees increase a loss just as they reduce a gain.

Closing is a distinct action

Confirm that your closing order reduces the existing position. Some platforms permit separate opposing positions while others net them. Holding equal long and short contracts may leave charges and operational exposure rather than a clean exit. Check the open position list and final statement. An unfilled closing order does not remove market risk.

Try it yourself

Ten contracts worth $2 per point are sold at 1,200 and repurchased at 1,215. Extra charges total $8. Calculate the net result.

Show the worked answer

The market moved 15 points against the short. The loss is 15 × 10 × $2 = $300, plus $8 of charges, for a net loss of $308.

Further reading

Educational material, not a recommendation to trade. Numerical examples are hypothetical. CFDs involve leverage and substantial risk of loss. Availability, costs and protections depend on the contract, legal entity, jurisdiction and client classification.

Continue learning