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Trade index takes the form of Contracts for Difference (CFDs), that is, profit is realized by the difference between the sale and repurchase price without requiring physical possession.
In order to make a purchase you need only 2% own funds of the transaction value and simultaneously gain / loss, is recognized in full in your account. Thus one can speculate with the price indices of the world's leading exchanges. Contract for Difference (CFD) is becoming more popular in terms of high speculative profits that can be achieved with strong movements of shares and the main financial indices within one day.
Example: Deal with the Dow Jones index
Opening a position:
Decide that the price of the Dow Jones will increase. Price in Meta Trader 4 platform is 17421/17425. you buy 2 indexes of Dow Jones at a price of 17,425 dollars for the index.
Deal size of $ 34,850 to open it you need to deposit $ 697. Standard commission charged by Varchev Finance is one point of an index or $ 2.00.
2 indexes of Dow Jones
2 x $1.00 = $2.00
Volume of transaction
2 x $17 425 = $34 850
Required initial margin
$34 850 x 2% = $697
After several days Dow Jones index it will rise. The price in the Meta Trader 4 platform is 17882/17886. Decide to collect their profits and sell 2 Dow Jones index of price $ 17 882. The standard commission for the transaction is $ 1.00 or $ 2.00.
The profit realized from the position is calculated as follows:
$457 х 2 = $914
Thus, the final result of the operation is calculated as follows: