Trade with ETFs takes the form of Contracts for Difference (CFDs). So, profit is realized by the difference between the sale and the purchase price without the need for physical possession.
To make a purchase, you need between 10% and 25% of your own funds from the transaction value, and at the same time the profit/loss is reflected in your full account. This way, speculation can be speculated with the price movements of the indices of the world's leading exchanges. The CFD is becoming increasingly popular in view of the high speculative gain that can be achieved with strong stock movements and key financial indices within one day.
Example: Deal with the ETF on banking sector in Europe - Lyxor Stoxx Europe 600 Banks CFD /BNK.FR/
You decide that the price of Lyxor Stoxx Europe 600 Banks CFD /BNK.FR/ will increase. Price in Varchev Absolute Trader is 22.4551/22.4850. You buy 50 CFDs of BNK.FR at a price of 22.4850 EUR for ETF
The amount of the transaction of 1123.50 EUR to open it is necessary to deposit 281.00 EUR. The standard commission that Varchev Finance charges is 0.1% with a minimum of 8 EUR.
You buy 50 ETFs at BNK.FR
(50 x 22.4850) * 0.1%, which is less than the minimum and here is paid 8 EUR
Volume of the deal
50 x 22.4850 EUR = 1123.50 EUR
Necessary initial margin
1123.50 EUR x 25% = 281 EUR
In a few days, the ETF has risen, with the Varchev Absolute Trader quote being 25,0000/25,0299. You decide to withdraw your winnings and sell the 50 ETFs to BNK.FR at a price of 25.0000. The commission is the minimum EUR 8.
The realized profit on the position is calculated as follows:
Price at opening
2.515 EUR х 50 = 125.75 EUR
Thus, the end result of the operation is calculated as follows: