Contracts For Difference (CFD’s) are a fantastic margin product for trading both US and UK equities. BUT care must be taken when setting up trades. A CFD Calculator will help with understanding your risk on each trade.
The following Calculators will allow a trader to enter Opening Price, Closing Price and Stop Loss Price. Then once a trader has projected how many days the trade is expected to be open, that also can be inputted into the CFD Calculator. Then it is just a matter of adjusting the number of CFD’s to purchase until the Potential Loss is equivalent to 1% of the traders account balance, a standard risk percentage. The calculator also works out the Risk to reward profile using the data provided and again a standard Risk to reward profile really needs to be above 1.6. There are different calculators for US and UK Equities as they are represented differently in price. A US share price is given in Dollars and Cents, for example a price of 400.00 is $400.00. Whereas a UK Equity is given in Pennies, for example a price of 400.00 is 400 pennies which is £4.00.
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