### Calculating profits for CFDs

### Calculating profits for CFDs

Returning to the case study where our trader *bought* £5 of** **the** **FTSE 100, if the FTSE index proceeded to see an increase to a level of 7007.4/7008.4, the trader may decide it would be a good time to close this position. To calculate the profit on the trade:

**Profit made = amount bought (£) x number of points the trade has moved in trader’s favour**

In this case, the trader’s profit would be £10 (£5 x 2).

In the other direction, if the trader had decided to *sell* £5 of the FTSE 100 at the 7004.4 level and then closed the trade at that 7007.4/7008.4 level, the loss on the trade would be £20 (£5 x 4), as the price of the closing trade is four points more than when it was opened.

In another instance, the FTSE 100 declines from 7004.4/7005.4 to7002.4/7003.4. If the trader had opened the trade by purchasing £5 of the FTSE 100, were the trader to sell at the new level, this would result in a loss:

**Loss incurred = amount bought x number of points the trade has moved against trader’s favour **

The trader’s loss would be £15 (£5 x 3).

If the trader had instead sold £5 of the FTSE 100 at the original level then the profit would be £5 (£5x1).