Guide to Trading CFDs as the ASX Closes Higher

SYDNEY, July 29, 2012 /PRNewswire/ --

On Thursday, 26 July, the benchmark Australian stock index, the S&P/ASX100, closed higher by more than half a per cent - with industrial and telco sectors leading the gains.

In the following CFD trading guide, we look at the news out of Australia and how you can take a position with a CFD trading account from City Index Australia. CFD trading carries a greater degree of risk and is not suitable for all investors; in addition you may not own an interest in the underlying asset.

Australian Shares Close Higher

At market close on Thursday, the benchmark S&P/ASX100 index was up nearly 0.6% or 18.9 points to 3,411.3.

In the days trading, Australia's struggling Qantas Airways announced it was in talks with a number of companies, including Dubai's flagship carrier Emirates - about a potential alliance, causing its share price to soar by 9.6%.

Trading CFDs on Qantas Shares

Using the Qantas share price as an example, let's look at how you can trade CFDs on shares such as Qantas where the market is rising.

With a CFD trading account, you can take a position on the Qantas Airways CFD market through the City Index trading platform.

Let us as an example say that as the market opened on Thursday, July 26, you decided to go long and buy the Qantas Airways CFD market following positive news about a possible alliance with Dubai-based Emirates on expectations that its shares price would rise in value.

Through the CFD trading platform (available online and for mobile), the market was available for a spread of 1.023/1.028.

You went long and bought 1,000 CFDs at 1.028.

In the coming hours you watched the market rise until the market was available for a spread of 1.102/1.107.

In order to close your CFD trade, you sell back 1,000 CFDs at 1.102.

As a result you net a profit of $74, i.e. value at start = $1,028 - value at end = $1,102)

Had prices actually fallen, you would have encountered a loss. CFDs are a leveraged product which can result in losses that exceeds your deposit and you may not have interest in the underlying asset.

Start Trading CFDs today with City Index Australia

With City Index Australia, you can take a position on a range of CFD markets for only small percentage of the total value of the underlying instrument.

Start trading CFDs today with City Index Australia.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

City Index is a leading global provider of margined foreign exchange and CFD trading. As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. To learn more visit: http://www.cityindex.com.au/.

Trading CFDs on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. Ensure you fully understand the risks involved.