Example of going short (profit)

1. ABC Corp is trading at 159/160 and you think the price is going to fall in value.
2. You decide to sell ABC Corp CFDs at 159.
3. You decide to trade 1000 share CFDs to the value of £1,590 and are charged a commission of £20.
4. Your margin requirement with RBS Spread Trading for ABC Corp is 5% therefore £79.50 will be allocated from your account against this trade as initial margin. Remember if the share price moves against you, it is possible to lose more than this £79.50 initial margin.
5. Two days later you see that ABC Corp has fallen to 138/139.
6. Therefore you choose to buy CFDs in ABC Corp at 139 and realise your profit.
7. You sold at 159 and bought at 139 which means ABC Corp fell by 20p.
   20p x 1000 CFDs = £200 revenue, for which you are charged a commission of £20.
8. You held the CFD position for two days, and because you went short you were effectively loaning us money so you receive two nights financing charge. This is how you calculate the financing you will receive;
   [(£1,590 X (LIBOR - 2.5%))/365] x 2 = 20 p. LIBOR in this case is 4.75%.
9. Therefore you add the financing payment to the revenue and realise a profit of £160.20.