A short trade
With CFD trading your profit or loss is determined by the difference between the buy price and the sell price of the financial instrument that you are trading. Imagine this scenario about fictional oil company called North Sea Oil PLC (NSO):
Placing a trade
North Sea Oil Plc is trading at 1599/1600p. You think that the price is going to fall in value so you decide to go short and sell 1000 NSO CFDs at 1599. 1000 CFDs at 1599 gives you a position size of £15999. 1000 x 1599p = £15999. As the margin requirement for this share is 5%, only £799.95 is allocated from your trading account as a deposit.
Closing your position
The market falls 50 points to 1549/1550. You decide to close out your position and realise a profit.You buy 1000 NSO CFDs at 1550 to close out your NSO position and make £449 profit less commission and any financing charges.