Short Trading Example

'Going short’ is simply opening a short or 'sell' CFD position to profit from a potential share price decline.

Amy believes Qantas Airlines (QAN) will release lower than expected profit figures and she expects the share price to drop in response. Amy places a sell order for 10,000 QAN shares at the current market price of $2.50. The margin rate on QAN is 5% so $1,250 is required as margin to open the position. The trade is placed and Amy holds a short QAN CFD position.

When opening a short position you have received a cash payment for the full value of your short position and receive interest on this amount at the RBA rate minus 2% pa. The overnight interest rate is calculated by dividing the per annum applicable interest rate payable by 365 (Days per year).

The table below demonstrates the outcome of the trade assuming that the price of QAN falls by 10 cents to $2.40 the following day.

Please note we have not compared this trade to an identical equity trade due to the limitations with short selling physical shares.


*Financing is calculated at the closing market price of $2.45.

Note: If the share price of QAN had risen by $0.10, Amy would have incurred a loss of $1,047.32.

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