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Author Bart Bregman

Bart Bregman

Author & Financial Analyst: 9 Years of full-time trading experience. "There is no such thing as a bad trade."

Disclaimer: The information provided on this blog should not be seen as financial advice, and is only intended for entertainment and informational purposes.

CFD Trading Profit Calculations on eToro

cfd profit etoroUnravel the mystery of calculating profits in Contract for Difference (CFD) trading on eToro. With a clear understanding of long and short orders, you’ll be prepared to make informed trading decisions. Ready? Let’s dive in!

Key Takeaways

→There are two positions in CFD trading: long and short orders.
→Long orders anticipate an asset price increase, while short orders expect a decrease.
→Different formulas calculate profits for long and short orders, accounting for leverage.
→Practicing these calculations in a demo account can enhance your trading skills.

Table of content

  • 📈 Understanding Long and Short Orders in CFD Trading
  • 📚 Calculating Profit for Long Orders
  • 😇 The Holy Grail of Formulas
  • 🧪 Example: Long Order Profit Calculation
  • 📉 Calculating Profit for Short Orders
  • 🤓 Flipping the Script
  • 🧪 Example: Short Order Profit Calculation
  • 🔄 Calculating Losses in CFD Trading
  • 💡 Pros and Cons of CFD Trading on eToro
  • 🎮 Practice Makes Perfect: eToro Demo Account
  • eToro CFD Trading: • Learn more about eToro CFD Trading📝
  • CFD Basics:
  • CFD Trading Strategies:
  • Advanced CFD Topics:
  • CFD & Options Trading:
  • More on CFD Trading:
  • GENERAL RISK WARNING
  • Author & Expert Trader - Financial Analyst :

📈 Understanding Long and Short Orders in CFD Trading

There are two primary positions in CFD trading: long and short. If you anticipate an asset’s price to increase, you’ll place a long order, also known as “buy” or “going long.” Conversely, if you expect a downward market movement, you’ll place a short order, referred to as “sell,” “shorting,” or “going short.”

📚 Calculating Profit for Long Orders

😇 The Holy Grail of Formulas

Calculating profits when going long on eToro

When you expect an asset’s price to rise, you’ll place a long order. To calculate profit, use these formulas:

  • Profit Percentage = ((closing price / opening price) – 1) x 100%
  • Profit Amount Without Leverage = Profit Percentage x Investment
  • Total Profit = Profit Amount Without Leverage x Leverage

🧪 Example: Long Order Profit Calculation

Mark invested $1,000 in a company’s stocks, anticipating an upward market movement. He places a long order using x5 leverage. The stock’s value is $12 at the start of the contract and $15 when the position is closed. Applying the formulas:

  1. Profit Percentage = (($15/$12) – 1) x 100% = 25%
  2. Profit Amount Without Leverage = 0.25 x $1,000 = $250
  3. Total Profit = $250 x 5 = $1,250

📉 Calculating Profit for Short Orders

🤓 Flipping the Script

Calculating Profit for Short Orders

When you expect an asset’s value to drop, you’ll place a short order. The fundamental profit calculation is similar to long orders, with a slight tweak:

  • Profit Percentage = (1 – (closing price / opening price)) x 100%
  • Profit Amount Without Leverage = Profit Percentage x Investment
  • Total Profit = Profit Amount Without Leverage x Leverage

🧪 Example: Short Order Profit Calculation

Mark spots a market downturn and invests $1,000 in an asset, expecting its value to decrease. He places a short order with an x30 leverage. The asset’s value is $15 when the position is opened and $10 when it’s closed. Applying the formulas:

  1. Profit Percentage = (1 – ($10/$15)) x 100% = 33.33%
  2. Profit Amount Without Leverage = 0.3333 x $1,000 = $333.33
  3. Total Profit = $333.33 x 30 = $9,999

🔄 Calculating Losses in CFD Trading

Calculating profit and losses on CFD trading on eToro

It’s important to remember that the same formulas used for calculating profits also apply to calculating losses. Losses are essentially negative profits and will appear as such when calculated.

💡 Pros and Cons of CFD Trading on eToro

Pros Cons
✅ Access to a wide range of assets ❌ Risk of losses due to leverage
✅ No ownership of underlying asset ❌ Overnight fees on open positions
✅ Ability to trade with leverage ❌ Not suitable for long-term investments

🎮 Practice Makes Perfect: eToro Demo Account

Now that you’ve learned how to calculate profits (and losses) in CFD trading, put your newfound knowledge into practice using eToro’s demo account. This risk-free environment allows you to sharpen your trading skills and build confidence in your profit calculation abilities before diving into real-world trading.

eToro CFD Trading: • Learn more about eToro CFD Trading📝

CFD Basics:

  • What Is a CFD Contract on eToro?
  • Mastering CFD Price Quotes on eToro
  • CFD Dividends on eToro
  • CFD Overnight Financing on eToro
  • CFD Price Manipulation on eToro

CFD Trading Strategies:

  • CFD Rollover Fees on eToro
  • CFD Stop Loss on eToro
  • Maximizing Your Returns with CFD Take Profit on eToro
  • Profit Calculation for CFD on eToro

Advanced CFD Topics:

  • Commodity Trading Systems on eToro
  • Fixed Income Basics on eToro
  • Futures Contract Basics on eToro
  • Loan Financing on eToro
  • Mastering CFD Price Action on eToro

CFD & Options Trading:

  • Mastering CFD Price Charts on eToro
  • CFD Rollover on eToro
  • Option Basics on eToro
  • Options Hedging on eToro
  • Options Trading on eToro

More on CFD Trading:

  • Options Trading Strategies on eToro
  • Swap Contracts on eToro
  • Understanding CFD Margin Calls on eToro
  • What are Indices on eToro?
  • What is a CFD Contract on eToro?
  • How to Start CFD on eToro


Support us by using the eToro sign-up form down below.⬇️

Plus you will get a Free demo account! Thank you!

eToro sign-up form

GENERAL RISK WARNING

  • ▸eToro is a multi-asset platform that offers: Stocks, Crypto assets, and CFDs.
  • ▸CFDs are complicated and can make you lose money quickly because of leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. Think about if you understand how CFDs work and if you can afford to take the risk of losing your money.
  • ▸Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
  • ▸Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
  • ▸Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
  • ▸eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.
  • Be warned!


Author & Expert Trader - Financial Analyst :

Bart Bregman
My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/

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