Jump to content
  • 0

How much is a point in CFD Stock trading?


Breakstate

Question

Apologies if this is super obvious, but I literally can't find this anywhere on the IG help site or forums. And I've made the mistake 5 times now, trying to set trailing stops on a position but incorrectly calculating how much "1 point" actually is and getting stopped out.   Sometimes "1 point" seems to be $0.10, sometimes it seems to be $1.00. Help please! 

 

How much is 1 point when setting a trailing stop on stock in CFD trading?

I've found this from "Investopia":

Points in Stocks and Other Securities

Just to add to the confusion, a point has a different definition when used to describe the price movement of a bond, a futures contract, or a stock.

  • A two-point increase in a bond's price indicates a 2% change in its value, such as an increase from $10,000 to $10,200.
  • A two-point increase in a futures contract correlates to an increase of two-hundredths of a cent, the equivalent of 2% of a penny.

A two-point increase in the price of a common stock share is a $2 increase, such as a $100 stock rising to $102.

Link to comment

4 answers to this question

Recommended Posts

  • 0

Yeah it's confusing. As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place

Take Barclays, The value at the moment is £1.19 per share but expressed as pence 119.44 on the trading platform (CFD, SB, share dealing). Obviously we can't have £1.1944 in real monetary terms so a rounding takes place when you actually cash out 

so if you do a trade of 'BUY £1 a point', that means for every 1 penny rise (on the screen 119.44 -> 120.44) in the price of barclays you make a £1, or in other words, you are 100 times leverage,  Look at the 2 examples, The both work out the same , For SB it's easier to  understand, for CFD to produce the same affected you need to theoretically buy 100 shares.

Of course you could just use sharedealing  go out and buy 100 shares of barclays at £1.1944 a share and when the price rises  to £1.2444, sell them, so you earn 5p x 100 shares = £5. But this way you need to fork out £1,194.44 . Using SB or CFD you only need £23.86 in your account

All 3 options have their advantages and disadvantages 

For US stocks they are quoted in $ not cents so Amazon is 3251, i.e. $3,251

 

 

 

Barc CFD.jpg

Barc SB.jpg

  • Like 1
Link to comment
  • 0
On 21/07/2020 at 22:43, DavyJones said:

Yeah it's confusing. As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place

Take Barclays, The value at the moment is £1.19 per share but expressed as pence 119.44 on the trading platform (CFD, SB, share dealing). Obviously we can't have £1.1944 in real monetary terms so a rounding takes place when you actually cash out 

so if you do a trade of 'BUY £1 a point', that means for every 1 penny rise (on the screen 119.44 -> 120.44) in the price of barclays you make a £1, or in other words, you are 100 times leverage,  Look at the 2 examples, The both work out the same , For SB it's easier to  understand, for CFD to produce the same affected you need to theoretically buy 100 shares.

Of course you could just use sharedealing  go out and buy 100 shares of barclays at £1.1944 a share and when the price rises  to £1.2444, sell them, so you earn 5p x 100 shares = £5. But this way you need to fork out £1,194.44 . Using SB or CFD you only need £23.86 in your account

All 3 options have their advantages and disadvantages 

For US stocks they are quoted in $ not cents so Amazon is 3251, i.e. $3,251

 

 

 

Barc CFD.jpg

Barc SB.jpg

Thanks for this reply.

"As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place". But the example you gave is that 1 point is 2 decimal places to teh RIGHT of the decimal place - i.e. 1 point = 1 penny.

So I read from this that to calculate the value of a single point, I convert the total price into cents and use 1 cent = 1 point.   So Amazon at BUY of 3145.00 - at stop loss of 4500 points puts the stop at 3100.00.

Tested this today, seems to hold, but I find it funny that the standard definition is not consistent with reality!

 

Link to comment
  • 0
On 21/07/2020 at 22:43, DavyJones said:

Yeah it's confusing. As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place

Take Barclays, The value at the moment is £1.19 per share but expressed as pence 119.44 on the trading platform (CFD, SB, share dealing). Obviously we can't have £1.1944 in real monetary terms so a rounding takes place when you actually cash out 

so if you do a trade of 'BUY £1 a point', that means for every 1 penny rise (on the screen 119.44 -> 120.44) in the price of barclays you make a £1, or in other words, you are 100 times leverage,  Look at the 2 examples, The both work out the same , For SB it's easier to  understand, for CFD to produce the same affected you need to theoretically buy 100 shares.

Of course you could just use sharedealing  go out and buy 100 shares of barclays at £1.1944 a share and when the price rises  to £1.2444, sell them, so you earn 5p x 100 shares = £5. But this way you need to fork out £1,194.44 . Using SB or CFD you only need £23.86 in your account

All 3 options have their advantages and disadvantages 

For US stocks they are quoted in $ not cents so Amazon is 3251, i.e. $3,251

 

 

 

Barc CFD.jpg

Barc SB.jpg

Thanks for this reply.

"As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place". But the example you gave is that 1 point is 2 decimal places to the RIGHT of the decimal place - i.e. 1 point = 1 penny.

So I read from this that to calculate the value of a single point, I convert the total price into cents and use 1 cent = 1 point.   So Amazon at BUY of 3145.00 - at stop loss of 4500 points puts the stop at 3100.00.

Tested this today, seems to hold, so I would clarify the explanation to read: "A 'point' is the 1st whole integer number. i.e, the first digit before the decimal place, when the price is converted to cents or pents (i.e. whole dollar or pound price x 100).  Examples:

BUY $1.20 a share = 120.00 cents. A stop loss of 5 points puts the stop at 115.00 or $1.15.

BUY $3145.56 a share = 314,545 cents. A stop loss of 4545 points puts the stop at 310,000 cents or $3100.00

Please anyone, let me know if I've got this wrong!

Link to comment
  • 0
8 hours ago, Breakstate said:

Thanks for this reply.

"As I understand it a 'point' is the 1st whole integer number. i.e, the first digit before the decimal place". But the example you gave is that 1 point is 2 decimal places to the RIGHT of the decimal place - i.e. 1 point = 1 penny.

So I read from this that to calculate the value of a single point, I convert the total price into cents and use 1 cent = 1 point.   So Amazon at BUY of 3145.00 - at stop loss of 4500 points puts the stop at 3100.00.

Tested this today, seems to hold, so I would clarify the explanation to read: "A 'point' is the 1st whole integer number. i.e, the first digit before the decimal place, when the price is converted to cents or pents (i.e. whole dollar or pound price x 100).  Examples:

BUY $1.20 a share = 120.00 cents. A stop loss of 5 points puts the stop at 115.00 or $1.15.

BUY $3145.56 a share = 314,545 cents. A stop loss of 4545 points puts the stop at 310,000 cents or $3100.00

Please anyone, let me know if I've got this wrong!

If it makes it easier just use stops and limits in £,$ via the option in IG, that way you can be  sure what exactly you're risk/  reward is money 

Silver.jpg

  • Like 1
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,601
    • Total Posts
      91,807
    • Total Members
      41,870
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    jasebob
    Joined 21/03/23 13:16
  • Posts

    • 🟢GBPCHF broke and closed above a major falling trend line on a daily. The broken trend line turned into a key vertical support now. Probabilities will be high, that a bullish movement will initiate from that.   Next goals for buyers: 1.1423 / 1.151 For Additional confirmation use: Leading Indicators
    • Shopify Inc., Elliott Wave Technical Analysis Shopify Inc.,(SHOP:NASDAQ): Daily Chart, 21 March 23, SHOP Stock Market Analysis: Shopify keeps moving sideways as expected, as it stays between the 20 and 200EMA. As long as we do not break the red line we can assume we will be seeing further downside.   SHOP Elliott Wave Count: Wave (iv) of {i}. SHOP Technical Indicators: At the cross of 20 and 200EMA. SHOP Trading Strategy: Waiting for a potential triangle in wave (iv). TradingLounge Analyst: Alessio Barretta     Shopify Inc., SHOP: 4-hour Chart, 21 March 23, Shopify Inc., Elliott Wave Technical Analysis SHOP Stock Market Analysis: We keep moving sideways in a three wave manner, which confirms the fact we are in a corrective structure. We are moving between the 50% and 38.2% retracement of (iii).   SHOP Elliott Wave count: Wave (iv) of {i}. SHOP Technical Indicators: Above all averages.   SHOP Trading Strategy: Looking for sideways continuation in wave (iv).
    • Elliott Wave Analysis TradingLounge Daily Chart, 21 March 23,   Ethereum/U.S.dollar(ETHUSD) ETHUSD Elliott Wave Technical Analysis  Function: Follow trend Mode: Motive Structure: Impulse Position: Wave III Direction Next higher Degrees: wave (I) of Motive Details: Wave 3 equals 1.618 multiplied Length of wave 1 at 2943.53 Wave Cancel invalid level: 1073.42 Ethereum/U.S.dollar(ETHUSD)Trading Strategy: Ethereum resumes its upward trend in wave III with a chance to reach the 161.8 level of wave I at 2943.53. Also, the price has risen above the MA200 line, giving the view to a continued upward trend in wave III. Ethereum/U.S.dollar(ETHUSD)Technical Indicators: The price is above the MA200 indicating an UpTrend. The wave oscillators above Zero-Line momentum are bullish. TradingLounge Analyst: Kittiampon Somboonsod, CEWA     Elliott Wave Analysis TradingLounge 4H Chart, 21 March 23,   Ethereum/U.S.dollar(ETHUSD) Elliott Wave Technical Analysis Function: Follow trend Mode: Motive Structure: Impulse Position: Wave (3) Direction Next higher Degrees: wave ((3)) of Motive Details: Wave 3 equals 1.618 multiplied Length of wave 1 at 2290 Wave Cancel invalid level: 1369 Ethereum/U.S.dollar(ETHUSD)Trading Strategy: Ethereum resumes its upward trend in wave (3) with a chance to reach the 161.8 level of wave (1) at 2290. Also, the price has risen above the MA200 line, giving the view to a continued upward trend in wave (3). Ethereum/U.S.dollar(ETHUSD)Technical Indicators: The price is above the MA200 indicating an UpTrend. The wave oscillators above Zero-Line momentum are bullish.
×
×
  • Create New...