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How much is a point in CFD Stock trading?


Breakstate

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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.

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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

 

 

 

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Barc SB.jpg

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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!

 

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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!

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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 

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