CFD Point Value: Calculating P&L, Stop Risk, and Position Size
Summary
The document explains point value as the monetary gain or loss caused by a one-unit price move in a CFD. It distinguishes the number of points moved from the money each point represents, then gives the basic calculation: price movement multiplied by point value. Examples compare trades with different point values and lot sizes to show why identical market moves can produce different account results.
It connects point value to contract specifications, position sizing, leverage, and stop-loss risk. A suggested workflow is to choose an acceptable monetary loss first, then size the position to fit the planned stop distance. The examples are illustrative, and the article does not provide broker-specific contract data or a complete sizing formula accounting for fees, slippage, or currency conversion. Its central lesson is to check the instrument’s specifications and the position’s monetary exposure before trading.
Key ideas
- Point value is the amount a CFD position gains or loses for each unit of price movement.
- P&L depends on both the distance moved and the point value of the position.
- Point value varies across instruments, contract specifications, and trade sizes.
- A stop distance translates into a different cash loss depending on point value.
- Traders can set a monetary risk limit and use it to guide position sizing.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.