Index and share CFDs
Contract size and the value of one point
A contract size is the amount of the underlying asset that one CFD represents. For an index CFD, the broker sets this size, and it can be A$1, A$10, or another figure. The value of one point is then this contract size multiplied by the price step. For example, if the contract size is A$2 per point, one point move is worth A$2.00.
On a share CFD, the contract size is usually the number of shares the CFD represents. If one contract equals one share, and the price step is 0.01, then a one-step move is worth A$0.01 per contract. But brokers often set a different contract size, such as 100 shares per contract, so one step becomes A$1.00 per contract. Always check the contract specifications.
The platform may show the value per point in the instrument's currency, not in A$. For AUD/USD, the point value is in USD, so you need to convert to A$ using the current exchange rate. For index and share CFDs, the point value is often already in the currency of the underlying market, such as USD for US30. Your broker will convert this to A$ for your account, but the rate used can vary.
Trading hours and overnight financing
Currency pairs like AUD/USD trade nearly 24 hours a day, five days a week. Index and share CFDs follow the hours of the underlying market. For example, US30 tracks the Dow Jones Industrial Average, which trades during US market hours. A local index, such as the ASX 200, trades during Australian market hours. Outside these hours, you may not be able to open or close a position.
If you hold a position overnight, your broker may charge or pay a financing fee. This fee is based on the value of your position and an interest rate. The rate varies between brokers and can change. For share CFDs, you may also receive or pay dividends if the company pays them. The dividend adjustment is made to your account, but it can be taxed, and the tax treatment depends on your circumstances.
Corporate events such as stock splits, mergers, or rights issues can affect a share CFD. The broker will adjust the contract to reflect the event, but the timing and method can differ. For index CFDs, the index provider may rebalance the basket, which changes the weightings of the companies. These changes can affect the price of the CFD, and you may see a gap in the chart.
Reading the platform for index and share CFDs
On your trading platform, each instrument has a details panel. This panel shows the contract size, the price step, the trading hours, and the financing rate. For example, on US30, you might see a contract size of A$1 per point and a price step of 1.0. On a share CFD like Apple, you might see a contract size of 100 shares per contract and a price step of 0.01.
The platform also shows the margin requirement. Margin is the amount of money you need to set aside to open a position. It is a percentage of the position value. For index CFDs, margin rates can be lower than for share CFDs, but this varies. ASIC sets rules for retail clients, including leverage limits, but the exact rates depend on the broker and the instrument.
Before you trade, use the platform's calculator to work out the value of one point in A$. The calculator will use the current exchange rate and the contract specifications. If the calculator is not available, you can ask your broker for the exact numbers. Do not assume that one point is always worth the same across different instruments.
One point on US30 and on a local index
| Step | Amount | Note |
|---|---|---|
| Index | US30 | A basket of 30 large US companies. |
| Price step (tick size) | 1.0 index point | The smallest change the platform will quote. This varies between brokers. |
| Value of one point per contract | A$1.00 | The contract size is set by the broker. Here it is A$1 per point. |
| Move in the example | 20 points | A price move from 39,000 to 39,020. |
| Gross profit or loss | A$20.00 | 20 points x A$1.00 per point = A$20.00. |
| Local index price step | 0.1 index point | A smaller step than US30. This varies between brokers. |
| Value of one point on the local index | A$10.00 | The contract size is larger. Here it is A$10 per point. |
| Move in the local example | 10 points | A price move of 10 full points. |
| Gross profit or loss on the local index | A$100.00 | 10 points x A$10.00 per point = A$100.00. |
Your broker may round the price step, charge a commission or spread on top, and adjust for dividends. The value of one point per contract is set by the broker and can differ between accounts.
Doing it once, step by step
You will now walk through the steps to find and check the contract details for an index CFD and a share CFD on your platform, so you can work out the value of one point in A$.
- 01
Open the instrument details
Log in to your trading platform and search for the instrument, such as US30 or a share CFD. Click on the instrument to open its details panel. This panel shows the contract specifications.
- 02
Note the contract size and price step
Write down the contract size and the price step. For an index CFD, the contract size is the value per point in the instrument's currency. For a share CFD, it is the number of shares per contract. The price step is the smallest price movement.
- 03
Check the trading hours
Find the trading hours for the instrument. These are the hours when you can open and close the position. They follow the underlying market, not your local time. Note any breaks or holidays.
- 04
Find the financing rate
Look for the financing rate or overnight fee. This is the cost or credit for holding a position overnight. It is usually expressed as an annual percentage. The rate can change, so check it before you trade.
- 05
Calculate the value of one point in A$
Use the platform's calculator or do the maths yourself. Multiply the contract size by the price step to get the value per point in the instrument's currency. Then convert to A$ using the current exchange rate. If you are unsure, ask your broker.
- 06
Review before trading
Before you place a trade, review all the details. Check the margin requirement and any commissions or spreads. Make sure you understand how dividends or corporate events could affect your position. If anything is unclear, do not trade.
The mistake most people make here
The common mistake is to treat an index CFD like a currency pair and assume one point is always worth the same. In fact, the value of one point depends on the contract size your broker sets, which can be A$1, A$10 or another amount. People also forget that index and share CFDs have trading hours that follow the underlying market, so a position may be held overnight and incur a financing charge. Before you trade, check the contract specifications for the price step, the value per point and the trading hours. If you are unsure, use the platform's calculator or ask your broker for the exact numbers.Check yourself
If one point on an index CFD is worth A$2.00 and the index moves 15 points in your favour, what is the gross profit before costs?
15 points x A$2.00 per point = A$30.00.
A share CFD has a price step of 0.01 and you hold 100 contracts. If the price moves 0.05 in your favour, what is the gross profit when one point is worth A$1.00 per contract?
The move is 0.05 / 0.01 = 5 steps. 5 steps x A$1.00 x 100 contracts = A$500.00.
Questions that come up next
How do I read the contract size on my platform?
The contract size is shown in the contract specifications for each instrument. It tells you how much of the underlying asset one CFD represents. For an index CFD, this might be a dollar amount per point. For a share CFD, it might be a number of shares. If you cannot find it, ask your broker for the exact figure.
Why does the value of one point change between instruments?
Each instrument has its own contract size set by the broker. A point on one index might be worth A$1, while a point on another is worth A$10. The price step also matters: a smaller step means more steps for the same price move. So the same point movement can produce different profits or losses in A$.
What happens if I hold a share CFD over a dividend date?
The broker will make a dividend adjustment to your account. If you are long, you may receive a payment; if you are short, you may pay it. The amount is based on the dividend per share and your contract size. Tax rules vary, so check with a tax adviser.
Can I trade an index CFD outside its underlying market hours?
Usually not. Index and share CFDs follow the trading hours of the underlying market. For example, US30 trades during US market hours. Outside those hours, you may not be able to open or close a position. Some brokers offer extended hours, but the spread is often wider.
How is overnight financing calculated on these CFDs?
Financing is based on the value of your position and an interest rate. The rate is set by the broker and can change. It is charged or paid each day you hold the position overnight. The exact formula is in the contract specifications.
What is a corporate event and how does it affect my share CFD?
A corporate event is something like a stock split, merger or rights issue. The broker adjusts your contract to reflect the event. The timing and method can differ between brokers. You may see a gap in the chart or a change in the number of contracts you hold.
In Australia
- Regulator
- ASIC
- Currency
- Australian dollar, written A$
- Payment methods
- PayID, BPAY and cards
- Example instrument
- AUD/USD, around 0.6640
- One pip on one standard lot of AUD/USD
- 10 units of the quote currency (100,000 x 0.0001), converted at the current rate
The words used on this page
- Contract size
- The amount of the underlying asset that one CFD represents. For an index CFD, it is set by the broker, such as A$1 or A$10 per point. For a share CFD, it is often the number of shares.
- Price step
- The smallest amount by which the price of an instrument can move. For example, a share CFD might have a price step of 0.01. The value of one step depends on the contract size.
- Overnight financing
- A fee charged or paid when you hold a CFD position overnight. It is based on the value of your position and an interest rate set by the broker. The rate varies between brokers.
- Dividend adjustment
- A credit or debit made to your account when a company pays a dividend and you hold a share CFD. It reflects the dividend you would have received or paid if you owned the shares. Tax treatment depends on your circumstances.
- Corporate event
- An action by a company that changes its shares, such as a stock split, merger or rights issue. The broker adjusts your CFD contract to reflect the event. The method and timing can differ between brokers.
- Trading hours
- The times when you can trade an instrument. For index and share CFDs, these follow the underlying market. For example, US30 trades during US market hours. Outside these hours, you may not be able to trade.
What to take away
- Index CFDs move with a basket of companies; share CFDs move with one company.
- The value of one point depends on the contract size and price step, which vary by instrument and broker.
- Trading hours follow the underlying market, so positions may be held overnight and incur financing.
- Dividends and corporate events can change your position; check the contract specifications for details.