Digital 100 trading examples

Digital 100 trading offers a way to speculate on popular financial markets with limited-risk. There are only two possible outcomes: yes or no. 

If you think the event will occur, you buy the digital 100; if you don’t think the event will occur, you sell the digital 100.

Digital 100s have a buy and sell price which will always be set between 0 and 100. 

Your profit or loss is the difference between 100 or 0 (depending on whether you win (100) or lose (0))  and the level you bought or sold at. 

Generally when entering a digital 100 trade, if the price is closer to 100 the event is more likely to occur, while if the price is closer to 0 it’s less likely to occur.

Digital 100 Ladder example: Germany 30 

Will the Germany 30 digital 100/Countdown settlement price finish at or above 10,000 at the end of the digital 100 expiry? 

​Let's assume that our current digital 100 sell price is 72 and buy price is 76:

  • If you think the event will occur, you would buy the digital 100 at 76
  • If you don't think the event will occur, you would sell the digital 100 at 72

If, at expiry, the Germany 30 digital 100/Countdown settlement price finishes at or above 10,000, then the digital 100 will settle at 100. Your profit or loss will be the difference between your entry price and 100. 

Outcome A: winning trade​

If the size of your digital 100 was 1 and you bought the digital 100 at 76, your profit would equal: ​

  • £24 = 1 x (100-76)
    Digital 100 profit = size x (current digital 100 price - digital 100 opening price)

Outcome B: losing trade

  • -£28 = 1 x (72 - 100)
    Digital 100 loss = size x (digital 100 opening price - current digital 100 price)

If, on the other hand, the Germany 30 digital 100/Countdown settlement price does not finish at or above 10,000, then the digital 100 will settle at 0. In this case, if you had bought the digital 100 you would have lost £76 and if you had sold you would have made a profit of £72.

Digital 100 Ladder (1 hour) example: EUR/USD

Let's say it's the first Friday of the month and you believe that EUR/USD will move higher after the US non-farm payrolls announcement at 1.30pm (UK time).​

At 1.15pm, our one-hour (1h) digital 100 is priced at approximately 10.9 on the sell side and 18.0 on the buy side for a strike price of 1.139500 (which is just above recent highs). 

CMC Markets

You believe that by the digital 100 expiry of 2pm, the price will finish at or above the strike. Based on this assumption, you select the buy price to bring up an order ticket. 

CMC Markets

You place a buy Ladder order with a size of 1:

A trade at this size has a maximum profit potential of £82.00:

  • Profit/loss = (settlement price - purchase price) x size
  • Potential maximum profit = (100 – 18.0) x 1

​The maximum risk (potential loss) is £18.00:

  • Profit/loss = (settlement price - purchase price) x size
  • Potential maximum loss = (0 – 18.0) x 1

Note: The amount (which in the example above is £18.00) of the digital 100 order is immediately debited from your account once the order is placed.

Closing your digital 100 order early

Unfortunately the non-farm payrolls announcement was not as good as you expected.

You now decide that the price of EUR/USD is unlikely to be at or above 1.139500 by 2pm and decide to close out of the digital 100 early (prior to the pre-close period).​

The digital 100 price has dropped significantly, with the sell price now at 3.3 and buy price at 9.8.

CMC Markets
  • Profit/loss = (sell price - purchase price) x size
  • Realised loss = (3.3 – 18.0) x 1 = -£14.70

    If you had waited for the digital 100 to expire, you would have lost £18.00

Account
When you close a digital 100 position early, or it expires, an amount equal to your digital 100 amount plus or minus any realised profit or loss is credited back into your account. In this case, £3.30 is credited back to your account upon closing the digital 100 (this amount will be displayed in the confirmation ticket and within history):

  • Amount due = amount (deducted from account on placing a digital 100) - realised loss.
  • Amount due = £18.00 – £14.70 = £3.30

Note: if the digital 100 settled at 100 (winning digital 100 order) the amount returned would be £100:

  • Amount due = amount + realised profit
  • Amount due = £18.00 + £82.00 = £100.00

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