For CFD trading, why would the average cost change in my portfolio?

[qazw80]

I recently started CFD trading, so I'm a beginner here. Short sell a stock for 1600 shares at $3.01 last week. When I checked my portfolio today, the average cost changed to $3.04 (which was the closing price from yesterday). Isn't the average cost $3.01 (the price when I short sell the stock)?

Why would that be?

 

[Trembling Hand]

Re: For CFD trading, why would the avergae cost changed in my portfolio?

No derivatives are Marked To Market each day.

 

[Snakey]

I recently started CFD trading, so I'm a beginner here. Short sell a stock for 1600 shares at $3.01 last week. When I checked my portfolio today, the average cost changed to $3.04 (which was the closing price from yesterday). Isn't the average cost $3.01 (the price when I short sell the stock)?

Why would that be?

The cost is $3.04 because it includes brokerage perhaps

 

[Trembling Hand]

The cost is $3.04 because it includes brokerage perhaps

No thats not right.

 

[qazw80]

Re: For CFD trading, why would the avergae cost changed in my portfolio?

No derivatives are Marked To Market each day.

Sorry, still don't quite get what you mean.

Would you mind simplify what u said?

Thx.

 

[Trembling Hand]

I assume this was on your statement? With any derivative or product that uses margin your broker Marks to Market . It doesn't matter what price you paid for your product it only matters to them (& you) what the current price is and if you have sufficient margin to cover that current price. They have not changed what price you sold at, and as far as what margin is required they only need the current price.

have a look here,

http://www.investopedia.com/terms/m/marktomarket.asp

 

[AlterEgo]

They are marked to market each day. ie. at the end of each trading day, your account balance is adjusted to reflect the latest prices. So in this case the stock has gone up in price by .03, therefore they adjust the cost base by that amount and debit your account with the $48 difference, since it's a short sale (1600 x .03). Does that make sense?

 

[qazw80]

Yup, makes sense now

Thanks Trembling Hand and AlterEgo.