Calculating CFD margins

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In order to open a CFD (contract for difference) position in your account, you need to deposit a certain amount of money called margin.

The margin is a percentage of the full value of the position and is referred to on our platform as “position margin”. Position margin is calculated using the applicable margin rates as shown in the product library area of the platform. Read more about margin rates for CFDs.

CFD margin explained

Shares may be subject to different margin rates depending on the size of your position or the level to which your position (or part of your position) in that instrument is allocated. The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.

The average price of the first level (indicated on the platform) is used to calculate the margin on the position.

Position margin example

Company ABC (GBP) margin rates

CFD margin requirement

As you can see, margin trading allows you to open a position by depositing a percentage of the full value of the position. This means that your losses will be amplified and you may lose more than your original deposit. Gains and losses are relative to the full value of your position. Find out more about our trading commissions.

Trading on margin is not suitable for everyone, so you should ensure that you understand the risks associated with CFDs before making any trades and seek independent professional advice if necessary.

FAQ

What is margin in CFD trading?

Margin allows traders to open CFD positions for a fraction of the full cost, rather than paying for the entire position up front. This allows traders to gain access to the financial markets that they may not have been able to otherwise. Learn more about margin trading.

Are margin rates on CFDs higher than spread betting?

At CMC Markets, our margin rates are the same for both spread betting and CFD products. For example, you can trade 300+ currency pairs with a margin of just 3.3% or 60+ world indices with a margin of 5%. Check out our range of markets to see more examples.

How is CFD margin calculated?

CFD margin is calculated differently for each asset class and depends on your position size and number of units. Read on to see an overview of our CFD margin rates.

What does a 5% margin rate mean when trading CFDs?

A 5% margin rate means that you only need to deposit 5% of the trade value to open a position. This can increase your profit or loss by 20 times the original amount. A margin rate of 5% is equivalent to a leverage ratio of 20:1. Read more about leverage in trading.

Can I trade CFDs without margin?

It is not possible to trade CFDs without using margin or leverage because they are derivative products. If you are wary of trading on margin, read our guide to money and risk to find out what risk management tools you can use to minimize your losses.

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