In order to open a position on your account you will be required to deposit an amount of money known as margin. The margin you will be required to deposit reflects a percentage of the full value of the position. On our platform this is referred to as the position margin.
The position margin will be calculated using the applicable margin rates, as shown in the product library in the platform.
A selection of the current margin rates for our most popular products are shown in the table below:
*Margin rate means our margin rates as of 7 September 2013
|Indices||US SPX 500||0.20%|
|Commodities||Crude Oil West Texas - Cash||0.75%|
|Commodities||Crude Oil Brent – Cash||0.75%|
|Treasuries||UK Gilt – Cash||0.25%|
|Treasuries||Euro Bund – Cash||0.25%|
|Treasuries||US T-Note 10YR – Cash||0.25%|
For certain products, different margin rates may apply depending on the size of your position in that product or the tier your position (or a portion of your position) in that product falls within.
The portion of the position that falls within each tier is subject to the margin rate applicable for that tier.
In order to calculate the position margin, the level 1 mid-price (shown on the platform) is used.
For example, position margin is calculated as follows:
Company XYZ margin rates
|Tier||Position size (units)||Margin rate|
Based on the margin rates in the table below for Company XYZ ($AU), if a position of 6500 units used the level 1 mid-price of 2.75, ($2.75), the margin would be $3,437.50.
Your position margin requirement is calculated as follows:
|Tier||Position size||Margin rate||Calculation|
|1||1000||10%||1000 x $2.75 x 10% = $275|
|2||2000||15%||2000 x $2.75 x 15% = $825|
|3||2000||20%||2000 x $2.75 x 20% = $1100|
|4||1500||30%||1500 x $2.75 x 30% = $1237.50|
|Total||6500||Total = $3,437.50|
The notional value of your total position is $17,875.00 ($6,500 x $2.75).
As you can see, trading using margin allows you to open a position by only depositing a percentage of the full value of the position. This means that your losses will be amplified and you could lose more than your initial deposit. Profits and losses are relative to the full value of your position. Trading using margin is not necessarily for everyone and you should ensure you understand the risks involved and if necessary seek independent professional advice before placing any trades.