Calculating spread betting margins
Spread betting is a leveraged product, which means you only have to place a percentage of the full trade value to open a position. For example, if you placed a spread bet on a share you would need to deposit 20% of the full trade value as the margin requirement. View our spread betting margin rates for popular markets.
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Spread betting margin explained
The margin you will be required to deposit reflects a percentage of the full value of the position you wish to open. We refer to this as 'position margin' on our platform. The position margin will be calculated using the applicable margin rates, as shown in the product library area on the platform.
For shares, different margin rates may apply depending on the size of your position or the tier of your position (or a portion of your position) in that instrument. The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.
In order to calculate the position margin, the level 1 mid-price (shown on our trading platform) is used.
Position margin example
Company ABC (GBP) margin rates
| Tier | Position size (stake) | Margin rate |
|---|---|---|
| 1 | 0-10 | 20% |
| 2 | >10-30 | 25% |
| 3 | >30-50 | 30% |
| 4 | >50-100 | 35% |
| 5 | >100 | 50% |
Stake in Tier 1 x Tier 1 Margin rate
Stake in Tier 2 x Tier 2 Margin rate
The sum of: Stake in Tier 3 x Tier 3 Margin rate x level 1 mid-price x point multiplier
Stake in Tier 4 x Tier 4 Margin rate
Stake in Tier 5 x Tier 5 Margin rate
Based on the margin rates in the table below for Company ABC (GBP), a position of £65 per point, using the level 1 mid-price of 275.0 (£2.75), would require a position margin of £5,018.75.
Spread betting margin calculator
Your position margin requirement is calculated as follows:
| Tier | Position size | Margin rate | Margin |
|---|---|---|---|
| 1 | 10 | 20% | 10 x 275 x 20% = £550 |
| 2 | 20 | 25% | 20 x 275 x 25% = £1,375 |
| 3 | 20 | 30% | 20 x 275 x 30% = £1,650 |
| 4 | 15 | 35% | 15 x 275 x 35% = £1,443.75 |
| 5 | 0 | 50% | 0 |
| Total | 65 | Total = £5,018.75 |
The notional value of your total position is: £17,875.00 (65 x 275).
Spread betting margin requirement
Spread betting 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 all of your capital. Profits and losses are relative to the full value of your position. Learn more about our trading fees.
Spread betting 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 spread bets.
See our spread betting guides to further your learning and consult our trading costs page. Compare our award-winning Next Generation platform features to MetaTrader 4 and choose the best trading platform to tailor for your individual trading needs: Next Generation vs MetaTrader 4.
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FAQ
What is a spread?
A spread refers to the difference between the buy and sell prices of an instrument in trading. The bid-ask spread is affected by a number of factors, including market volatility and liquidity. Discover our spread betting spreads.
What is margin in spread betting?
Trading with margin when spread betting is an effective way for traders to gain greater exposure to the financial markets, including forex, shares and commodities. This requires traders to place a fraction of the full trade value as a deposit, which is known as the margin requirement. However, profits and losses will be based on the full value of your position. Open a spread betting demo account to practise trading on margin.
How much do I need to start spread betting?
You can deposit as much or as little capital as you want into your spread betting account, once you’ve opened an account with us. Leveraged trading means you only need to pay an initial deposit to open a trade, based on the instrument’s margin requirement. However, you need to have sufficient funds in your account to cover your margined trades and prevent account close-outs. Read more about the risks of spread betting.
How is spread betting margin calculated?
Spread betting position margin is calculated margin rates, which vary depending on the asset class (forex, indices, commodities) and specific instrument you trade on. Spread betting margin also depends on the size of the position that you wish to open. Learn how to calculate spread betting margins.
Are margin rates the same for spread betting and CFDs?
Our margin rates for financial assets are the same for both products, whether you’re spread betting or trading CFDs. These start relatively low at 3.3% for major forex pairs, and are much higher for volatile assets, such as cryptocurrencies, which have a margin rate of 50%. Check our spread betting margin rates.
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