Understanding and calculating
CFD margins
In order to open a CFD position on your account you will need to deposit an amount of money known as margin.
The margin reflects a percentage of the full value of the position, and is referred to 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 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 ABC (SGD) margin rates
| Tier | Position size (units) | Margin rate |
|---|---|---|
| 1 | 1-1000 | 10% |
| 2 | 1001-3000 | 15% |
| 3 | 3001-5000 | 20% |
| 4 | 5001-10000 | 30% |
| 5 | Above 10,000 | 50% |
The position margin will be calculated using the applicable margin rates, as shown in each product's overview section on the platform.
Based on the margin rates shown in the table for company ABC (SGD), if a position of 6500 units used the level 1 mid-price of $2.75, the margin would be $3437.50.
Your position margin requirement is calculated as follows: 1250 x $2.75 = $3437.50
The notional value of your total position is $17,875 (6,500 x $2.75).
| Tier | Position size | Margin rate | Calculation |
|---|---|---|---|
| 1 | 1000 | 10% | 1000 x 10% = 100 |
| 2 | 2000 | 15% | 2000 x 15% = 300 |
| 3 | 2000 | 20% | 2000 x 20% = 400 |
| 4 | 1500 | 30% | 1500 x 30% = 450 |
| 5 | 0 | 50% | 0 |
| Total | 6500 | Total = 1250 |
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.
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