To open a CFD position on your account you will need 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 'position margin'.
The position margin will be calculated using the applicable margin rates, as shown in each instrument's overview section on the platform.
For shares, different margin rates may apply depending on the size of your position, or the tier your position (or a portion of your position) in that instrument 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.
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Company ABC (GBP) margin rates
|Tier||Position size (units)||Margin rate|
Based on the margin rates shown in the table for company ABC (GBP), a position of 6,500 units, using the level 1 mid-price of 275.0 (£2.75), would require a position margin of £5,018.75.
Your position margin requirement is calculated as follows:
|Tier||Position size||Margin rate||Calculation|
|1||1,000||20%||1,000 x £2.75 x 20% = £550|
|2||2,000||25%||2,000 x £2.75 x 25% = £1,375|
|3||2,000||30%||2,000 x £2.75 x 30% = £1,650|
|4||1,500||35%||1,500 x £2.75 x 35% = £1,443.75|
|Total||6,500||Total = £5,018.75|
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.
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