Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Calculating CFD margins
In order to open a CFD (contract for difference) 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. Read more about our CFD margin rates.
CFD margin explained
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.
Position margin example
Company ABC (GBP) margin rates
| Tier | Position size (units) | Margin rate |
|---|---|---|
| 1 | 0-1,000 | 20% |
| 2 | >1,000-3,000 | 25% |
| 3 | >3,000-5,000 | 30% |
| 4 | >5,000-10,000 | 35% |
| 5 | >10,000 | 50% |
Unit in Tier 1 x Tier 1 Margin rate
Unit in Tier 2 x Tier 2 Margin rate
The sum of: Unit in Tier 3 x Tier 3 Margin rate x level 1 mid-price
Unit in Tier 4 x Tier 4 Margin rate
Unit in Tier 5 x Tier 5 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 would be £5,018.75.
Trade CFDs on 12,000+ instruments
CFD margin calculator
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 |
| 5 | 0 | 50% | 0 |
| Total | 6,500 | Total = £5,018.75 |
The notional value of your total position is £17,875.00 (6,500 x 2.75).
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 could lose more than your initial deposit. Profits and losses are relative to the full value of your position. Learn more about our trading fees.