CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
When trading CFDs (Contracts for Difference), you need to set aside a portion of your funds, known as the margin, to open and maintain a trading position. Think of the margin as a security deposit that allows you to control a larger position through leverage.
Leverage reduces the amount you need to provide upfront, meaning you only set aside a fraction of the total trade value. However, profits and losses are calculated based on the full position size, which means leverage can amplify both gains and losses. Learn more about how leverage works 👉 here.
How does margin affect my position?
Margin is not a fixed amount—it adjusts based on the current price of the instrument you are trading. While your position remains open, the required margin stays reserved. Once you close the trade, the margin is released back into your available funds.
đź’ˇ Example
Let’s say you open a CFD position with 100 units of Gold. The leverage is set at 1:20, and the current price is $1,728.10 per unit. The required margin is calculated as:
(100 Ă— 1,728.10) Ă· 20 = 8,640.50