CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% 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.
Leverage is a tool that allows you to control a larger trading position with a smaller amount of money. In simple terms, it means you can trade more units of an instrument than your available funds would normally allow. Leverage acts as a multiplier for your deposit, giving you increased exposure to the market.
The following formula applies:
Leverage = Total Position Size / Margin Required
Since leverage is 1:5, you only need 1/5th of the total position size as margin.
💡 Example
1. Calculate position size.
Total Position Size = Quantity × Instrument Price
= 5 × 203.69 = 1,018.45
Margin = Total Position Size / Leverage
= 1,018.45 / 5 = 203.69
Margin in Account Currency (EUR) = Margin USD * (EUR/USD conversion rate)
= 203.69 USD * 1.0404 = 195.79 EUR