CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Basics

Leverage and margin, explained

5 min read

With CFDs you do not pay the full value of a position up front. You put down a fraction of it — the margin — and the broker extends the rest. That ratio is your leverage.

How much margin a trade needs

Margin = position value ÷ leverage

At 1:50 leverage, a position worth 10,000 needs 200 of margin. At 1:10, the same position needs 1,000.

Leverage does not change what you gain or lose per point the market moves — your position size does. What leverage changes is how large a position your money can open, and therefore how fast your account can move.

The numbers on your screen

WebTrader shows these live, updating as the market moves:

  • Balance — your deposits plus closed-trade results.
  • Unrealised P/L — the profit or loss on your open positions right now.
  • Equity = balance + unrealised P/L. What your account would be worth if you closed everything.
  • Margin used — the margin held for your open positions.
  • Free margin = equity − margin used. What is left to open new trades or absorb losses.
  • Margin level = equity ÷ margin used × 100%.

An example

You deposit 1,000 and buy a position worth 10,000 at 1:50. Margin used is 200, free margin 800, margin level 500%.

  • The market moves 2% in your favour: +200. Equity is 1,200 — a 20% gain on your deposit.
  • The market moves 2% against you: −200. Equity is 800 — a 20% loss on your deposit.

A 2% market move became a 20% account move. That is leverage.

When margin runs out

As losses grow, equity falls and so does your margin level. If it drops too far, positions may be closed automatically to stop further losses — possibly at a worse price than you expected, especially in a fast market. The level at which this happens is set out in our Terms of Service.

Using leverage sensibly

  • Size positions by how much you are prepared to lose, not by how much margin is free.
  • Keep free margin as a buffer.
  • Use a stop-loss on every position — see managing risk.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Only trade with money you can afford to lose.