Margin In Spread Betting

Margin In Spread Betting
Spread bets and 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 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.

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Published on: 02/11/2021 | Modified on: 12/07/2022

Spread betting is a leveraged product, which means you only have to place a percentage of the full trade value to open a position. For example, if you placed a spread bet on a share you would need to deposit 20% of the full trade value as the margin requirement. View our spread betting margin rates for popular markets.

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When trading with a margin account , the margin you will be required to deposit reflects a percentage of the full value of the position you wish to open. We refer to this 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.

For shares, different margin rates may apply depending on the size of your position or the tier of your position (or a portion of your position) in that instrument. The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.

In order to calculate the position margin, the level 1 mid-price (shown on our trading platform ) is used.

Here is an example using Company ABC (GBP) margin rates.

Stake in Tier 1 x Tier 1 Margin rate

Stake in Tier 2 x Tier 2 Margin rate

Stake in Tier 3 x Tier 3 Margin rate

Stake in Tier 4 x Tier 4 Margin rate

Stake in Tier 5 x Tier 5 Margin rate

x level 1 mid-price x point multiplier

Based on the margin rates in the table below for Company ABC (GBP), a position of £65 per point, 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:

The notional value of your total position is: £17,875.00 (65 x 275).

Spread betting 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 all of your capital. Profits and losses are relative to the full value of your position. Learn more about our trading fees .

Spread betting 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 spread bets.

See our spread betting guides to further your learning and consult our trading costs page. Compare our award-winning Next Generation platform features to MetaTrader 4 and choose the best trading platform to tailor for your individual trading needs: Next Generation vs MetaTrader 4 .

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Spread betting position margin is calculated margin rates, which vary depending on the asset class (forex, indices, commodities) and specific instrument you trade on. Spread betting margin also depends on the size of the position that you wish to open. Learn more about our spread betting margins .
Our margin rates for financial assets are the same for both products, whether you’re spread betting or trading CFDs. These start relatively low at 3.3% for major forex pairs, and are higher for more volatile assets, such as shares, which have a margin rate of 20%. Check our spread betting margin rates .
You can deposit as much or as little capital as you want into your spread betting account, once you’ve opened an account with us. Leveraged trading means you only need to pay an initial deposit to open a trade, based on the instrument’s margin requirement. However, you need to have sufficient funds in your account to cover your margined trades and prevent account close-outs. Read more about the risks of spread betting .
Trading on margin when spread betting is an effective way for traders to gain greater exposure to the financial markets, including forex, shares and commodities. This requires traders to place a fraction of the full trade value as a deposit, which is known as the margin requirement. However, profits and losses will be based on the full value of your position. Open a spread betting demo account to practise trading on margin.
A spread refers to the difference between the buy and sell prices of an instrument in trading. The bid-ask spread is affected by a number of factors, including market volatility and liquidity. Discover our spread betting spreads .
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Spread bets and 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 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.
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What is Margin in Spread Betting ? Spread betting is a leveraged traded product and spread betting providers will insist that you deposit a certain percentage of the total market exposure you take with them before they will permit you to open a trade. This deposit is referred to as margin and acts as a guarantee that you will honour the contract.
There are two types of margin in spread betting . The first, is the Notional Trading Requirement (NTR). This is the minimum amount that you need in your account to open a spread bet and it varies depending on the financial instrument. Generally it is a multiple of the bet size. For example, with Spread Co the NTR for the UK100 index (FTSE100) is 25.
Spread betting 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 all of your capital. Profits and losses are relative to the full value of your position. Learn more about our trading fees .
So a spread betting provider might offer the UK 100 (FTSE) with a minimum margin of £40 and enforce a minimum margin of £80 on the Wall Street. If you want to bet on the FTSE, say betting £10 per point, you would simply multiply the £40 by 10. So, if betting £10 per point on UK100, a client must have a minimum of £400 available on the account.
Usually, in your spread betting software, when you click on a share to trade, you will be shown the margin requirements. To calculate your margin requirements simply multiply the total notional value of your trade (stake x price of instrument) by the margin factor. Margin Requirement: (Stake x Price) x Margin Factor
The margin requirement for BP is 10%. Therefore the funds he is required to have in his account is: £50 per point is equivalent to buying 5000 shares. 5000 shares would cost 410p (£4.1) * 5000 = £20,500. 10% of £20,500 = £2,050 He is therefore £50 short of the required margin to make this trade.
May 20, 2022 There are two different types of margins in spread betting , which are deposit margin and maintenance margin . Deposit margin
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Margin In Spread Betting

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