Margin and Trade Financing; Cost of Holding CFDs: Financing, Charges and Dividends. PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Margin is the deposit required to fund a trade expressed as a percentage of the notional value.
Example: Buby 10 CFDs @ 6540.5
Notional value is GBP65,405
Margin requirement is 1%
The money required in your account to fund this trade: GBP654.10
- Margin is lower on Forex, Indices, Commodities (0.5% - 2%)
- Margin is higher on shares (5% - 25%)
- But notional is lower for the same relative exposure
If you are trading an aggressive volatile tech stock it is not unusual for it to move 5 or 7% in a single trading day and that's why brokers require a bigger deposit on such stocks.