CFDs Leverage and Margin, Margin Required, Equity, Used CFDs Margin and Free margin

Margin required : It's amount of money your cfd broker requires from you to open a position. It is expressed in percents.

Equity : It's total amount of capital you have in your account.

Used margin : amount of money in your account which has already been used up when buying a cfd lot, this contract is one that's displayed in open trades. As a trader you can not use this amount of money after opening a trade order transaction because you've already used it & it is not available to you.

In other words, because your cfd broker has opened up a position for you using the capital you've borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this cfd leverage he has given you.

Free margin : amount in your account that you can use to open new trade positions. This is amount of money in your trading account that has not yet been cfd leveraged because you have not yet opened a trade with this money - this money also is very important for you as a trader because it enables you to continue holding your open trades as will be explained below.

However, if you over use cfd leverage, this free margin will drop below a certain percent at which your cfd broker will have to close all your positions automatically, leaving you with a big loss. Cfd broker at this point closes all your position because if your positions are left open they would lose the money you've borrowed from them.

This is why you should always make sure you've a lot of free margin. To do this never trade more than 5 percent of your cfds account, in fact 2 percent is recommended.