What's CFD Trading Margin?
Margin is the amount of money required by your cfd broker so as to allow you to continue trading with borrowed amount in your cfd trading account.
In other words the question what is margin in CFD? can be described as money required to cover open cfds trades and is expressed in percentage. For 100:1, the amount you will control is 100,000 dollars if your cfd account capital is $1,000.
Now can you compare a investing $1,000 with another one that is investing $100,000? Obviously Not. This is how it works: it takes you from that retail investing $1,000 to that investing $100,000. Where does this extra cash come from? - You borrow it from your cfd broker in what is simply referred to as CFDs Leverage. This money that you borrow, you borrow it against the $1,000 dollar of your own that you deposit with your cfd broker when you open a cfd account. If you were to explain what this means - then it is the ability to control a big amount of money using very little of your own money and borrowing the rest. Otherwise, if you were trade CFD without this cfd leverage it would not be as profitable as it is, in fact you can still choose not to use cfd leverage, using the 1:1 cfd leverage option but you would not make money it would take too long to make any profit in cfd.
Example of how to calculate Margin:
CFD Margin required in this case is 1,000 dollars (your money) if it's expressed as a percentage of 100,000 dollars which you control it is:
If leverage = 100:1
1,000 / 100,000 * 100= 1%
CFDs Margin required = 1%
(1/100 *100= 1%)
How to Calculate Margin - What's Margin?
