LEVERAGING WITH CFDs

CFDs are leveraged instruments. Hence trading a CFDs exposes you to the full risk (and gain) of the underlying stock instrument without having to pay the full price of the instrument. Hence it is potentially more risky than trading shares directly.

The same margin of 10% applies to both buyers and sellers when opening a new position.

Even though your outlay is small in comparison to the equivalent physical trade, you will still be exposed to the same potential profit and loss. This means your Return On Investment (ROI) is magnified.

Example of CFD trading:

You wish to buy 10 lots (10,000 shares) of GE (General Electric) at 33.00
The margin requirement for the GE CFD is fixed at 10%
Hence the position is valued at $33.00 x 10,000 shares = $330,000
You only need to deposit 10% of this value into your account for the trade.
$330,000.00 x 10% = $33,000