CFD
and Spread Bet trading allow our customers a great
deal of flexibility when investing.
There are two types of Margin
commonly referred to with regard to CFDs and Spread
Betting. The first and most important is Initial
Margin. This is the margin % requirement or stake
multiplier that needs to be deposited before a
trade can take place and is calculated as follows:
Amount of
Units
Price
Margin %
Initial Margin
10,000
£5.83
10
£5,830
or
Stake (£
per point)
Margin factor
Initial Margin
£10
X
125
£1,250
After a trade’s inception
a Variation Margin applies. This is the margin
required to maintain 10% of the trade’s
value. If a stock went up in value, then 10% of
the new, higher value is required as margin:
Amount of units
(Current - Opening Price)
Margin %
Variation Margin Requirement
10,000 X
(£6.00 - £5.83) X
10
= £170
This variation margin requirement
is of course outweighed by the profit on the trade.
Profit/Loss on trade +/-
Net Credit on Trade
10,000 X (6.00-5.83) = £1,700
1,700 - 170 = £1,530
*in
major index constituent stocks & spread products only
Risk
Warning
Spread Betting, CFDs and Forex are leveraged products and carry
a high degree of risk to your capital and it is possible to
lose more than your initial investment. Only speculate with
money you can afford to lose. These products may not be suitable
for all investors, therefore ensure you fully understand the
risks involved, and seek independent advice if necessary.
Religare Hichens Harrison Plc. are authorised and regulated by the Financial
Services Authority. Tax law can be changed or may differ if
you pay tax in a jurisdiction outside the UK.
Authorised
and regulated by the Financial Services Authority, Member of
the London stock Exchange, Member of the Association
of Private Client Managers & Stockbrokers, Member of the
PLUS Market. Copyright 2005, Religare Hichens Harrison Plc.
HH1803 is a brand name of Religare Hichens Harrison Plc.
