This CFD Trading Guru blog is all about Trading CFDs, from CFD Providers offering the trading pit to punters game enough to have a go.
From the IG site - Margin requirements for CFD positions with non-guaranteed stops are capped at the amount of margin for no stop (ie if the stop is wide then the calculations used may give a higher margin requirement than the calculation for no stop. If this happens then we limit the margin to the amount required for the same position with no stop).
Number of shares x share price x margin percentage
E.g. 1000 Vodafone shares at a price of £1.94:
1000 x 1.94 x 5% = £97 margin
(Margin for equivalent trade with no stop x slippage factor) + value per point* x stop distance
E.g. 1000 Vodafone shares at price of £1.94, with a non-guaranteed stop 3 points away:
(£97 x 30% + (£10 x 3) = £59.10 margin
* Note: 100 UK shares = £1 per point, 100 US shares = $1 per point, 100 Euro shares = €1 per point etc
Value per point x stop distance:
E.g. 1000 Vodafone shares at a price of 194, with a guaranteed stop 11 points away:
£10 x 11 = £110 margin
I note in the past that you have recommended using DMA orders instead of OTC. I use IG Markets as my broker. With DMA orders it is not possible to place a guaranteed stop on price. Do you recommend I purchase DMA orders with normal stops or what kind of protection do you recommend…read more
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