CFD spreads and margins
Our spreads and margins explained.
The first thing you need to understand is that all CFDs have a buy price and a sell price. The difference between them is called the spread. The second thing to remember is that when you trade CFDs on the CMC Tracker platform you need to decide how much leverage you want to use before you place your trade. A feature of the CMC Tracker platform is that it allows you to choose whether you want to fund the whole position yourself, or trade using leverage. In fact, you can dial your leverage up or dial it down (above the default margin). On the CMC Tracker platform, this is called customisable financing.
Guide to spreads
Here’s a quick guide to the things you need to know about spreads:
- The buy price is always higher than the sell price.
- The spread will vary from market to market, and can sometimes change depending on market volatility.
- You can always see both the buy price and the sell price, so it’s easy to understand the spread for any trade.
- CMC Markets offers tight spreads from as low as 0.7 points on popular instruments such as the AUD/USD and EUR/USD. You can find out more about these great prices here.
- Spreads can change depending on market conditions, volatility and liquidity. The CMC Tracker platform offers some of the most consistent spreads around, and we publish our historical spreads within our charting package so you can see how good they are, no matter what the market is doing.
Guide to leverage
When you trade CFDs, you don’t buy or sell the actual product – you’re just trading on the movement of that product’s price.
Here’s a quick guide to the things you need to know about margin:
- When you trade CFDs on the CMC Tracker platform you can choose whether you want to fund the whole position yourself or, if you want to trade using leverage, you can choose to ‘borrow’ the maximum amount – on some products this is as high as 99%.
- Trading using leverage gives you more profit and loss potential because your trade exposure is greater than the margin amount.
- Because markets affect your account in real time, the margin amount has to be maintained as long as the position remains open.
- If your position loses money you may need to top up your margin to keep the position open.
- In the factsheet for each product you can see the maximum amount you are allowed to ‘borrow’.
Platform features to manage your risk
Here are three CMC Tracker platform features that can help you manage your risk when trading CFDs:
- If your account value falls below 50% of your total margin requirement, the CMC Tracker platform will attempt to notify you that this level has been reached. (The total margin requirement is the sum of margin required for all positions on your account.) Please remember that this notification is only provided as a courtesy and you must not rely on it. It is your obligation to monitor your account.
- With our transaction-based stop loss feature the CMC Tracker platform sets a stop loss for each new trade, equal to the margin. If you wish, you can turn off this feature in your account preferences.
- You can set a trailing stop loss for any position. Trailing stop losses can help you take greater advantage of a profitable trade. If the price moves in your favour, then your stop loss will also move in the same direction. Then if the market reverses, your stop loss will be triggered at its new level.