Margin Trading | Trading Terms

2020/12/06
 
この記事を書いている人 - WRITER -
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One trading jargon that you’ll hear very often is margin. It’s usually in terms like margin account, margin trading and even margin call. It seems a bit complex at first but after this video with trading expert David Jones it should be something quite easy to grasp.

David breaks it down to the basics once again and explains the meaning of the word as well as the scenarios in which it’s used. He makes several trades on the Trading 212 platform – one in Forex and one for a stock CFD – and points to the exact value of the margin as it changes once the trade has been opened.

He also shows traders something that they might overlook – the cost of holding a position over night if you are trading on margin, i.e. with money borrowed from the broker.

For those of you that like to have something written down, here’s the definition of margin trading – it means that an investor pays only a percentage of the value of the asset and borrows the rest from the broker. The latter acts as a lender and uses the deposit as a collateral on the loan. The margin itself is the amount in the account that the investor has put down and is usually displayed as a percentage.

Still got some questions about margin trading? Let us know in the comments below.

At Trading 212 we provide an execution only service. This video should not be construed as investment advice. Investments can fall and rise. Capital at risk. CFDs are higher risk because of leverage.

この記事を書いている人 - WRITER -
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  1. Avatar Zavin says:

    First! I love your videos!

  2. Avatar peter danny says:

    so if the position of 500 with margin of 50 moves against you – down to 400, say – what happens?

    • Avatar David Jones says:

      Hi Peter, you need to have enough money in the account to cover the running loss. If you don’t then you get what is known as a “margin call” – where the broker requires more money to be deposited, otherwise you risk the position being closed out for you. You would still be liable for the loss of course.

  3. Avatar Dumb Ass says:

    What is your trading platform and with who do you have it

  4. Avatar My PERAsophy says:

    i am always watching your videos david, It is a great videos and very informative. I just made 100% return in my demo account in one day. I tried to adjust the 10000$ demo account into 1000$ dollars and made 2000$. So, i am now ready to open real account

    • Avatar Lester Stanley says:

      the answer is  NO…..!!!!.  NO…!!!!. NO…..!!!. why?  because demo accounts are not a true test or example of YOUR TRADING ability….trust me, no risk no lessons learnt. no losses no lesson learn’t, no emotional test – no lessons learnt.  You will fall into the 90/90/90 principle (90% of the people lose 90% of their money in 90 days….in your case 30 days)

      demo accounts are only useful to learn how to use that platform before you ‘try’ to invest your hard earnt REAL $$$$

      ….if your lucky only 5-10% of people ever make any money trading …!!!   if you do go ahead with real money and a real account.  Please let us know (( I’ll keep checking here to see how you go….. wish you ALL THE VERY BEST ))

    • Avatar Andy Schee says:

      Unless you are basically god your gain indicates a irresponsible money management. So you are not ready for real money.

  5. Avatar Mohit says:

    Very helpful video sir,
    I am planning to pursue a Chartered Financial Analyst course (US based )
    Could you pls guide me regarding the benefits and career opportunities that this course has to offer, or would you recommend another field of study !!
    I’d like to let you know Sir, that I wanna pursue a career in finance
    Thanks for your help

  6. Avatar macchizesro says:

    That £0.13 pence in that case is charged everyday until I close the trade?

    • Avatar Trading 212 says:

      Your trading account will be credited or debited with an interest swap on a daily basis for your open positions. The swap is applied at 10 pm GMT.

  7. Avatar Tony Hughes says:

    Great education, thank you and merry xmas to all.

  8. Avatar yousef rezaie says:

    hello david you videos are great can you please make a video on paying taxes and how it works ?thanks

  9. Avatar Txc fallout boy says:

    What charting program are you using?

  10. Avatar gary b says:

    How do you check margin on I pad??.thanx

    • Avatar Trading 212 says:

      Hi Gary, you will find the Margin Indicator in the Open Positions screen when using the iPad app. You will find the Margin and Swap Details calculation for opening a position with Forex or CFDs instruments in the Market Order Screen. Please get in touch with the customer care team, should you have any other questions. The contacts are listed at http://www.trading212.com/en/Contact.

    • Avatar gary b says:

      Ok thanks for help 👍

    • Avatar Andy Schee says:

      gary b if you trade on phone or ipad you set yourself up for failure.

  11. Avatar Lens to Brush says:

    This might sound a bit daft but could you do a tutorial on how to setup trading212 as you have on multiple screens etc. Really enjoying your tutorials!

  12. Avatar Bir Dost says:

    please make a new video about bitcoin !

  13. Avatar Alex Harrod says:

    Please could you do a video about the average directional index? Also, a video about leading and lagging indicators?

  14. Avatar Mace_In_Your_Face says:

    Why does the us30 16/03/18 have an expireryndate? And why is the price about $20 lower please? Thank you

    • Avatar Trading 212 says:

      The trading instrument US30-18Mar18 has an expiration date because it is a CFD on futures. Please clarify your second question, so you may receive the best answer. Alternatively, you can contact the customer care team at http://www.trading212.com/en/Contact.

    • Avatar Mace_In_Your_Face says:

      Trading 212 I spoke to one of the helpers on the website! Thanks!

  15. Avatar TRADING TODAY says:

    great video

  16. Avatar Connor Skudal says:

    Can you please do a video on Bollinger Bands

  17. Avatar lee berry says:

    When you buy on the computer with 212 before you confirm it tells you what the margin will be but not on the app. Can we have that on the app as well?

    • Avatar Trading 212 says:

      Hi Lee, the Margin and Swap Details panel when trading Forex and CFDs is available in the mobile apps’ Market Order screen.

    • Avatar lee berry says:

      Trading 212 thank you

  18. Avatar lee berry says:

    Thank you

  19. Avatar Ricardo Luz says:

    how will i pay that interest swap? its per trade , per day… ?

    • Avatar Trading 212 says:

      Hi Ricardo, the interest swap is applied on a daily basis for all open positions with Forex and CFDs.

    • Avatar Ricardo Luz says:

      Trading 212 thanks! And thanks for the videos!

    • Avatar Trading 212 says:

      You are welcome, Ricardo. Stick around for more – fresh content every week.

  20. Avatar Jack Tingey says:

    What if you don’t have any free money in the account when trading with leverage

    • Avatar Trading 212 says:

      Hi Jack, you need to provide sufficient free funds on your trading account to keep your positions open and/or to open new positions.

  21. Avatar Taszline says:

    all great, just missing those margin trading terms!!! thanks for wasting my time

  22. Avatar Hells Gift MB says:

    With CFDs is there any restriction on how long you can hold the position or can you hold the position indefinitely?

    • Avatar Trading 212 says:

      Hi there, you may keep your open positions as long as you have sufficient funds on your trading account, or until the expiration date, in case you are trading CFDs on futures contracts.

  23. Avatar Jesús Moreno says:

    Thank you for this video! I was looking for this information, greetings from Venezuela!

  24. Avatar lance pheng says:

    so essentially if you become a very systematic trader and use your stop losses, it can be cheaper to trade on trading 212 vs TD think or swim as a round trip can cost you 12$ and 16$.

  25. Avatar Daniel Elliott says:

    generally like these vids but you guys really should explain the relationship between leverage size of the position and the liquidation price.

    • Avatar ecorry671 says:

      Exactly what I came down here to say

  26. Avatar Lee Sproson says:

    Please can you explain the quantities? Thanks !

  27. Avatar rahujian1234 mandu says:

    what if i dont pay minus balance in my account after taking leverage and i faced bigger loss.

    • Avatar Trading 212 says:

      Negative Balance Protection is enabled in all trading accounts with Trading 212. That means the maximum potential loss is limited to the account balance and cannot exceed it.

    • Avatar Subject 18 says:

      @Trading 212 so to clarify this means you can’t use all your balance on a leveraged trade because you need some balance to cover the potential loss, is that right?

  28. Avatar Jonathan Ball says:

    anyone leveraging 10x or far worse, 200x for the fx trade is being foolhardy and needs their heads examining. This is not investing, this is just dumb gambling and your losses could be far worse than your initial investment.

    • Avatar Trading 212 says:

      Hello Jonathan, thanks to the Negative Balance Protection on Trading 212, the potential loss is limited to the amount in the trading account.

    • Avatar Jonathan Ball says:

      Well that is a good thing. I think what is prudent for an investor is to hold positions at level where they are not easily going to get taken out by the normal oscillations in the market price. It’s valid to predict the share price is going to go one direction or another, but leverage needs to be applied with great care. 2x for stocks and 5x for currency are good starting point. I would never advise such high leverage multiples.

  29. Avatar Arturs Mickevics says:

    Hello! Im a complete beginner in this, SORRY!.. i don’t get it.. Margin is a sum of money that is simply gets ”tide up” in case of leverageing? I understood leverage, kind of, but when margin comes in i kind of struggle

    • Avatar Trading 212 says:

      Hi Arturs, the initial margin requirement is the amount of money blocked on the trading account balance to secure opening a position when trading Forex and CFD instruments.

    • Avatar Arturs Mickevics says:

      Thank you very much! You guys are awesome

  30. Avatar Ruddy Foto says:

    I want to try it!! But first I need to become as professional in crypto!!

  31. Avatar Alex Vrinceanu says:

    Hi there, is it possible to buy stocks without leverage on trading212? Not entirely comfortable with CFDs yet.

    • Avatar Trading 212 says:

      Hi Alex, the short answer is Yes – we offer investing in real shares and ETFs as a service by Trading 212 UK Ltd.

  32. Avatar ADZ01982 says:

    OK I have invested if CFDs on trading 121 and seems to be doing well but how can I take my money out?

    • Avatar Trading 212 says:

      There is a “Withdraw Funds” button in the settings. Simply select it and follow the steps.

  33. Avatar Mero Binjie says:

    How much free money do you need in your account?

    • Avatar Trading 212 says:

      Hi Mero, please elaborate further on your question so we may offer you a relevant reply.

    • Avatar Mero Binjie says:

      @Trading 212 I found the information out on your website.. So the account will be closed when the margin indicator drops below 25%. Not 100% sure how this is calculated.. If you use all your funds, you will be at 50%.. Your trade position starts loosing, your margin drops. At what percentage of your original margin will the position be closed?

    • Avatar Trading 212 says:

      @Mero Binjie Thank you for elaborating, Mero.

      Indeed, when trading on a CFD account, your positions will automatically start closing in the order of opening once a Margin level of 25% is reached and until at least this level is restored. The margin percentage goes down as your positions go down in value, and there’s no available free funds to cover this. Also, investing all of your available funds will result in the Margin initially being at 50%.

      In case you have any further questions, you’re always welcome to contact us via the available support channels, where a colleague will be happy to assist you.

  34. Avatar Orion2b2b says:

    How can I trade without leverage? I have a demo account and leverage Is automatically applied when I open position. How can I switch it off?

    • Avatar Twiggy Smalls says:

      Orion2b2b there’s an option in settings! Pick 1-30 🙂

  35. Avatar Master Trader says:

    Good day – how do the brokers not loose money is this case; for instance you place an FX trade (1 mini lot position which from your example is 10,000units) and the required margin is 0.5% (which is 50.00 GBP again from your example) Assuming you have your stop loss in place and you loose that trade, however the broker would have lost 99.5% of that position/ trade (which would be 9,950 GBP) etc. ???

  36. Avatar Cloud Design FX says:

    Another great video !

  37. Avatar Jason Mighty says:

    So margin and leverage are the same?

  38. Avatar Fungai Kudakwashe Zendah says:

    Dave Jones from Pirates Of The Caribbean?😂😂

  39. Avatar Aaron Douglas says:

    Wouldn’t you technically only loose money when you close the order? If the market moves against you, couldn’t you just hold onto the CFD untill it’s moving back in your favour? Looking to learn

  40. Avatar Akim Farag says:

    Such a clear and concise teacher

  41. Avatar Strogarth says:

    Can you not trade with zero spread anymore?

  42. Avatar Mr Haider says:

    Can you end up in debt ???

  43. Avatar Kevin Pereira says:

    Great video as always, cheers David! How do I change the leverage on the trading 212 platform? I’ve been looking for a while and have not been able to find it in settings.

  44. Avatar isinsession says:

    In your buy if the price goes above your entry is that where profit begins and it turns green? Appose to red (negative)?

    Im in a trade now (sell) quantity 10,000 margin 243..price has fallen below my entry and is still red… Is that right? Shouldn’t profit start from where it cross your entry? In a sell and vice versa in a buy?

  45. Avatar The Commentator says:

    Is that a desktop app on the screens or just in a browser?

  46. Avatar calvin cooke says:

    It’s taken ages to get into the green on my account what’s the problem .

  47. Avatar Andrew Jenery says:

    Why are the last two digits after the decimal point for the sell and buy values enlarged and what exactly are they representing? I realize that may seem a silly question.

  48. Avatar Jack Miller says:

    Can i take out margin for holding stocks for months / years in a stocks and shares invest account? If so where? I have a 212 account with enough funds in to leverage.

  49. Avatar zen kai says:

    Does the position close when the leverage bar gets to 100% ?

  50. Avatar Ifeanyi Kalu says:

    Thank you for this.

  51. Avatar Baxish Parmar says:

    Hey How can I trade with Zero spread on 212, please let me know, whereas, Great Tutorial, Thanks for making it… Helped a lot.

    Trading212 Fan. 😊

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