CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFD Trading FAQs

The margin requirement for a position is calculated by multiplying the relevant CFD position size by the applicable margin rate:

Margin requirement = (position size) x (margin rate)

e.g. If the margin rate for Microsoft (MSFT) is 5% and you buy 1000 MSFT CFDs at $25, then the position size is $25,000 and the margin requirement ($25,000 x 5%) is $1,250.

For each of your open CFD positions (trades), Spread Co will require you to dedicate trading resources equal to a percentage of the position size. This funding is called a margin requirement.

Because you do not have to pay the full amount of your position size, CFDs enable you to increase the amount of exposure to an instrument through leverage. This means you can trade a larger position than if you traded using simply the funds you placed in your account. Leverage has the effect of magnifying the profits or losses on your trading capital. The maximum amount of leverage available to you varies with the instrument you are trading, for example, on equities the margin requirement is typically 20%, so you can trade £20,000 worth of shares with just £4000 in margin.

Please refer to our market information sheet for details.

If you don’t top up your account, one or more of your positions will be closed in order to bring the margin level in your account up to the required level for the remaining open positions.

A margin call occurs when there are insufficient funds in your account to cover your open positions with the necessary margin. This happens if your “Equity”/ “Account Valuation” falls below the “Margin” requirement.

The minimum account maintenance balance is US$200.

‘Account maintenance balance’ is the minimum required amount to hold an open position. This does not mean that you have to have a minimum of $200 in your account at all times, but only when you have open positions.

For consolidated positions accounts, the liquidation engine will cut the open position with the largest margin requirement. A liquidation trade will be created to close the open position at market price. Positions will be automatically matched based on a FIFO basis.

For single positions accounts, the liquidation engine will create a new liquidation trade thereby reducing the open position to zero. The new open position (liquidation trade) is added to the open position list on the open position blotter along with the original trade. Open positions which create zero exposure are not matched. This is left to the discretion of the position holders.

The fundamental purpose of Single Position accounts is to allow the position holders to manually select the open positions he wants to take profits/losses on as opposed to the trading platform automatically matching corresponding open positions in the same instrument.

Your trading account is subjected to a liquidation process if your account valuation falls below a percentage of the margin requirement (liquidation level) which is required to support your open positions.

If you are on a margin call, you must top up your account with sufficient funds to keep the position open, or close your open positions to reduce your margin requirement.

The liquidation process will stop only when your account equity is more than the margin requirement on your remaining positions.

The open positions with the largest margin requirement will be liquidated first.

No you will not be charged extra if you get liquidated.

“Cash” is your brought forward cash balance +/- realised P&L.

For consolidated accounts, “Equity”/ “Account valuation” is “Cash” +/- “Open P&L”.

For single position accounts, “Equity”/ “Account valuation” is “Cash” +/- “Open P&L” +/- “Unmatched P&L”.

“P&L Day” displays the real-time unrealised profit/loss of your open trades based on the “Open” price (The difference between “Current” price and “Open” price multiplied by “Quantity”). The profits or losses are expressed in your account currency.

“P&L Total” displays the real-time unrealised profit/loss of your open trades based on the “Open” price (The difference between “Current” price and “Open” price multiplied by “Quantity”). The profits or losses are expressed in your account currency.

“Unmatched P&L” is only applicable to single position accounts and it is the accumulated marked-to-market profit/loss for unmatched open positions. These unmatched open positions are marked against the previous day´s closing prices.

Matching is only available if you have a single positions account. The fundamental purpose of single position accounts is to allow position holder to manually select the open positions he wants to take profits/losses on as opposed to the trading platform automatically matching corresponding open positions in the same instrument. The act of manually selecting trades to close off against each other is called matching.

The ‘Open’ price is the average price that you entered into the position.

Example of “Open” price calculation on a consolidated CFD account

Customer A conducted 3 USDJPY trades on Day 1:

• Trade 1: Buy 200,000 USDJPY @ 110.50
• Trade 2: Buy 100,000 USDJPY @ 110.40
• Trade 3: Sell 100,000 USDJPY @ 110.60

As your positions are closed on a FIFO basis, Trade 3 would close out 100,000 USDJPY of Trade 1, therefore the “Open” price would be 110.45 [(100,000 x 110.50) + (100,000 x 110.40)]/200,000.

‘Day Open’ price is the previous day’s close price for positions held overnight, and the trade price for positions opened on the current business day. It is the price used to calculate the P&L you are making on the current business day.

Example of “Day Open” price calculation on a consolidated CFD account

Customer B conducted 3 USDJPY trades on Day 1 and market closed at 110.70:

• Trade 1: Buy 200,000 USDJPY @ 110.50
• Trade 2: Buy 100,000 USDJPY @ 110.40
• Trade 3: Sell 100,000 USDJPY @ 110.60

As your positions are closed on a FIFO basis, Trade 3 would close out 100,000 USDJPY of Trade 1, therefore the “Day Open” price would be 110.45 [(100,000 x 110.50) + (100,000 x 110.40)]/200,000.

On Day 2, Customer A will see the open position of USDJPY being rolled over, with the “Day Open” price indicated as 110.70.