What is a CFD Margin Call?

Submitted by Share Trading on 11 February, 2010 - 13:02

Find out what is a CFD margin call?

When your free equity falls below zero in your account, a margin call will be enacted against you. You will be contacted by your CFD provider to advise you on depositing more money into your trading account or to reduce your positions. You can choose to add some funds to your account from your bank account or credit card. Alternatively you can exit some positions to free the equity required in your account. The third option is to ignore your margin call, but the consequence of this is that if the value of the underlying security continues to go against your position, then your CFD provider may close out your position to prevent your account from going into negative territory. However, the worst case scenario is that if the market gaps down, then your losses may theoretically be larger than your account size.