Hi, I have a question about trading CFD stocks with margin Let's say the broker offers a 10% margin (as I understand it is similar to 10:1 leverage) and I have a $10k balance. Can I open a $100k position, and stock moved 1%, this means I have potentially earned $1,000 with just $10k balance on this CFD stock ?
The following point may be obvious, but since from your question it seems you're not familiar with these types of instruments, I'll mention it anyway... In the above example, you may have a big problem - depending on the conditions of your broker. Again, margin requirement for the given instrument is 10%, you have $10k in your account, and you take a position worth $100k. Once you open the position, you're now using 100% of your available margin. If the position moves against you even a little bit, now you're margin requirement is greater than the funds in your account. This is the part that will depend on your broker: there is going to be a set point at which they will liquidate the position(s) in your account in order to cover the margin requirement. It's usually expressed as as a percentage (account equity / margin requirement). 100% is a common level. So in the above example, it's possible that if it moves against you, even just a few dollars, your position (or some part of it) may be liquidated.