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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 55.2% 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
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Trade with Leverage

Leverage or gearing effectively multiplies a client’s deposit or account value. This provides a client with the ability to hold larger positions than their initial deposit would cover. In other words traders can hold open positions, with only a fraction of the positions underlying value required as a deposit or margin. Leveraging your funds means you can make larger trades or a higher number of trades than your initial deposit on its own would allow*.

*The use of leverage can magnify profits but it can do the same for losses. Forex and CFDs are leveraged products, involve a high level of risk and can result in the loss of more than your invested capital. Please consult our full risk warning notice.

Leverage

Leverage allows you to hold a larger position than the initial cash deposit. Your initial outlay is supplemented to increase the value of your underlying investment. The higher the leverage, the larger the position the trader can execute for the same amount of the initial deposit.

For example, a client using 30:1 leverage could hold a position in the forex market of $30,000 with a margin of $1,000.

Leverage increases the potential of high returns when the market moves in their favour. However, please note that leverage will act against you when the market moves in the opposite direction to your prediction.

Leverage Levels

Different leverage levels apply to different account types.

Margin Requirement

When an investor opens an account with a broker, an initial deposit is required in order to open a position in the market. The required cash deposit will act as a deposit to cover any credit risk. Depending on the agreement, the investor could be able to leverage up to a certain limit.

The margin requirement for a forex trade is calculated using the following formula:

Margin = (Lot Size * Contract Size * Opening Price) / Leverage

The examples below are based on a Standard/Classic account with a leverage of 30:1.

Forex

Margin requirement for one standard contract position in EUR/USD at 1.2500 is calculated as follows:
Margin = (1 * 100,000 * $1.2500) / (30) = $4166

Spot Gold

Margin requirement of one standard contract position in Gold at 1579.01 is calculated as follows:
Margin = (1 * 100 * $1579.01) / (20) = $7895

Spot Silver

Margin requirement for one standard contract position in Silver at 28.70 is calculated as follows:
Margin = (1 * 5000 * $28.70) / (20) = $7175

Note: Interest is not required to be paid on the borrowed amount, but if the investor decides to hold his position overnight, interest will be charged as the rolled over rates on the total positions held.

Margin Call

Margin Call is a level set by a brokerage that defines the minimum amount of money required to trade in the market. When your account falls below the margin call level, you will need to make an additional deposit to maintain your positions. Alternatively, you can close some of your positions to reduce your required margin. At Blackwell Global, Margin Call is set at 80%.

Stop Out Level

In the event you are unable to maintain sufficient funds in your account after hitting Margin Call, and if your account value depreciates to the Stop Out level, all your open positions will be closed automatically to prevent further loss to your capital. At Blackwell Global, Stop Out level is set at 50%.