Margin Leverage and Position Sizing · CFDs Trading Guide

A margin close out is an account survival mechanism, not a carefully chosen trading exit. Understand its trigger before several positions share the same equity.

Follow the account calculation

Account equity commonly reflects cash plus unrealised position results and accrued entries, using the provider definitions. Required margin reflects open exposure and margin rates. Free margin is the remaining capacity under that system. A losing position can consume the buffer supporting unrelated trades, so isolated ticket calculations do not describe the whole account.

Know which rule applies

For UK retail CFD accounts covered by FCA restrictions, the close out framework uses a 50% account margin threshold. This is jurisdiction specific and should not be assumed for every account or client classification. Providers can impose additional conditions. Read the actual terms, including which positions may close and how market conditions affect execution.

Trace an illustrative threshold

Assume required margin stays at $2,000 and the relevant threshold is 50%, or $1,000 of equity. Starting with $3,000 equity leaves $2,000 before reaching that threshold. A sudden loss can jump across it. The rule does not promise that exactly $1,000 remains after execution, and required margin itself may change with prices or margin schedules.

Manage before the forced decision

Use your own exposure and cash limits well before a provider threshold becomes relevant. Do not rely on receiving or responding to an alert. Adding money can postpone closure while increasing capital at risk. Review whether the position still belongs in the plan, and keep operational access and available cash separate from assumptions about a future rebound.

Try it yourself

Required margin is $1,600 and the assumed close out level is 50%. Equity is $1,100. How much additional loss reaches the threshold if all other inputs stay constant?

Show the worked answer

The threshold is $800. Another $300 loss reaches it. This simplified calculation is not an execution guarantee and ignores changing margin requirements and charges.

Further reading

Educational material, not a recommendation to trade. Numerical examples are hypothetical. CFDs involve leverage and substantial risk of loss. Availability, costs and protections depend on the contract, legal entity, jurisdiction and client classification.

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