Education · June 24, 2026 · Education Team
CFD Trading 101: Understanding Leverage and Margin
Leverage lets you control larger positions with a smaller deposit. Learn how margin works and why risk management is essential.
When trading CFDs, you only deposit a fraction of the total trade value — this is called margin. For example, with 1:100 leverage, a $10,000 notional position requires roughly $100 in margin.
While leverage amplifies profits, it equally amplifies losses. A small adverse move can consume your margin quickly, which is why stop-loss orders and position sizing are non-negotiable.
Core concepts
- Margin: collateral required to open a trade
- Free margin: funds available for new positions
- Margin call: warning when equity falls too low
- Stop out: automatic closure to prevent negative balance
