What is Margin?
Margin trading gives you full exposure to a market using only a fraction of the capital you'd normally need. Margin is the amount of money you need to open a position, defined by the margin rate. For example: if you were to buy S$1000 of shares through a traditional broker, you'd need to pay the full S$1000 upfront to own them (plus the associated broker charges). As CFD is a leveraged product, you don't need to pay the full value of your exposure in order to deal. Instead, you'll only need to put up a fraction of your total exposure to open your position.
There are two types of margins to consider:
Initial marginThe initial margin is the minimum amount you'll need to put up to open a position. It is sometimes called the deposit margin, or just the deposit.
Maintenance marginThe maintenance margin, also known as variation margin, is extra money that we might need to request from you if your position moves against you. Its purpose is to ensure you have enough money in your account to always fund the present value of the position – covering any running losses.
Things to remember:
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What is a Margin Call?
Margin call is the term for when the equity on your account – the total capital you have deposited plus or minus any profits or losses – drops below your margin requirement. You can find both figures listed at the top of the IG platform.
At this point, your positions become at risk of being automatically closed to reduce the margin requirement on your account.
You can rectify the situation yourself in one or two ways: deposit enough funds to increase your equity above the margin requirement, or close positions to reduce it. |
What are the Margin Call Policies Application to SG clients?
50% Rule: Clients' positions will be closed if their equity drops below 50% of the margin
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Frequently Asked Questions
What is a margin call?
Margin call is the term for when the net liquidation value on your account – the total capital you have deposited plus or minus any profits or losses – drops below your margin requirement.
At this point, your positions become at risk of being automatically closed in order to reduce the margin requirement on your account.
You can rectify the situation yourself in one of two ways: deposit enough funds to increase your net liquidation value above the margin requirement, or close positions to reduce it.
2. How is margin calculated in IG Markets CFD trading?
For positions without a stop:
margin is calculated Number of Contracts x Value Per Point x Price x Margin Requirement.
For positions with a stop, the margin requirement is calculated as:
(Number of contracts x Value per point x Price x Margin % x slippage factor) + (Number of contracts x Value per point x Stop distance)
Product | Margin Rate |
Indices | 5% - 20% |
Forex | 5% |
Commodities | 20% |
Shares | Minimum 10% |
3. When will my positions be closed due to margin call?
Typically, there are two scenarios in which your positions will get automatically closed.
If your net liquidation value drops beneath 50% of your margin requirement
If you are on margin call during periods of increased volatility, or periods when we anticipate increased volatility
Our margin requirements are subject to change. If they increase on one or more of your positions then your current net liquidation value may not be enough to keep positions open.
Finally, it is important to remember that we could close you out at any time when you are on margin call. It is your responsibility to have enough funds on your account to fully cover the margin requirement of your open positions.
4. Will I be notified if my account is in a margin call?
We monitor your account margin levels continuously. Here is what happens at each level:
100% of maintenance margin — first notification You will receive an email notification alerting you that your account has fallen to margin call level. We recommend you act on this promptly by either depositing additional funds or reducing your positions.
75% of maintenance margin — second notification You will receive a second email notification. At this point, your account requires immediate attention.
50% of maintenance margin — position close-out If your account falls to this level, we will begin closing your open positions to protect you from further losses.
While we make every effort to notify you at each level, please note that we are not obligated to do so. In fast-moving markets, there may be instances where notifications are delayed or cannot be sent in time. It is your responsibility to monitor your account and ensure it is sufficiently funded at all times.
5. What happens if my balance goes below zero in IG Markets CFD trading?
In severe market conditions, if the available balance of clients falls below zero, clients will be margin called and positions will be closed as seen in IG Markets’ Margin Rules.
6. Does IG Markets CFD trading offer negative balance protection?
No. We do not offer negative balance protection.
7. Can I lose more than my deposit in IG Markets CFD trading?
Yes, it is possible to lose more than your initial deposit when trading CFDs. Because CFDs are leveraged products, your profits and losses are calculated on the full value of your position, not just the margin you put down. If the market moves sharply against your position before we are able to close it out, your losses could exceed the funds in your account.
This is why it is important to monitor your account closely, use risk management tools such as stop-loss orders, and ensure your account is sufficiently funded at all times.
8. Can my positions be closed automatically in IG Markets CFD trading?
Yes. Under the 50% Rule, IG Markets will automatically close positions when Net Liquidation Value falls below 50% of the total margin requirement. Positions are closed on a FIFO basis at the prevailing market price.