However, that topic now has almost 900 posts, so it’s difficult for people to quickly glean the information they need. The intention of this topic is to address that by keeping all the current information in the first few posts: Please feel free to suggest new content
THE CALCULATORS (Community Created) @obrienciaran and @Richard.W have both developed calculators. They were intended to help people understand the impact of the margin changes. Trading 212 have not been involved in the development of the calculators, so they’re not official.
We currently recommend the use of this calculator because it contains the latest bug-fixes and features:
We welcome and encourage anybody who has a solid understanding of margins to test this calculator and let us know if you find any issues with it. We hope that Trading 212 staff will contribute to that effort as they may be able to think of scenarios that have not been considered.
As we are still testing and refining the calculator, we recommend that you revisit it regularly to ensure you are seeing the most up-to-date predictions.
Please note that the calculator is only able to produce accurate (hopefully!) results for portfolios that only contain stocks, as only stocks are affected by the margin change.
All of the above parameters are generally static (ignoring when dividends are paid or interest is charged), except “Unrealised Profit/Loss”, which fluctuates due to price and exchange rate changes. BLOCKED FUNDS will also fluctuate for the same reason, or when margins are changed. FREE FUNDS is then just ACCOUNT VALUE - BLOCKED FUNDS.
What positions are affected? - The margin changes only apply to stocks. Commodities, Indexes, FOREX, etc. are not affected.
Will my Profit/Loss be affected? - No. The value of your Profit/Loss will not be affected, but if any positions are closed as a result of the margin changes then your unrealised Profit/Loss will become a realised Profit/Loss.
Will my ACCOUNT VALUE be affected? - No, other than by the usual fluctuation in prices or exchange rates.
Will my BLOCKED FUNDS be affected? - Yes.
Will my FREE FUNDS be affected? - Yes.
Will my MARGIN STATUS (the percentage that causes margin calls at 45% and positions to close at 25%) be affected? - Yes. Your MARGIN STATUS will reduce, which may cause margin calls or positions to close.
Will margin calls still happen at 45% and will positions still close at 25%? - Yes, these fixed values are the same for everybody and are not changing. However, as described above, your personal MARGIN STATUS will reduce taking you closer to these limits.
When will the margin requirement return to previous levels? - Trading 212 have stated that the change is “temporary” but no specific timescales have been mentioned.
1.5 x BLOCKED FUNDS will move from FREE FUNDS to BLOCKED FUNDS.
Your MARGIN STATUS will decrease to reflect the increase in BLOCKED FUNDS.
If your new MARGIN STATUS is above 45%, nothing else will happen.
If your new MARGIN STATUS is above 25% but below 45% then you will receive a margin call, which is just a warning that you’re getting closer to 25%.
If your new MARGIN STATUS is below 25% then Trading 212 will automatically liquidate your positions in the order they were opened one at a time. Each liquidation will cause the margin for that position to move from BLOCKED FUNDS to FREE FUNDS. Your MARGIN STATUS will increase to reflect the decrease in BLOCKED FUNDS. The liquidations will stop if the MARGIN STATUS goes above 25%.
It’s important to understand that your Profits/Losses won’t change, but if any positions are liquidated then they will move from unrealised to realised Profits/Losses.
SUMMARY - AFTER THE MARGIN INCREASE, IF YOUR MARGIN STATUS STAYS ABOVE 25% THEN THE ONLY CHANGE TO YOUR ACCOUNT WILL BE THAT YOUR FREE FUNDS HAVE DECREASED AND YOUR BLOCKED FUNDS HAVE INCREASED (by 1.5 x BLOCKED FUNDS). You can use the calculators to check what your MARGIN STATUS will be after the increase.
BLOCKED FUNDS are increasing by 1.5 x BLOCKED FUNDS (NEW BLOCKED FUNDS = 2.5 x BLOCKED FUNDS). Therefore, in order to maintain the same MARGIN STATUS, you’d need to add 1.5 x ACCOUNT VALUE (NEW ACCOUNT VALUE = 2.5 x ACCOUNT VALUE). I imagine that this will be out of the question for many people. However, since your leverage is dropping from 1:5 to 1:2, your portfolio will be less affected by movements in stock prices. It is therefore arguable that you don’t need to keep your MARGIN STATUS at its existing level (NOT FINANCIAL ADVICE). I therefore recommend using the calculators to determine how much funds you need to add (if any) to establish a new MARGIN STATUS that you’re comfortable with. You should use both calculators and verify that their results match.
IF PORTFOLIO CONTAINS INSTRUMENTS OTHER THAN STOCKS (e.g. INDEXES, COMMODITIES, FOREX, etc.)
If you don’t have time to do the complex calculation yourself, I think you could still use the calculators (despite the warnings) in order to get a worst-case-scenario. The original calculator will show a “Margin after leverage change if no action taken” that is too low (GOOD, extra contingency) and both calculators will show a “funds to add” figure that is too high (GOOD, extra contingency - you can always withdraw the funds once you’ve seen the actual effect of the margin increase).
Hi Supraman, as you look quite sharp on the topic could you clarify to my a couple of points plz:
1 - as the leverage decrease the position on profit will exponentially reduce but what about these that are loosing? Will them decrease the lose? For example what will happen to a position that is currently loosing 2K.
2 - I’ve used the calculator and following my parameters it came out that as it stand my account will drop at 23.5% and I’ll need to deposit 18.5K to keep my account at the current 55%… Can you tell me if I’m going wrong here or I’m basically fucked?
I’ve used only the first, it won’t be 100%accurate as I have 1800£on the Ftse100 so will be better then what it shows but still a bit of a shock ( I will upload both pics of calculator and balance ).
Now I’veanaged to get rid off most of the accounts with positive figures but I still have many on negative.
I’ve got that if they reduce the leverage my positive figures will decrease, but if so, will also the negative figures improve their lose??
Please let me know what’s your thoughts bout it.