Currently on a demo account, wondering if theres a way to reduce the amount of leverage on a bet, seems like it defaults to the max with no way of reducing it.
The demo displays the 2 rates you can expect to see when trading CFDs, retail leverage of 30x and a professional leverage limit of 500 times. You can choose between these using the settings trading preferences, but by default you should only be at the retail 1:30 unless you chose otherwise.
These are just the upper limits according to your deposit amount. So while you can trade £30000 with a balance of just £1000, if you only trade £3000 then your leverage is only 1:3. It always exposes your whole balance, and it’s your responsibility to manage your positions accordingly.
If you are not comfortable having a 30x limit moving to real money, you should be able to contact the T212 team and request it to be lowered to 20x, 15x or 10x. but note it’ll be harder to make money with a lower limit even if it helps force you to reduce your ability for loss.
Hi there, I am new trading 212 customer, and new to CFDs trading, I have tested the practice area to know a like more about cfds and I have a past experience with other retail derivatives (warrants, turbos) that have common and also different characteristics… but in the end CFDs seems to me in my humble opinion, a far superior trading product.
So, my question is similar, regarding this topic, I want to clarify some technical issues:
First in the FAQ area : https://www.trading212.com/en/Frequently-asked-questions?cId=4 says that “When the margin indicator drops below 25%, your positions will start closing following the order of their opening to prevent a loss exceeding your deposited funds.” I understand this, its a trading 212 client risk policy that protects against client negative money account positions.
CFD Example :
I need help to clarify the implications of this: So, assuming that I want to buy 500 pounds of SPX cfd, with exchange price stands at 3100 points. So, in this case, I can buy with no leverage 500 pounds / 3100 points = 0.16 SPX cfds contracts. But assuming that I use cfds because of leverage, lets says that I want to use 10x leverage, so in this case, 0.16 SPX cfds x 10 = 1.6 SPX cfds contracts that I need to buy in order to have 10x leverage in a 500 pounds SPX cfd contract with exchange price stands at 3100 points. Is this correct, so far ?
Again, continue this example, the next step will be the determination of the worst case of using 10x leverage, ie, the forced liquidation value of this, when cfds margin gets to zero. So if I bought the spx cfd at 3100 points with 10x leverage will be 1/10 = 0.1 percentage less from current spx 3100 bought level, ie, the liquidation of this will be 1-0.1 = 0.90 percentage of the SPX cfd, so the value of the forced liquidation will be 3100 x 0.90 = 2790 points, correct, so far?
So, catching the FAQ issue above “When the margin indicator drops below 25%, your positions will start closing following the order of their opening to prevent a loss exceeding your deposited funds.”, So 2790 points will be a theoretically calculated value, in practice will also need to discount the 25% margin remaining that if is touched when the contract is still opened, will trigger an automatically forced sell. So, in practice, the liquidation value will not be the 2790 points but a little bit above, ie, 0.1 x (1 - 0.25) = 0.075 percentage (adding the 25% indicator safety), so the value of the forced liquidation will be 1-0.075 = 0.925 percentage of the SPX cfd. 3100 x 0.925 = 2867,5 points for the real case forced liquidation value , is this correct?
@jpagp3 This is how you can calculate the margin indicator’s percentage:
Over 50%: [ Total funds / (Total F. + Blocked F.) ] x 100
Example: Let’s you have $500 & have invested 250 in SPX.
[ 500 / (500 + 250) ] x 100 = ( 500 / 750 ) x 100 =0.66(6) x 100 = 66.66
Equal to or under 50%: ( Total Funds / Blocked Funds ) x 50
In your example: ( 500 / 500 ) x 50 = 50%
Stop out level: ( 250 / 500 ) x 50 = 25%
Think of it this way, whenever your free funds drop to 50% of your total funds, the positions get liquidated.
Thank you Mr. David, your help is really appreciated, I really had a mess with math because of my past trading experience with turbos I guess, I have difficult in see from that angle you just mentioned, because I am trying to focus not on the money math that I put to work but rather on underline asset, which in this example case is SPX index. Assuming that I want to buy 500 pounds of SPX cfd at 3100 points, what will be my SPX cfd liquidation price, if I want to use 10x leverage.
1/10 x leverage = 0.1 my position below will be 1 - 0.1 = 0.90 x 3100 = 2790 points stop out level, correct?
My cfd quantity using 10x leverage will be 500 / 3100 = 0.16 x 10 = 1.6 correct?
I really enjoyed that trading 212 feature whenever you buy or sell cfds, it shows the fixed horizontal line in the chart where the price was bought or sold. It was useful if one could see also the liquidation price of it based on the client condition.