What do leverage and margin mean?


CFD is leveraged trading; you can receive full exposure in a market without positing the full amount, magnifying your potential profits and losses.

The leverage factor determines the amount that you post; initial margin requirements vary from 5% to 20%, depending on the broker.

The margin of 20% results in leverage of 5:1

Practical Example: Trive has a margin factor of 20% for all local shares; client A is looking to trade 10 shares of Company A at a price of 10 000.

The notional value of the trade is ZAR 100 000, and the client would not require the full amount but rather ZAR 20 000, which is based on the leverage factor (10 x 10 000 x 20%)

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