margins

CFD Market Fundamentals: Margins


What is a variation margin?

When trading CFD in ASX, initial margins are required to open contracts. Apart from that, any movements in price is covered by further payments, which are called variation margins.

If you have a long position and the price drops below the position's entry price or the previous day's closing price if it was help overnight, then a trader is required to pay the variation margin. The payment should be large enough to over the adverse movement of position's value in the market.

Syndicate content

Recommended Websites