Trading Library

When your free equity falls below zero in your account, a margin call will be enacted against you. You will be contacted by your CFD provider to advise you on depositing more money into your trading account or to reduce your positions. You can choose to add some funds to your account from your bank account or credit card. Alternatively you can exit some positions to free the equity required in your account.

When you trade CFDs, traders have CFD margin requirements to maintain. The CFD margin is like a deposit, kind of like a deposit for a house mortgage. The margin requirement is used to protect the CFD provider if they need to exit the trader’s position. Initial margin requirements varies from stock to stock, usually starts at 3% for blue chip companies and then varies all the way to 80% for unknown rarely traded company stock. However for currencies (forex trading), the margin requirement is as low as 1% (or 1 to 100).

Direct Market Access CFDs offer identical prices and liquidity to the underlying sharemarket price for the stock. Direct Market Access CFD trading has each CFD order placed as an actual buy or sell order ticket on the Australian Stock Exchange (ASX) – an order which appears on the trade queue and follows typical stock trading rules.

You can read more Trading and Investment definitions here.

ALL ORDINARIES (ALL ORDS) – Measures the level of share prices at any given time for a sample of major companies listed on ASX to determine the overall performance of the sharemarket. Stock exchanges in other countries have similar indices, eg. Dow Jones Industrial Average (New York), FTSE (London) and Nikkei Dow (Tokyo).

You are probably wondering what are shares? A share is simply part ownership of a business. If you invest in shares, stocks, securities or equities – as they are sometimes called – you are buying part ownership of the company’s business and become a shareholder in that particular company

Obviously you then have a vested interest in the fortunes of that company and hope the business will grow and prosper, together with your equity in its future. If it does then you may get to share in its profits. These profits are paid out in dividends and are your reward for investing with the company.