General

More FAQ links

What is margin/leverage?

When buying shares in a company an investor must pay the full purchase price, so 1,000 shares for 250p would cost £2,500. When using a spread bet the client is able to create that same exposure but pay less cash. Typically the margin is 5%, so to open a position worth £2,500 the client only needs to pay £125 up front.

Trading on margin is a double-edged sword. With shares, the worst that can happen to your £5,000 investment is that you lose the lot. With £5,000 of spread bets, your potential losses are not limited to your 5% initial margin of £250. Since £250 can give you exposure to a trade worth £5,000, if you use your entire capital to open up trades then your initial £5,000 can give you exposure to trades worth £100,000. However, a sensible stop loss policy or limited risk accounts enable you to limit any losses.

What is financing?

Financing is charged or paid on positions that are carried or held overnight. On short positions you will be credited, whereas on long positions you will debited.

The value of the adjustment will represent one night's cost of borrowing the notional value of your position.

The adjustment is calculated using the London Inter-Bank Offer Rate (LIBOR) +3 % for long positions and -3% for Short positions.

The financing adjustments on currency derived bets such as bullion and Forex bets work differently to share derived bets.

Essentially, the financing adjustments applied to your open positions are based on daily interest rate differentials derived from applicable rates in the Interbank market.

Can I lose more than what's in my account?

Yes! In some circumstances (such as the market ‘gapping’ and you trading without a Guaranteed Stop Loss), you can lose more than is in your account. However, if market movements cause a situation to occur whereby there are insufficient funds in your account to cover your margin requirement then CMC Markets will endeavour to send you margin call emails. However, the responsibility ultimately rests with the client and if further market movements occur and you are significantly overtrading, CMC Markets reserves the right to close out (Liquidate) your position(s). If this occurs you will be sent an email Liquidation Notice informing you of what has happened and the resultant status of your account.

What markets can I spread bet on?

Trade on thousands of financial instruments from numerous markets – you can spread bet shares from: UK, US, Canada, France, Germany, Ireland, Italy, Netherlands, Austria, Sweden, Finland, Norway, Denmark, Spain, Switzerland and Japan. You can trade on indices from: Asia, Europe, and the Americas. You can trade on Sectors – such as US S&P500 Banks or UK FTSE 350 Mobile Telecoms. And don’t forget about Treasuries – from UK Gilt to Japanese Government Bonds… And Commodities – from US Crude to UK Coffee… And of course, there are all the major currencies!

Click here for a full list of instruments offered by CMC Markets plus the spreads and margins

What are the risks?

Spread Betting is a leveraged product and carries a high level of risk to your capital. It is possible to incur losses that exceed your initial investment. This product may not be suitable for all investors, therefore ensure you fully understand the risks involved and seek independent advice if necessary. You and CMC Markets, and not Digital Look, will be the counterparties to each Transaction. CMC Markets (i) executes transactions with you solely as principal and (ii) deals on an execution only basis - therefore CMC Markets is not under any obligation to provide any advice on the merits of any transaction. CMC Spreadbet Plc is authorised and regulated by the Financial Services Authority.

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