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On September 11th, Deutsche Bank analyst Woll said in a report that the ECBs latest forecasts suggest that interest rates may remain low for longer. On the one hand, the staffs recent forecast for overall inflation was slightly raised, which means that the inflation target in 2026 will be less likely to fall short of expectations. However, the core inflation forecast was lowered to 1.8% in 2027, indicating that this below-expected situation may persist. He said: "This may have a dovish impact on monetary policy." However, he said that the ECB is in no rush to make a judgment and the interest rate pause is likely to continue.On September 11, Franklin Templeton analyst David Zahn said that the European Central Banks policy is generally neutral. Against this backdrop, Templeton favors short-term bonds, that is, those that are less affected by the risk of interest rate changes, and high-quality defensive stocks.On September 11th, ING analyst Éric Pessolé warned that the British pound remains at risk of decline ahead of the November 26th Autumn Budget due to concerns about the UKs fiscal sustainability. He noted that the pound has recently strengthened against the euro as long-term UK government bonds rebounded from last weeks sell-off. The pound is more sensitive to sell-offs in long-term government bonds than the euro and the dollar, suggesting that risks remain ahead of the budget. However, while UK government bonds remain stable, higher short-term interest rates due to the Bank of Englands cautious stance on rate cuts make selling the pound "expensive."Tip: US President Trump delivered a speech at the 9/11 memorial ceremony.Oracle (ORCL.N) reversed its opening gains and extended its losses to 4.3%.

what is the Leverage and Margin in CFD trading?

LEO

Oct 25, 2021 13:27

Leverage in CFD trading explained

CFD trading is leveraged, which means you can gain exposure to a large position without having to commit the full cost at the outset. Say you wanted to open a position equivalent to 500 lots EURUSD. With a standard trade, that would mean paying the full cost of the EURUSD upfront. With a contract for difference, on the other hand, you might only have to put up 1% of the cost. 

While leverage enables you to spread your capital further, it is important to keep in mind that your profit or loss will still be calculated on the full size of your position. In our example, that would be the difference in the price of 500 EURUSD from the point you opened the trade to the point you closed it. That means both profits and losses can be hugely magnified compared to your outlay, and that losses can exceed deposits. For this reason, it is important to pay attention to the leverage ratio and make sure that you are trading within your means.


Margin explained

Leveraged trading is sometimes referred to as ‘trading on margin’ because the funds required to open and maintain a position – the ‘margin’ – represent only a fraction of its total size.

When trading CFDs, there are two types of margin. A deposit margin is required to open a position, while a maintenance margin may be required if your trade gets close to incurring losses that the deposit margin – and any additional funds in your account – will not cover. If this happens, you may get a margin call from your provider asking you to top up the funds in your account. If you don’t add sufficient funds, the position may be closed and any losses incurred will be realised.


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