All trading involves risk. Losses can exceed deposits.

Margin definition

All trading involves risk. Losses can exceed deposits.

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Margin has a particular significance in relation to IG's platform. Here, we define margin in general investing and explain what it means to you when trading with IG.

In trading, margin is the funds required to open and maintain a leveraged position.

Providers that offer margin trading will only ask for a portion of the full value of a position in order for that position to be opened. The amount of margin required will usually be given as a percentage of the full value of the trade.

Say, for instance, that you wanted to purchase £1,000 worth of Royal Mail shares and your provider required 10% of the position to be put forward as a margin. The initial amount needed for the trade would be £100. This is known as the deposit margin.

If your trade begins to incur a loss, your deposit margin may no longer be enough to keep the position open. The margin needed to keep a position open is known as the maintenance margin. At this point, your provider will ask you to top up the funds in your account. This is a margin call.

With IG

CFDs and spread bets are both leveraged products that trade on margin.

Visit our education section

Find out more about leverage and margin in our education section.

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