Plus500 initial margin

This happens as a result of a price moving in a direction that is not favourable to the trader, reducing their equity below the maintenance margin, meaning that they no longer have enough equity to sustain the position.

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Margin Requirements, plus500 initial margin.

One of these free alerts is a margin alert that can be sent via SMS, email, or push notification. It serves to notify you that your available equity is low and that your position has a high probability of being closed automatically, unless you take action.

Margin requirements

In this video, you’ll learn about the different types of margins 1 that you will come across when trading with plus500.

What are margins?

Margins enable you to use leverage when trading an instrument. This allows you to put down a percentage of the opening value of the trade while still gaining full exposure to the instrument’s size.

This increases a trader’s exposure & risk to the fluctuations of the market. For example, if an instrument moves in a direction that is not in the trader’s favour, they are responsible for the full value of the leveraged trade’s movement.

What is the initial margin?

The initial margin is the amount required in order to open a leveraged position. The margin ratio gives traders information regarding the power of the leveraged position.

For example, if you are trading an instrument that has an initial margin of 5%, or a leverage of 1:20, you only need to put aside that margin amount in order to gain full exposure. The benefit of trading with leverage is that you can realise 100% of the profits of the trade even though only 5% of the total value was used. This can also work against traders, because their exposure to risk is magnified.

A trader will notice that when opening a position, the funds that are used to open the position are deducted from their ‘available’ funds while their ‘equity’ remains the same. A simple way to calculate the total available balance is: available = equity - initial margin.

What is a maintenance margin?

The maintenance margin is the minimum amount of equity which must remain available in order to keep positions open.

The amount that needs to remain available in your equity to satisfy the maintenance margin is half the value of the initial margin. For example, if a position requires the trader to put aside 5% of the trade value to open a trade, then they will need to keep only 2.5% of the trade’s value as their maintenance margin in their equity to keep it open.

Traders should be aware that if the market moves against their positions and the equity drops near the maintenance margin requirement, they will be at a greater risk of a margin call.

Traders can see the maintenance margin requirements for each product in the instrument details in the trading platform.

A trader has no open positions and $2,000 available in their account. Assuming they can open a leveraged position on an oil CFD where the initial margin is $1,000, and another position for netflix CFD with the same amount for the initial margin, they will have two open positions, with $0 under ‘available’ but still almost $2,000 under ‘equity’.

As positions begin to move either up or down, the amount of equity will change. But as long as the amount of equity does not dip below the combined maintenance margins of $1,000 ($500 for oil and another $500 for netflix), the positions will remain open.

What is a margin call?

A margin call refers to the automatic closure of a trade due to insufficient equity.

Traders can use a stop loss feature as an extra precaution against margin calls but should always remain aware of market movements while positions are open. In order to avoid margin calls, traders can deposit more funds 2 to meet the maintenance margin requirements or reduce their exposure by either closing or adjusting their open positions.

How will alerts be sent?

Plus500 offers free trading alerts to help make your trading experience more convenient.

It is important to know that due to carrier interruptions, rapid price movements, and other factors, margin alert notifications are not guaranteed and should not be relied upon to make trading decisions.

Ultimately, it is the trader’s responsibility to monitor their trades to ensure that they have sufficient funds to support their position’s maintenance margin.

1 leveraged trading activity involves substantial risks for losing all of the invested funds in a short time period.
2 depositing additional funds may prevent the transaction from being closed, but also can increase potential loss.

What is the initial margin?

In order to open a new position, you must have a certain amount of funds in your trading account (your account’s equity must exceed the initial margin level requirement). To view the initial margin requirement for a specific instrument, go to the main screen of the plus500 trading platform, select the financial instrument and click on the “details” link next to it.

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Cfds are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.4% of retail investor accounts lose money when trading cfds with this provider. You should consider whether you understand how cfds work and whether you can afford to take the high risk of losing your money.

Plus500 is mainly compensated for its services through the bid/ask spread. Check our fees & charges

Plus500 is a trademark of plus500 ltd. Plus500 ltd operates through the following subsidiaries:
plus500uk ltd is authorised and regulated by the financial conduct authority (FRN 509909). Cryptocurrency cfds are not available to retail clients. Office address: plus500uk ltd, 8 angel court, copthall avenue | london EC2R 7HJ.
Plus500cy ltd is authorised and regulated by the cyprus securities and exchange commission (licence no. 250/14). Cryptocurrency cfds are not available to UK retail clients.
Plus500au pty ltd holds AFSL #417727 issued by ASIC, FSP no. 486026 issued by the FMA in new zealand and authorised financial services provider #47546 issued by the FSCA in south africa.
Plus500sey ltd is authorised and regulated by the seychelles financial services authority (licence no. SD039).
Plus500sg pte ltd (UEN 201422211Z) holds a capital markets services license from the monetary authority of singapore for dealing in capital markets products (license no. CMS100648-1).

What is the initial margin?

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What is the required margin on plus500?

When you start trading with plus500, the margin is very important. If you do not pay attention to the required margins, you can lose the full amount of your investment. Please read this article carefully so that you understand how margins work with plus500.

What is margin trading?

On plus500 you can trade on a margin. This means that you do not have to deposit the full amount of the investment. Using leverage allows you to open larger trades with a smaller amount. This works with a leverage. When you deposit $100, you can invest on plus500 with a maximum amount of $3000. Do you want to learn more about investing with leverage on plus500? Then read this article first.

When you deposit $100 and trade with $3000, the broker does not want to lose $2900 if your trades are not going well. That is why the broker uses a margin. In the rest of the article we will discuss how margins work.

What is the initial margin?

When you open a trading position, the initial margin matters. The initial margin indicates the percentage that must be in your account to open the trade. For each CFD you can find information about the margin percentage.

For example, when the initial margin is 10%, you must deposit 10% of the value. If you want to open a CFD trade for $1000, this means that you need at least $100 on your account.

A CFD share can cost $100. When you apply a margin of 10% the position would consist of 10 CFD shares with a value of $1000. Your winnings and losses on the position are then deducted from the $100 you deposited yourself.

What is the maintenance margin?

After you open a position, the maintenance margin is important. The maintenance margin indicates the amount that must be in your account to keep the investment open. When the maintenance margin is 5%, you must have 5% of the value of the trade in your account.

In the example in the previous paragraph you opened a CFD trade of $1000. In this case, you will always need to have $50 in your account to keep the position open. Let’s see how this works in practice.

You have used an initial margin of 10%. This means that your trade is worth ten times more than you invested yourself. A 1% rise or fall in the CFD will lead to a 10% rise or fall of your account balance.

When the maintenance margin is 5%, your investment may not fall more than 5%. After all, your share cost $100, but because of the margin you trade in 10 CFD shares of $100 each. With a decrease of 5% you would lose $5 in all 10 CFD shares which means you lose a total of $50. When you lose $50 you would not meet the requirements for the maintenance margin any longer. When this happens, you can decide to deposit money. If you do not do this, you may have to deal with a margin call.

Watch out for a margin call

If your account balance falls below the maintenance margin, you can get a margin call. The broker will then automatically close your position or positions to avoid a greater loss. With plus500 it is not possible to get a negative balance. However, with a margin call you can lose your entire account balance with just one single trade.

It is therefore important that you understand the risks of trading on margin. It is always advisable to set a stop loss. With a stop loss, your position is automatically closed at a certain price. By setting a stop loss you avoid losing your entire account balance on one trade.

It is also important to leave some space to breathe. When you immediately put your full initial margin on a trade, there is little room for the price to drop first. Therefore, first analyse how much you think the price can move in the other direction. By making less use of the margin, you reduce the risk of your trades.

Are you approaching the maintenance margin and do you believe that the price will still move in the right direction? Then you can always decide to deposit more money. By depositing money, you can once again meet the margin requirements of your trades.

How does it work with multiple trades?

With a trading account you can of course trade in several cfds at the same time. It is always important to continue to meet the margin requirements. For this, you can always look at the balance bar within the plus500 software.

In the balance bar you can immediately see how your account is doing. The maintenance margin indicates the part of the money in your trading account that you need to keep your positions open. When a trade is profitable, you can also use this profit to meet the maintenance margin requirements.

At the same time, loses on one trade can cause all of your positions to close. It is therefore important to keep a close eye on the margin requirements of all your trades.

The available amount is the amount that you can still use to open new trades. You can use this amount to meet the required initial margin for a trade.

Trading with margin: dos and don’ts

Trading with margin can be interesting for traders who want to speculate. You can achieve a greater return with a smaller amount in the shorter term. At the same time, the chance of loss also increases considerably. If you make the wrong decisions, you can even lose your full investment on just one trade.

It is recommended to practice with a free demo first. That way you can master trading with a margin before you start trading with your own money.

How do I calculate my margin requirements?

Initial margin = (position's opening price*size of the trade)*initial margin percentage.
For example, let’s suppose you buy 30 facebook stocks cfds for $75 each (a "buy" position), then the value of the position would be 30*75=$2250. If the initial margin percentage were 20%, then the required initial margin would be 20%*2250=$450.

Maintenance margin = (position's opening price*size of the trade)*maintenance margin percentage.
For example, let’s suppose you buy 30 facebook stocks cfds for $75 each (a "buy" position), then the value of the position would be 30*75=$2250. If the maintenance margin percentage were 10%, then the required maintenance margin would be 10%*2250=$225.

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Plus500 is mainly compensated for its services through the bid/ask spread. Check our fees & charges

What is a margin call?

Should your equity fall below the maintenance margin amount, plus500 will make a margin call and close any/all open positions. It is your responsibility to monitor your open position(s) at all times and ensure that you have sufficient funds on your account or take a decision to close any or all of your open position(s).

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Plus500 is mainly compensated for its services through the bid/ask spread. Check our fees & charges

How do I open a position?

To open a position, go to the “trade” screen on the plus500 platform, choose the instrument you wish to trade on, click buy/sell, and the position screen in the form of a pop-up box will be opened. In the position screen, you will be able to see the rate (price), choose the amount of shares/contracts/etc. (size of trade), view the position’s value and the required margin to open the trade, as well as set stop orders to help manage your risk. Please bear in mind that until you click on the buy/sell button on the position screen, the rates (prices) are constantly being updated according to market movements.

To learn more about margin requirements and stop orders, please refer to: “what are the margin requirements?” and “what kind of stop orders do you offer?".

Trading example:

You have $5000 in your account.
Balance (deposits - withdrawals + P&L of closed positions): $5000
P&L (total profit and loss of all open positions including daily overnight fundings): $0
available balance (balance + P&L of open positions - initial margins): $5000.
Equity (balance + P&L of open positions): $5000.

You think that alphabet shares will rise soon, and decide to open a buy position.
Buy price: $750.
Amount of shares (cfds): 20
total value: 20*$750= $15000.

Initial margin (amount required to open the position): 20% of 15,000 → $3000.
Maintenance margin (amount required to maintain the position): 10% of 15,000 → $1500.

Available balance after opening this trade/position: ($5000 - $3000) → $2000.

Alphabet's buy rate increases to $760 and you decide to close your position.
P&L: 20* ($760 - $750) = $200
balance: ($5000 + $200) = $5200
available balance: $5200
equity: $5200

Therefore, the position closed with $200 profit.

What is a margin call?

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Plus500 is mainly compensated for its services through the bid/ask spread. Check our fees & charges

What is a margin call?

Didn’t find an answer to your question? Contact us!

Plus500 is mainly compensated for its services through the bid/ask spread. Check our fees & charges

So, let's see, what we have: margins enable you to use leverage when trading an instrument. This increases a trader’s exposure & risk to the fluctuations of the market. At plus500 initial margin