What are the common terms that I should be familiar with when trading CFD?

Below are the terms that you would commonly come across when using CFD and reflected in your statement and account management.

a) Ledger: Initial cash deposit – commission (inclusive of GST) – realized finance charges + Realized Profits/Losses

b) Equity Balance = Ledger + Unrealized Profits/Losses + Unrealized Finance Charges Mark-to-market at end of each trading day

c) Initial Margin (IM): The required available balance (margin excess) in customer’s CFD account prior to buying or selling CFD contract. Starts from 10% of market value of portfolio.

d) Maintenance Margin (MM): The minimum amount of Equity Balance that must be maintained in customer’s CFD account. Starts from 10% of market value of portfolio. Mark-to-market at end of each trading day

e) Force Liquidation Margin (FM): If equity balance falls below 5% of market value of portfolio, customer will receive notification to top up the account to maintenance margin level. Mark-to-market at end of each trading day.

f) Margin Excess (Available balance) = When the value of the equity balance rises above that of the initial margin, the difference is the margin excess. Margin Excess = Equity balance – Maintenance margin

g) Margin Deficit: MM – Equity Balance

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