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Trading

Leverage, CFDs and forex

Margin lets you control a larger position than your deposit. It also lets a small move wipe the deposit out. A margin call is a demand for more money, not a suggestion.

Reviewed 29 October 2026 by the WiT Money editorial team. This is general information, not a recommendation from a named adviser.

Key points

  • You can lose the margin and, on some contracts, more.
  • A stop-loss is an order. It is not a guarantee in a fast market.
  • Currency pairs and commodities add a price you may not follow every day.

With leverage, the provider requires a fraction of the position as margin. A 2% move against a position geared twenty times can remove the margin. The provider can close the position. That is liquidation. If the market gaps, the loss can exceed the margin and you can owe the difference.

A contract for difference, a forex pair and a commodity CFD are bets on a price with a counterparty. If that firm fails, the contract is not a share sitting at a nominee. Read the client-money statement. Do not assume bank deposit insurance applies. It does not apply to a trading loss, and it does not apply to crypto.

What to read before you fund an account

The leverage offered, the margin percentage, when positions are closed, the overnight financing charge, and whether losses are limited. If the document is unclear, do not fund the account in order to find out.

Why advertised results mislead

A screenshot of a winning week leaves out the losing weeks, the deposits added, and the positions that were closed at a loss. It is not evidence you will be paid a similar result.

Questions readers ask

Are CFDs suitable for a first investment?

They are a leveraged contract. They are a poor place for money you cannot afford to lose, and they are not a starter version of a unit trust.

Related

Sources

Page updated 29 October 2026. A source date is the day WiT Money checked that page, not a promise the institution has not changed it since.