FAQs
- Is there a minimum opening contract value?
- Is there maximum opening Contract Value?
- What markets can I trade on?
- What are the advantages of trading CFDs?
- How does Margin work?
- How is the margin requirement calculated?
- What is the difference between a deposit requirement and a margin requirement?
- What are the tax implications of trading CFDs?
- How long can I hold a CFD?
- What are the costs?
Is there a minimum opening contract value?
In principle there is no minimum opening contract value and you can execute trades at any level.
Is there maximum opening Contract Value?
Only the cash in your account available to meet the Margin requirement and the ability of the broker to deal in the underlying shares limits the maximum Contract Value.
What markets can I trade on?
Twowaymarkets provides trades on a huge variety of products from all major financial centres of the world, including stocks and indices.
What are the advantages of trading CFDs?
The advantages of trading CFDs include the ability to go long and short, the ability to place long and short term trades, instant execution, leverage and tight spreads.
How does Margin work?
As a holder of a long or short CFD you do not pay the full underlying value of the contract. However, you are required to deposit margin as collateral known as initial margin. Initial margin is calculated as a percentage of the full contract value and the rate varies according to the market capitalisation and volatility of a particular share. For example if the initial margin is set at 10% you can go long or short of a CFD worth £100,000 and deposit just £10,000, gaining ten times leverage.
How is the margin requirement calculated?
Simply multiply the price by the amount of your stake. Multiply this by the initial margin and this is the amount of margin required to hold your position. The margin requirement for single stock trades is calculated on a percentage basis of the notional value of the position. On Stocks the margin requirement is no more than 10% of the value of your trade, most commonly 5%.
What is the difference between a deposit requirement and a margin requirement?
A deposit requirement and a margin requirement is essentially the same thing - the amount of equity you need to open or hold a position. With Twowaymarkets, the typical margin requirement for a share CFD is 10% and 5% for an index CFD.
What are the tax implications of trading CFDs?
Whilst they are exempt from stamp duty, any profits on CFDs may be subject to CGT (Capital Gains Tax) but losses may also be offset against CGT. For more information, please click here - http://www.hmrc.gov.uk/cgt/index.htm.
How long can I hold a CFD?
There are no expiry dates on CFDs, as a result you can run a position, long or short, for as long as required.
What are the costs?
For further information on our "execution only" commission rates, please click here.