CFDs Leverage and Margin, Margin Required, Equity, Used CFD Margin and Free margin

Margin required : It's the amount of money your cfd broker requires from you to open a position. It is expressed in percents.

Equity : It is the total amount of capital you've in your account.

Used margin : amount of money in your account that has already been used up when buying a cfd lot, this contract is the one that is displayed in the open trades. As a trader you can not use this amount of money after opening a trade because you have already used it & it is not available to you.

In other words, because your cfd broker has opened up a position for you using capital you've borrowed, you must maintain this usable margin for your account as a security to allow you to continue using this cfd leverage he has given you.

Free margin : amount in your account which you can use to open new trades. This is the amount of money in your trading account which hasn't yet been cfd leveraged because you have not yet opened a trade with this money - this money also is very important for you as a trader because it enables you to continue holding your open trades as will be explained below.

However, if you over use cfd leverage, this free margin will drop below a certain percent at which your cfd broker will have to close all your positions automatically, leaving you with a big loss. Cfd broker at this point closes all your position because if your positions are left open they would lose the money you've borrowed from them.

This is why you should always make sure you've a lot of free margin. To do this never trade more than 5 percent of your cfds account, in fact 2 percent is recommended.