Margin is not something we include in our comparison tables as it changes for every client and portfolio.
The FCA is also not keen on brokers promoting excessive margin rates at the moment.
It’s important to remember that margin rates are there protect both broker and trader. So any broker offering very high leverage may not have their client’s best interests at heart…
There are two types of margin, initial and variation.
Initial margin rates are generally set by brokers or exchanges based on what is deemed to be the wider than the trading range of the day.
Variation margin is the deposit that is due or paid based on the mark to market P&L at the close of business.
More experienced traders will have lower margin rates, in particular traders that have upgraded to professional status.
However, where most traders get upset is when brokers put there margin rates up with short notice which can happen for a variety of reasons.
Significant trading events such as elections effect pretty much every market, so brokers will increase margin rates across the board.
Single asset exposure, will result in increased margin rates as all a trader’s eggs are in one basket. A single stock portfolio is a higher risk than a diverse one as stocks can (and will without notice) move significantly.
Large trading sizes are often subject to scaled margin rates, so the higher your trade size the higher your margin rates will be.
So in conclusion, it’s very hard to compare margin rates as they have so many variables they change on a daily basis with little or no warning.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.