Introduction to DMA CFDs

What is a CFD?

AContract for Difference (CFD) is a contract between two parties to exchange the difference in the price of an security from the open and close of a contract. CFDs are a leveraged product and require a trader to deposit a fraction of the total value of the position (known as margin) to open a position. The profit or loss of the trade is based on the total value of the position allowing you to gain increased exposure to the market with a lower capital outlay.

What is a margin?

A margin is a deposit used as collateral to fund a CFD position. First Prudential Markets have determined a margin rate for each security we offer which is expressed as a percentage and is determined by the liquidity and volatility of the underlying security. The margin requirement of a CFD position will be adjusted to reflect any changes in the price of the underlying security.

Calculating an Initial Margin

You wish to buy 2,000 Share CFDs at $10.00
The Share CFD has a 5% margin requirement

2,000 x $10.00 = A$20,000 (this is the total value of the trade)
A$20,000 x 5% = $1,000

$1,000 is the initial margin requirement for this trade. 

Minimum commission, interest, platform fees, dividends, variation margin and other fees and charges may apply.

The information within this website does not take into account your objectives, financial situation or needs. Consequently, you should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire the product. A Product Disclosure Statement is available from First Prudential Markets (either from this website or on request from our offices) and should be considered before entering into transactions with us. Derivatives can be risky; losses can exceed your initial deposit. First Prudential Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354). ^Investment Trends CFD Report, May 2007