What is margin trading?

Margin can be compared to a mortgage, where you put up collateral when buying something more expensive than you can afford.

Margin trading enables you to amplify the potential of your trade by using borrowed funds to trade securities, also known as leveraging or gearing. This allows you to get a bigger exposure than your initial capital would.

When trading with leverage, your potential profits are bigger, but it’s important to note that the same goes for potential losses.

Margin trading at Saxo

Saxo offers various financial instruments including CFDs, Futures, FX Options, FX Spot etc. You can read more about Saxo’s margin trading offers here.

When you trade in such contracts, you are not buying an actual asset (e.g. with stock trading) but you are entering into a contract.

At Saxo, you cannot sell stocks you do not own. However, if you wish to short a stock (sell without owning the stock), you have the option to short the CFD based on that stock.

This article will cover the following topics:

• Margin trade example

Margin trading requirements

Margin requirements refer to the minimum amount of funds that must be in your account to open and maintain a margin trade. You can check the requirements for a specific margin product by clicking "i"