Margin is an aspect of CFDs that should be understood by anyone prior to getting involved in trading. Although margin trading (leverage) can help you make substantial gains with relatively small sums of money, it can also leave you broke very quickly.
When you open a contract for difference, it will be dealt on a margin basis meaning you are only required to pay a percentage of the contract in the form of a deposit (also known as a Notional Trading Requirement). The NTR requirement differs from broker to broker with a typical figure being 10%. In this instance, if you wanted to open a BP contract worth £10,000 you would be able to do so with just 10% (£1000) of its value.
Again, due to the nature of margin, it is important that you understand that CFD trading is a high risk form of investing and you should only trade with money you are prepared to lose.