Leverage refers to the ability to control a larger position size than the amount of capital you have deposited. In the context of Stock CFDs, brokers often offer significant leverage ratios, such as 10:1, 20:1, or even higher. This means that for every dollar you deposit, you can control a larger position size, depending on the leverage ratio. For example, if you have $1,000 in your trading account and your broker offers a leverage of 10:1, you can control a position size of $10,000. 

While leverage can amplify your potential profits, it also increases the risk of losses. With greater control over larger positions, even small price movements can have a significant impact on your trading account. For instance, if your leveraged position moves against you by just 1%, it can result in a loss of $100 on a $10,000 position. Therefore, while leverage can enhance profitability, it is essential to use it judiciously and have a well-thought-out risk management strategy in place. 

Margin is the amount of money required to open and maintain a leveraged position. In essence, margin acts as a security deposit that the trader must provide to cover potential losses. When trading Stock CFDs, the margin requirement varies based on the broker and the leverage offered. For example, if you want to open a position worth $10,000 with a leverage of 10:1, your broker may require a margin of $1,000 (10% of the position size). 

It’s important to note that margin requirements can vary between different brokers and types of assets. Some brokers may offer lower margin requirements for major stocks or well-established companies, while higher-risk stocks may have higher margin requirements. Traders should always check the margin requirements of the stocks they intend to trade to avoid unexpected margin calls. 

A margin call occurs when the equity in your trading account falls below a certain level due to adverse price movements. In such cases, the broker may require you to deposit additional funds to maintain your open positions, or they may close your positions to limit further losses. To prevent margin calls, traders should practice proper risk management by using appropriate position sizes, setting stop-loss orders, and monitoring their account balance closely.