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I love answering these kinds of trading questions

by , 06 May 2021
I love answering these kinds of trading questions
Q. “Can you please help me understand the ‘margin requirements' when it comes to trading international stocks. If so, I have three questions…

1. Is there a way I can find out all the information about the international stock on ProTrader e.g. with Fresenius CFD on the German Stock Exchange?

2. Using the last Pickpocket CFD trade idea i.e. Fresenius, on Protrader it says the margin requirements are 10% / 5.56%. What do these two numbers mean?

3. How do I calculate in rands the margin requirements when Fresenius is priced in euros?”

 
A. I love these kind of questions. Really gets into the nuts and bolts with international trading… I’ll answer each question in blue…
 
“Is there a way I can find out all the information about the international stock on ProTrader e.g. with Fresenius CFD on the German Stock Exchange?”
 
Here are three steps to find the information table with each CFD.
 
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To get started, click the button below
 
 
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Step #1: Add the CFD to your watchlist
 
On the top right of the watch list screen, click the plus button (+). Then in the search bar type in Fresenius. Search an click on Fresenius SE, Co KGaA CFD and click ‘Add’.

 
Step #2: Go to the Symbol Information
 
Once you’ve added the CFD, it’ll populate in the watch list. Right click on the stock and click on ‘Symbol Info’.
 
 
Step #3: Scroll
 
When the window opens, you’ll have all the information you’ll need for each CFD. Scroll to the bottom and you’ll see the Margin Requirements…
 
 
“Using the last Pickpocket CFD trade idea i.e. Fresenius, on Protrader it says the margin requirements are 10% / 5.56%. What do these two numbers mean?”
 
In the margin requirements table, the two numbers indicate first the Initial Margin and Maintaining Margin.
 
Initial Margin is the percentage of the stock’s price you’ll need to have (deposit) in order to take the trade.
 
Maintaining Margin is the percentage of the stock’s price you’ll need to have in your portfolio at all times in order to keep holding your trade and keeping the position open.
 
It’ll all make sense when I answer the third question…
 
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Not only is this one of the easiest ways to trade the markets, it’s so quick you could have ‘pick-pocketed’ your first profit in the short time it’s taken you to read this far!
 
As soon as I spot an opportunity, I’ll slide open my mobile and text you the details of a trade idea that will take no more than a couple of minutes to action. (I’ll show you how quick it is in a moment.)
 
Really, this isn’t one of those things that are quick if you’ve been doing it for years but takes ages if you’re just starting out...
 
By the second time you do this yourself, you’ll be able to react to my text in a matter of minutes, which is amazing really, when you consider in that brief time you could pickpocket a profit of R14,050, R6,250 or even R5,450...
 
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“How do I calculate in rands the margin requirements when Fresenius is priced in euros?”
 
The margin requirements in this trade are the following:
 
Initial Margin = 10%
Maintaining Margin = 5.56%
 
Here are the trade specifics we need:
 
Market: Fresenius
Type: Long (buy)
Entry: 40EUR
 
Now we have all the information, we need to calculate the Margin Requirements with this Pickpocket Trade.
 
The first thing we’ll need to do (with international stocks) is convert the stock price into rands.
 
Let’s use the current exchange rate of EUR/ZAR = R17.24 per 1 Euro.
 
The entry price for Fresenius is EUR40 = R689.00.
 
The Initial Margin is 10% per CFD and 5.56% for maintaining margin…
 
This means you’ll pay 10% (an initial deposit) of R689.00 to buy 1 CFD = R68.96 (R689 X 10%).
 
And to keep holding your trade, you’ll need 5.56% of the current price of the stock…
 
As the current price is 40.88EUR (R704.00), you’ll need to have in your portfolio 5.56% of that amount or R39.18.
 
NOTE: The current price and exchange will always change according to the market’s valuation. I have only calculated these based on the current prices that are trading…
 
If you have any other trading related questions you can ask me at timon@fsp.co.za.
  
Trade well, 
 
Timon Rossolimos,
Analyst, Red Hot Storm Trader   


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