Are CFD funds allowed to go negative

[crazydave]

Hi,

 

Currently, both my CFD funds and equity are positive.  However, I can think of a number of scenarios where funds could go negative whilst equity remains positive - running winners and cutting losers for example, or interest charges outweighing dividend adjustments on long holds.

 

So, are funds allowed to go negative as long as equity remains positive?

 

And if so, can I withdraw funds whilst funds are negative as long as equity remains positive following withdrawal?

 

[ClaireL]

Hi there,

 

Firstly, clients need to have enough funds (cash balance) on the account before any positions could be opened. The equity is the difference between the funds and P/L. If the equity is lower than the margin requirement, the available funds will be below zero and the account would be on margin call. In this situation, clients won't be able to withdraw funds and the positions become at risk of being closed. Funds do not change by opening new positions. Before any positions being closed, the funds would be the same amount as well until any profit or loss are realised. In short, funds have to be positive before any positions could be opened and will stay as the same before any positions are closed. I hope this helps.