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FHM

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  1. Hi all, Newbie here, I understand the concept of leverage and margin pretty well but not sure how the latter works when there is a guaranteed stops in place. As an example, say I deposited e1,000 into my account and I want to go long on a single name stock using spread betting. I am prepared to risk losing the e1,000 but no more. Share price is e200.00. I set a guaranteed stop at 180.00 (i.e 10% below) and therefore buy 50 units. Say the margin requirement is also 10% so I will also have initial margin requirement of 1,000 (plus the guaranteed premium but lets assume thats 0 for now to keep it easy). Does that fact that I have a GS in place that ensures my losses are equal to or less than the money in my account mean that I will not be subjected to margin calls? Intuitively I feel like it should but from reading some other posts it seems like that I still would. If the share price dropped 5% I will obviously have an unrealised loss of e500 but will i also have a margin call given that my 'equity' position is now down to 500e and the new margin requirement is 1,450 (50 * 190 + 500) ? In fact in this scenario even a 1% drop triggers a situation where my equity is less than the new margin... If this is the case, is there a more efficient way of limiting my 'risk' and capital injection to 1,000 while maximising potential upside? Thanks in advance
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