Why a CFD Singapore Broker Allows Trades on Margins without Checking Credit Scores

CFDs can be traded on margin money, which means that a CFD Singapore broker will allow you to place trades of a much larger value than the amount in your account. The balance amount is financed by your CFD Singapore broker.

The question to be asked here is do you need to have a good credit score for margin trading. The simple answer is no. However, a CFD Singapore broker would be more than eager to give you the required margin for trading. The question that crops up to mind is why a broker would lend you money. The answer to this is not that simple and needs to be understood.

A loan means taking a risk. Even a fully secured home loan has an element of risk as it is not easy for the loan provider to sell the mortgaged property. In the case of a margin trading loan there is no collateral but still there is not risk attached to it. It works like this.

Suppose you have 100 dollars in your account with the CFD Singapore broker and you buy a CFD of the value of 4,000 dollar. On the face of it, the broker has loaned you a sum of 3,900 dollars. The reality however is that the loan is at risk only if you happen to lose more than 100 dollars in the trade.

It is this aspect of margin trading that the CFD Singapore is worried about. The moment the loss amount reaches 90 dollars, the automated trading software alerts the broker and you will be asked to deposit more money in the account or the trade will be automatically closed. It is because of this that a CFD Singapore broker has bigger margins for CFDs based on highly volatile assets.