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Variation margins

In addition to the initial margins required to open contracts, any adverse price movements in the market must be covered by further payments, known as variation margins. The variation margin is based on the end of day marked to market revaluation of an ASX-listed CFD position.

For example, if you have a long position and the price falls then you are required to pay a variation margin large enough to cover the adverse movement in the value of the position.

On the other hand, if you have a short position and the price falls, you would receive a variation margin equal to the positive movement in the value of the position.

Failure to meet (pay) a variation cargin call can lead to the position being compulsorily closed out. The position holder is obligated to pay for any shortfall in funds if variation and initial margins are insufficient to cover the shortfall.

Further information on variation margins can be found in our CFD online education section.