Saxo Bank doesn't provide margin lending for real stocks but Saxo clients can trade stock CFDs with leverage. The cost of CFD leverage trading is average at Saxo Bank.
If you're unsure what margin lending, CFDs, or leverage mean, read this section first.
Saxo Bank margin rates
Saxo Bank stock CFD financing rates
As a Saxo client, you will be charged an average annual fee for trading stock CFDs on leverage. Check out the annualized percentage value of this fee in the table below.
|Apple CFD financing rate||7.3%|
|Vodafone CFD financing rate||5.7%|
If you're not familiar with the terms leverage or stock CFD, read this section first.
Saxo Bank margin rates
Margin trading/lending: buying financial assets with your own funds and money lent by your broker. Let's see an example: if you want to buy Apple stock for $1,000, your broker may allow you to invest only $500 and they will lend you the remaining $500.
Leverage: in the example above, you used leverage of 2:1 because your $500 equity was doubled to $1,000. Leverage is another term used for borrowing money from your broker to amplify your buying power. Leverage is usually expressed using the following formula: "Your buying power : 1". For example, if the leverage on your trade is 5:1, you will need only $200 to open a $1,000 position .
Margin rates: this is how much it will cost you to borrow the funds from your broker to buy real stocks on margin. It's usually expressed in annual percentages. Staying with the previous example: if you borrowed $500 and the margin rate is 10%, you will need to pay your broker an annual $50. The margin rate is usually charged in monthly installments, i.e. you would pay a little over $4 each month.
CFDs: short for contract for difference. When you trade CFDs, you speculate whether the price of a particular financial asset (i.e. a stock index, commodity, or a currency pair) will increase or decrease in value. You essentially bet on whether the price will rise or fall and if your bet is right, your trade will make a profit. You don't own the underlying asset.
Stock CFDs: when you trade a stock CFD, you make a bet that the price of the stock in question will rise or fall. For example, when you buy an Apple CFD, you will not own Apple shares. However, you will make a profit if the price increases, but lose if the price decreases.
Financing rates: CFD products are typically traded with leverage (i.e. money borrowed from your broker). The cost of leverage for trading CFDs is called the financing rate (or overnight fee or swap fee). Sticking with the previous example: let's say you buy Apple CFD for $1,000 with 5:1 leverage (you borrow $800 from your broker and use $200 of your own money). If the annual financing rate is 10%, you will need pay your broker $80 per year (10% of the borrowed $800). The financing rate is usually charged on a daily basis, so in this example, you will pay a little above $2 per day.