Commodity trading

To calculate your required margin, divide the full value of your position by the margin requirement. For example, if you want to open a £5,000 oil position with a 10% margin requirement, you'd need £500 as margin. 

The full value calculation depends on your trading method: 

If you’re spread betting, multiply your stake by the market's current price. 
If you’re trading CFDs, multiply the number of contracts by each contract's value. 

Learn more about how to trade commodities. 

We price non-expiring markets using two liquid futures contracts on the underlying commodity – typically those with the nearest expiry dates. 

The front month contract features the closest expiry date. 
The far month contract has the second-nearest expiry date. 

During the front month contract's duration, our NEC price gradually moves from the front month price toward the far month price. We may use alternative months if either becomes unsuitable for trading. 

A daily adjustment moves the NEC market price toward the far month. Your account receives a credit or debit to offset this price adjustment. For example, if the NEC adjusts by +2 points, long positions are debited 2 x stake and short positions are credited 2 x stake. See the video below for further explanation. 

In the video, the front month is labelled 'A' and the far month 'B'. As 'A's expiry approaches, the NEC price moves toward 'B's price (which may be higher or lower, depending on the commodity). Daily adjustments reflect one day's movement toward 'B'. 

A separate 'cost of carry' adjustment reflects the holding cost and reduces days to expiry between cash and futures markets. This cost is always positive and naturally offset by the daily financing cost paid on long positions or received on short positions.