If we look at the previous Vodafone example, in theory someone
with a deposit of £10,000 could go to a CFD provider and gain
exposure to £200,000 worth of Vodafone shares (£200,000 x 5% =
If Vodafone were to drop by 20% in one day (unlikely yes, but
never completely discount these situations) you would be liable for
an additional £30,000 to cover your position with your CFD broker.
Quite often these payments have to be made within 24 hours
so if you have leveraged yourself beyond your means how are
you going to pay? Remember that contract for differences are
legally binding and so you are liable for any losses you incur.