Gold Leverage & Margin, Margin Required, Equity, Used Gold Trading Margin & Free margin

Margin required : It's the amount of money your broker requires from you as a trader to open a trade transaction. It is expressed in percentages.

Equity : It's total sum of capital you have in your account.

Used margin : amount of money in your trading account that has already been used when opening a gold lot, this contract is the one that is displayed in the open trade transactions. As a trader you can not use this amount of money after opening a trading transaction because you have already used it & it's not available to you.

In other terms, because your broker has opened up a trade transaction for you using the capital you have borrowed, you must keep this usable margin for your account as a collateral to allow you to continue using this leverage he has given to you.

Free margin : amount in your account which you can use to execute new trades. This is the sum of money in your trading account that hasn't yet been leveraged because you have not yet opened a trade position with this money - this amount is also very important for you as a because it enables you to continue to hold your open trades as will be explained below.

However, if you over use leverage, this free margin will go below a certain percent at which your broker will have to close all your trade transactions automatically, leaving you with a big loss. Broker at this point stops out all your trade position because if your trades were to be left open they would lose the money that you have borrowed from them.

This is why you should always make sure you have a lot of free margin. In order to do this as a trader never trade more than 5% of your trading account, in fact two percentage% is advised.

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Gold Leverage & Margin, Margin Required, Equity, Used Gold Trading Margin & Free margin