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

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

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

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

In other words, because your online broker has opened up a trade for you using the capital you've borrowed, you must keep this usable margin for your account as a security to allow you to continue using this leverage which the broker has assigned to you.

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

However, if you over use leverage, this free margin will go below a certain percent at which your online trading broker will have and be forced to close all your trade positions mechanically, leaving you with a large loss. Broker at this point stops out all your position because if your trade positions were to be left open they'd lose the money that you have borrowed from them.

This is why you should always ensure you've got a lot of free margin. In order to do this as a trader never trade more than 5% of your trading account, in fact 2 percentage is advised.

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