Trade Gold Trading

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.

But, if you use too much leverage, the extra money you have will drop below a certain point, and your online trading company will automatically close all your trades, causing you to lose a lot of money. At this point, the broker closes all your trades because if they stayed open, the broker would lose the money they lent you.

That's why you always need plenty of free margin. To stay safe, never risk more than 5% of your trading account per trade - honestly, 2% is even better.

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