Trade Gold Trading

How Do I Calculate the Margin Required?

Three example of how to calculate the margin requirement in xauusd.

Now if Your Leverage is 100:1

When trading if you as a trader have $1,000 and use gold leverage option of 100:1 & buy 1 standard lot/contract worth $100,000 dollars your margin on this trade transaction is the $$1000 in your account, this is the money which you'll lose out if your open trade position goes against you, the other $99,000 that's borrowed, the broker will close the open trade transactions mechanically using a Margin Call once your $1,000 has been taken out by the market.

But this is if your gold broker has set 0% Margin Requirement before closing out your trades mechanically/automatically using the Margin Call.

Examples of Calculating a 20% Margin Requirement Level

With a 20% margin requirement mandating the mechanical liquidation of your open trades via a "Margin Call," your positions will be forcibly closed once your account equity diminishes to $200: at the $200 threshold, the margin call will be issued.

Illustrative Example 2: Calculation Methodology for a 50% Margin Requirement Threshold

Based on a 50% prerequisite level for automatically closing your trades via a "margin call," your transactions will be forcibly closed once your trading account equity diminishes to $500 - a margin call is triggered at the $500 threshold.

Example 3: Calculation of the 100% Margin Requirement Level.

If the online broker sets 100% margin percentage level requirement of this level before closing out your open trading positions automatically using what is known as a margin Call - at $1,000 you'll get a margin call, then your trade positions will be closed once your trading account balance drops to $1,000 dollars: Meaning the trade transactions will closeout as soon as you execute a 1 standard lot on this gold account because even if you as a trader you pay 10 dollars spread your gold account balance will get to below $1,000 & the needed margin requirement percentage is 100 percent i.e. $1,000, hence your gold orders will immediately get closed using a Margin Call once your margin requirement falls below 100 %.

Most gold brokers do not set 100 % margin requirement, but there are those gold brokers that set 100% margin percent level requirement are not appropriate for you at all, even those who set 50 % margin requirement level are still not suitable. Choose and Select those online brokers that set their margin level requirement at 20 % margin level, in fact, those brokers that set their margin requirement at 20 % Margin Requirement are among some of the best because the likely hood that they close-out your trade position using a Margin Call is reduced and minimized as cited in the above example illustration.

To read more on leverage and margin, see the lessons below.

Leverage and Margin Lesson

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Gold Broker