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 have $1,000 and use gold leverage option of 100:1 and buy 1 standard lot for $100,000 dollars your margin on this trade transaction is the $1000 dollars in your account, this is the money which you'll lose if your open trade transaction moves against you, the other $99,000 that is borrowed, the broker will close the open trades automatically using a Margin Call once your $1,000 has been taken by the market.

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

Examples 1: How to Calculate What's 20% Margin Requirement Level

For 20% margin requirement before liquidating your trades automatically using what is known as a Margin Call, then your trades will be stopped out once your account balance drops to $200 - at $200 you will get a margin call.

Examples 2: How to Calculate What's 50 % Margin Requirement Level

For 50% prerequisite of this level before closing out your trades automatically using what is known as a margin call, then your transactions will be closed once your account balance gets to $500 - at $500 you'll get a margin call.

Example 3: How to Calculate What's 100% Margin Requirement Level

If the online broker sets 100% margin percentage level requirement of this level before automatically closing your open trade positions automatically using what is known as a margin Call - at $1,000 you will get a margin call, then your trades will be closed once your trading account balance gets to $1,000: Meaning the trades will close-out 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 suitable for you at all, even those that set 50 percent% margin requirement level are still not suitable. Choose those brokers that set their margin level requirement at 20 % margin level, in fact, those brokers which set their margin requirement at 20 percentage% Margin Requirement are some of the best because the likelihood they close out your trade using a Margin Call is reduced as cited in the above example.

To Learn More about Leverage & Margin - Read the Topics Below:

Leverage and Margin Lesson

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