How is Gold Margin Level Calculated?

We shall first explain the various gold trading margin trading terms used in gold trading platforms & then explain how gold trading margin level is calculated using an example in MetaTrader 4.

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

What's Margin Required? : It is the amount of money your gold broker requires from you to open a position. It is expressed in percents.

What's Equity? : It is the total amount of capital you have in your account.

What's Used Gold Trading Margin? : amount of money in your account that has already been used up when buying a gold lot, this contract is the one that is displayed in open trade positions. As a trader you cannot use this amount of money after opening a trading transaction because you have already used it & it is not available to you.

In other words, because your gold broker has opened up a position for you using the capital you have borrowed, you must maintain this usable margin for your account as a security to allow you to continue using this gold leverage he has given you.

What is Free Gold Margin? : amount in your trading account which you can use to open new trades. This is the amount of money in your account which hasn't yet been gold leveraged because you've not yet opened a trade with this money - this is also very important for you as a because it enables you to continue to hold your open trade transactions as will be described below.

Example of How is XAUUSD Margin Level Calculated on MT4?

The gold trading margin example on MT4 gold trading Software below, the set gold trading leverage is 100 : 1, the gold trading margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1% of their capital, this 1% equals to $2683.07, if 1% is equivalent to $2683.07 then 100% is equivalent to $268,307

Example of How is Gold Trading Margin Level Calculated on MetaTrader 4?