Trade Gold Trading

What Happens When Free Margin Hits Zero?

What Happens When Your Free Margin in Your Account is Negative?

A stop out is when a trader's trading account free margin goes below the required margin level that's set by the online broker. This means that because the free margin in the trader's account has gone below the required margin level then the trader gets a stop-out & some of the open trades in gold trader's are closed by the online broker until this margin level goes back upto above the required margin level.

Some of the open trades might be closed out or all of the open trades might be liquidated if this stop-out is automatically executed by the online broker.

What's Margin Requirement Level?

Now if Your Leverage is 100:1

When trading if you have $1,000 dollars and use leverage option of 100:1 & buy a trade position - your margin on this trade is the $1000 dollars in your trading account, this is the money that you will lose is your open trade moves against you the other $99,000 dollars that is borrowed, the broker will close out the open trades automatically using a Stop-Out once your $1,000 has been taken by the market.

But this is if your broker has set 0 % Margin Requirement before stopping outclosing outliquidating your trade positions automatically using this Stop Out.

What is 20 % Margin Requirement Level?

For 20% margin requirement before closing your trades transactions automatically using a Stop Out, then your trades will be closed once your account balance gets to $200 - at $200 you'll get a stop out.

What is 50% Margin Requirement Level?

For 50% prerequisite of this level before closing out your trades automatically using a stop out, then your transactions will be stopped out once your balance gets to $500 - at $500 you will get a stop out.

What's 100% Margin Requirement Level?

If the online broker sets 100% margin prerequisite of this level before closing out your open trades automatically using a Stop Out - at $1,000 you'll get a stop out, then your trades will be closed once your account balance gets to $1,000: Meaning the trades will close-out as soon as you execute a one standard lot on this trading account because even if you as a trader you pay $10 spread your trading account balance will get to below $1,000 & the needed margin requirement percentage% is 100% that is $1,000, therefore your orders will immediately get closed using a Stop Out once your margin requirement falls below 100 %.

Most online brokers do not set 100 % margin requirement, but there are those brokers that set 100 percent% margin are not suitable for you at all, even those who set 50 percentage% margin requirement are still not suitable. Choose those set 20 % margin requirements, in fact, those brokers which set their margin requirement at 20% Margin Requirement are some of the best because the likelihood they close out your trade using a Stop Out is reduced as cited in the above example.

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

Gold Leverage & Margin Described

Learn More Topics & Courses:

Forex Traders Seminar Gala

Forex Traders Seminar

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