Trade Gold Trading

What Happens When Your Free Trading Margin Gets To Zero?

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

A stop out is when a trader's trading account free margin falls below the required margin level that is 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 trade transactions 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 trade transactions might be closed or all of the open trade transactions might be liquidated if this stop out is executed automatically by the online broker.

What's Margin Requirement Level?

Now if Your Leverage is 100:1

When trading if you as a trader have $1,000 dollars & use leverage ratio of 100:1 and buy a trade position - your margin on this trade transaction is the $1000 in your trading account, this is the money that you will lose out if your open position goes against you - the other $99,000 dollars that's borrowed, the broker will closeout the open trade transactions mechanically using a Stop-Out once your $1,000 has been taken by the market.

But this is if your online broker has set 0 % Margin Requirement before closing out your trade position positions mechanically/automatically using this Stop Out.

What is 20 % Margin Requirement Level?

For 20% margin requirement before closing out your trades mechanically using a Stop Out, then your trade positions 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 mechanically/automatically using a stop out, then your transactions will be stopped out once your balance gets to $500 - at $500 you'll 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 trade transactions mechanically/automatically using a Stop Out - at $1,000 you will get a stop out, then your trade positions will be closed once your account balance gets to $1,000: Meaning the trade transactions will closeout as soon as you execute a one standard lot on this 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 brokers do not set 100 % margin requirement, but there are those online brokers that set 100 % margin are not suitable for you at all, even those who set 50 % margin requirement are still not suitable. Choose and Select those set 20 % margin requirements, in fact, those brokers that set their margin requirement at 20% Margin Requirement are among some of the best because the likelihood they close out your trade using a Stop Out is reduced and minimized as cited in the above example illustration.

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

Gold Leverage & Margin Explained

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Forex Traders Seminar Gala

Forex Traders Seminar

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