Trade Gold Trading

What Happens When Free Margin Hits Zero?

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

A margin call is when a trader's account free margin goes below the required margin level which 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 margin call and 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 closed out if this margin call is automatically executed by the online broker.

What is Margin Requirement Level?

Now if Your Leverage is 100:1

When trading if you have $1,000 and use leverage option of 100:1 and buy a trade position - your margin on this trade is the $1000 in your account, this is the money that you will lose is your open trade moves against you & the other $99,000 which's borrowed, the broker will close out the open trade positions automatically using a Margin Call 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 trades automatically using the Margin Call.

What's 20% Margin Requirement Level?

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

What's 50% Margin Requirement Level?

For 50 % requisite of this level before stopping outclosing outliquidating your trade positions automatically using a trade position margin call, then your transactions will be closed once your account balance gets to $500 - at $500 you'll get a margin call.

What is 100% Margin Requirement Level?

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

Most brokers do not set 100% margin requirement, but there are those brokers that set 100% margin are not suitable for you at all, even those who set 50 percentage% margin requirement are still not suitable. Choose those set 20 percent% margin requirements, 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 displayed in the above example.

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

Leverage & Margin Described

More Topics & Lessons:

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Forex Traders Seminar

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