How to Calculate Metals Trading Margin Requirement in Metals
Now if Your Metals Trading Leverage is 100:1
When metals trading if you have $1,000 & use option 100:1 and buy 1 standard lot for $100,000 your margin on this metals trade is the $1000 dollars in your metal trading account, this margin is the money that you will lose if your open trade goes against you the other $99,000 that is borrowed, they will close the open metals trades automatically once your $1,000 has been taken by metals trading market.
But this is if your metals broker has set 0% Metals Margin Requirement before closing your metal trades automatically.
For 20% requirement before closing your metal trades automatically, then your metals trade transactions will be closed once your account balance gets to $200
For 50% requirement of this level before closing your metal trades automatically, then your metals trade transactions will be closed once your balance gets to $500
If they set 100% requirement of this level before closing out your open trades automatically, then your metals trade will be closed once your balance gets to $1,000: Meaning the trade will close out as soon as you execute it because even if you pay 1 pip spread your account balance will get to $990 & the needed percentage is 100% i.e. 1,000 dollars, therefore your orders will immediately get closed.
Most metals brokers do not set 100% requirement, but there are those that set 100% or 50% aren't suitable for you at all, choose those set 20% margin requirements, in fact, those brokers that set it at 20% are some of the best because the likely hood they close out your open metals trade is reduced as shown in the examples below.
To know about this margin level which is calculated by your MT4 metal trading platform automatically - The MetaTrader 4 Metals Platform will display this as "Metals Margin Requirement", This will be displayed as a percentage the higher the margin percent the less likely your trades are to get closed.
For Examples if - for a broker requiring 20% margin requirement
Using 100:1 leverage
If metals leverage is 100:1 & you transact 1 Mini Lot, equals to $10,000
$10,000 dollars(mini lot) divide by 100:1, used capital is $100
Calculation:
= Capital Used * Percent(100)
= $1,000/$100 * Percent(100)
Metals Trading Margin Requirement = 1,000 %
Investor has 980% above the metals trading margin required amount
Using 10:1
If metals leverage is 10:1 & you transact 1 Mini Lot, equals to $10,000
$10,000 dollars(mini lot) divide by 10:1, used capital is $1000
Calculation:
= Capital Used * Percent(100)
= $1,000/$1000 * Percent(100)
Metals Margin Requirement = 100 %
Investor has 80% above the metals trading margin required amount
The margin trading example illustrated and explained below, the set metal trading leverage ratio is 100:1, the metals margin which is 1% is $2683.07, therefore the total amount controlled by metals trader is: $268,307 - this is because with this leverage the trader has used little of his money and borrowed the rest, with this set at 100:1, the trader is using 1 % of their capital, this 1% is equivalent to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307
How to Calculate Margin in Metals Trading - How to Calculate Metals Trading Margin Requirement in Metal Trading
