Metals Leverage & Margin, Margin Required, Equity, Used Metals Margin and Free margin

Margin required : It is the amount of money your metals broker requires from you to open a position. It is expressed in percentages.

Equity : It is the total amount of capital you have in your trading account.

Used margin : amount of money in your account which has already been used up when buying a metals lot, this contract is the one that's displayed in open trade positions. As a trader you can not use this amount of money after opening a trade transaction because you have already used it and it is not available to you.

In other words, because your metals 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 metals leverage he has given you.

Free margin : amount in your account that you can use to open new trade positions. This is the amount of money in your trading account that has not yet been metals leveraged because you've not yet opened a trade with this money - this is also very important for you as a trader because it enables you to continue holding your open trade transactions as described and illustrated below.

However, if you over use metal leverage, this free margin will drop below a certain percent at which your metal broker will have to close all your positions automatically, leaving you with a big loss. The metal broker at this point closes all your open trade position because if your open positions are left open they would lose the money that you've borrowed from them.

This is why you should always make sure you have a lot of free margin. To do this never trade more than 5 percent of your metal account, in fact 2 percent is recommended.