What Does 100% Metals Trading Margin Requirement Mean?
Margin requirement is the percentage of the trade transaction value that a trader must maintain so as to continue holding the open trades that have been opened using metal trading leverage.
Example of How Does 100% Metal Margin Requirement Work?
Now if Your Metals Trading Leverage is 100:1
When trading if you have $1,000 and use option 100:1 and buy 1 standard lot for $100,000 your metals trading margin on this trade transaction is $1000 dollars in your metal trading account, this is money which you'll lose if your open trade goes against you the other $99,000 that is borrowed from the broker, the broker 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% Metals Margin Requirement before closing your metal trades automatically, then your trades will be closed once your balance gets to $200
For 50% Metals Margin Requirement of this level before closing your metal trades automatically, then your trades will be closed once your balance gets to $500
If the broker sets 100% Metals Trading Margin Requirement of this level before closing your open trades automatically, then your trade will be closed once your account balance gets to $1,000: Explanation the metals 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 metals brokers that set 100% Metals Trading Margin Requirement or 50% Metals Trading Margin Requirement 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 metals trade is reduced as shown in the examples above.
To Know More about Metals Leverage & Margin - How to Read the Topics Below:
Metals Leverage & Margin Lesson
