Metals Margin Explained

What is Margin in Metal Trading?

The definition of Metals Trading Leverage is having the ability to control a big amount of money using very little of your own money and borrowing the rest - this is what makes the metal market to attract many investors.

We shall explain metals trading leverage first & then explain metals trading margin in this learn how to calculate metal trading leverage & margin tutorial.

Example:

We shall us this example to explain what metals leverage is? If your metals broker gives you metals leverage of 100:1 (this is best option to select as a maximum for any account)

This means you borrow 100 dollars for every dollar you've in your metal trading account.

To put in another way your metals broker gives you 100 dollars for every 1 dollar in your trading account. This is what's known as metal trading leverage.

This means if you open an account with $1,000 & your metal leverage ratio is 100:1, then you will get $100 for every $1 you that you've, the total amount that you will control is:

If for 1 dollar the broker gives you 100

Then if you have 1,000 you will get a total of:

$1,000 * 100 = 100,000 dollars

Now you control 100,000 dollars of Investment

Most new metals traders ask what metals leverage is best metals leverage for 1,000 dollars, or 2,000 dollars, or 5,000 dollars metals trading account? - The best metals leverage option to choose when opening a live metal account is always 100:1 & not 400:1.

What's Metals Trading Margin?

This is the amount of money required by your metal broker so that as to allow you to continue trading with borrowed amount.

In other words the question what is margin in Metals Trading? can be explained as money required to cover open metal trades & is expressed in percentage. For 100:1, the amount you will control is 100,000 dollars as explained in the above example.

Now can you compare a investing $1,000 with another one that is investing $100,000? Obviously Not. This is how it works: it takes you from that retail investing $1,000 to that investing $100,000. Where does this extra cash come from? - You borrow it from your metals broker in what is simply referred to as Metals Trading Leverage. This money that you borrow, you borrow it against the $1,000 dollar of your own money which you deposit with your metal broker. If you were to explain what this metals trading leverage means - then it is the ability to control a big amount of money using very little of your own money and borrowing the rest. Otherwise, if you were trade Metals Trading without this metals trading leverage it would not be as profitable as it is, in fact you can still choose not to use metal leverage, using 1:1 leverage option but you would not make money and it would take too long to make any profit.

Example of how to calculate metal leverage & margin:

Margin required in this case is 1,000 dollars (your money) if it is expressed as a percent of 100,000 dollars which you control it is:

If leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1%

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am Beginner'

(Simplify - your capital is $1,000 after metals leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1 %) that's your margin requirement for your metal trading account.