What is Commodity Trading Margin Requirement?
Margin Level Commodity Trading Calculation - MetaTrader 4 Commodity Trading Margin Level Percentage Calculator - Calculating Commodity Trading Margin Example on MT4 Platform.
This learn commodity trading tutorial will explain What is Commodity Trading Margin Requirement in commodities trading & how it's calculated in MT4 platform.
Margin Level Commodity Trading Calculator
If commodity trading 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 commodity trading capital is $1,000 after commodity leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1%) that is your commodity trading margin requirement for your commodities trading account.
The commodity margin example on MT4 commodity trading Software below, the set commodities leverage ratio is 100:1, the commodity margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, trader is using 1 % of their capital, this 1% equals to $2683.07, if 1% equals to $2683.07 then 100% is $268,307
MT4 commodity trading margin level percent calculator Example
Now if Your Commodity Trading Leverage is 100:1
When trading if you have $1,000 & use option 100:1 & buy 1 Mini lot for $10,000 your margin on this transaction is $1000 dollars in your commodity trading Mini commodities trading account, this margin is money that you will lose if your open trade transaction goes against you - the other $99,000 that is borrowed, commodities broker will close the open commodity trades automatically once your $1,000 has been taken by the commodities trading market.
But this is if your commodity broker has set 0% Commodities Margin Requirement before closing your commodities trades automatically.
For 20% margin requirement before closing your commodities trades automatically, then your trades will be closed once your account balance gets to $200
For 50% margin requirement of this level before closing your commodities trades automatically, then your trades will be closed once your account balance gets to $500
If your commodity broker sets 100% margin requirement of this level before closing out your open positions automatically, then your opened trades will be closed once your trading account balance gets to $1,000: Meaning trade transaction will close-out just as soon as you execute the trade transaction because even if as a trader you pay 1 pip spread your trading account balance will go to $990 & needed percentage is 100% i.e. 1,000 dollars, therefore your trade orders will immediately get closed.
Most brokers don't set 100% requirement, but there are those brokers that set 100% aren't suitable for you at all, select those set 50% or 20% margin requirements, in fact, those commodity brokers that set at 20% are some of the best because the likely hood they closeout your trade is reduced as shown in example above.
MetaTrader 4 Commodity Margin Level Percentage Calculation
In the above MetaTrader 4 commodity trading screenshot example, the trader is using $2683.07, total controlled amount is $268,307, but commodity trading account equity is $16,116.55, therefore used commodities leverage is ( $268,307 divide by 16,116.55 ) = 16.64 : 1
16.64 : 1 Used Commodity Trading Leverage
The Margin is 600% which is 580% above the required 20% Margin requirement by the broker.
To know about this margin level which is calculated by your MT4 commodities trading platform automatically - The MT4 Commodity Trading Platform will display this as "Commodities Margin Requirement", This will be displayed as a percentage higher the percent the less likely your trades are to get closed.
For Examples if - (using a broker that requires 20% margin requirement)
Using 100:1 commodity trading leverage
If commodity leverage is 100:1 & you transact 10 Mini Lots, equals to $100,000
$100,000 dollars divide by 100:1, used capital is $1000
Calculation:
= Capital Used * Percent(100)
= $1,000/$1000 * Percent(100)
Commodities Trading Margin Requirement = 100 %
Investor has 80% above the required trading margin level amount
Using 10:1
If commodities leverage is 10:1 & you transact 1 Mini Lot, equals to $10,000
$10,000 dollars divide by 100:1, used capital is $100
Calculation:
= Capital Used * Percent(100)
= $1,000/$100 * Percent(100)
Commodities Margin Requirement = 1000 %
Investor has 980% above the required trading margin level amount
Using 1:1 commodity trading leverage
If commodities leverage is 1:1 & you transact 0.1 Mini Lot, equals to $1,000
$1,000 dollars divide by 100:1, used capital is $10
Calculation:
= Capital Used * Percent(100)
= $1,000/$10 * Percentage(100)
Commodities Trading Margin Requirement = 10,000 %
Investor has 9800% above the required trading margin level amount
