Margin Call Explained
What Happens When Free XAUUSD Margin is Negative?
A margin call is when a xauusd trader's account free margin goes below the required margin level that's set by the broker. This means that because the free margin in the trader's account has gone below the required margin level then the trader gets a margin call & some of the open trades in xauusd trader's are closed by the broker until this margin percentage level goes back up above the required margin percent area.
Some of the open trades may be closed out or all of the open trades might be closed-out if this margin call is automatically executed by the broker.
What's Gold Margin Requirement Level?
Now if Your XAUUSD Trading Leverage is 100:1
When trading if you have $1,000 and use leverage of 100:1 & buy 1 standard xauusd lot for $100,000 your margin on this xauusd trade is the $1000 dollars in your gold account, this is money which you'll lose is your open xauusd trade goes against you the other $99,000 that's borrowed, the broker will close the open trades automatically using a Margin Call once your $1,000 has been taken by the gold trading market.
But this is if your xauusd broker has set 0% XAUUSD Margin Requirement before closing your gold trades automatically using this Margin Call.
What is 20% XAUUSD Margin Requirement Level?
For 20% margin requirement before closing your gold trades automatically using a Margin Call, then your xauusd trade transactions will be closed once your xauusd trading account balance gets to $200 - at $200 you'll get a margin call.
What is 50% XAUUSD Margin Requirement Level?
For 50% requirement of this level before closing your gold trades automatically using a margin call, then your transactions will be closed once your account balance gets to $500 - at $500 you will get a margin call.
What is 100% XAUUSD Margin Requirement Level?
If the broker sets 100% margin requirement of this level before closing out your open trades automatically using a Margin Call - at $1,000 you'll get a margin call, then your gold trades will be closed once your account balance gets to $1,000: Meaning the gold trades will close-out as soon as you execute a 1 standard xauusd lot on this xauusd account because even if you pay 10 dollars spread your xauusd account balance will get to $990 & the needed margin requirement percent is 100% that is 1,000 dollars, therefore your xauusd orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most xauusd brokers don't set 100% margin requirement, but there are those xauusd brokers that set their margin requirement level at 100 percent trading margin are not suitable for you at all, even those that set 50% trading margin requirement level are still not suitable. Select those trading brokers set their margin level requirement a 20% margin requirement, in fact, those gold brokers which set their margin requirement at 20% XAUUSD Margin Requirement are the best because the likely hood they closeout your trade using a Margin Call is reduced as shown in the examples above.
To Learn and Know More about XAUUSD Leverage and Margin - Read the Learn XAUUSD Trading Topics Described Below:
XAUUSD Trading Leverage & Margin Explained
