How Do I Calculate XAUUSD Margin Requirement in XAUUSD
Now if Your Leverage is 100:1
When xauusd if you have $1,000 and use leverage ratio 100:1 and buy 1 standard contract for $100,000 your margin on this xauusd transaction is the $1000 dollars in your account, this margin is the money that you'll lose if your open trade transaction moves against you the other $99,000 that is borrowed, they will close out the open trades automatically once your $1,000 has been taken by the market.
But this is if your broker has set 0 % Margin Requirement before stopping out your trade transactions automatically.
For 20 percent prerequisite before closing out your positions automatically, then your xauusd transactions will be closed once your balance gets to $200
For 50% prerequisite of this level before closing out your transactions automatically, then your xauusd transactions will be closed once your balance gets to $500
If they set 100% requirement of this level before closing out your open positions automatically, then your trade will be stopped out once your balance gets to $1,000: Meaning the trade will close out as soon as you execute it because even if you pay 1 pip spread your trading account balance will drop to $990 and the needed percentage is 100% i.e. $1,000, hence your orders will immediately get closed out.
Most brokers don't set 100 Percent requirement, but there are those who set 100% or 50% aren't suitable for you at all, choose those set 20% margin requirements, in fact, those brokers which set their margin requisite at 20 % are some of the best since due to the likely hood they stop out your open trade is reduced as shown in examples below.
To know about this margin level which is calculated by your MT4 automatically - the MetaTrader 4 Platform Software will illustrate this as "Gold Margin Requirement", This will be displayed as a percentage the higher the margin percentage the less likely your positions are to get closed out.
For Examples if - for a broker requiring 20% margin requirement
Using 100:1 leverage
If trading leverage is 100:1 & you transact 1 Mini Lot, equals to $10,000
$10,000(mini lot) divide by 100:1, used capital is $100
Calculation:
= Capital Used * Percent(100)
= $1,000/$100 * Percent(100)
XAUUSD Margin Requirement = 1000%
Investor has 980% above the margin required amount
Using 10:1
If leverage is 10:1 & you transact 1 Mini Lot, equals to $10,000
$10,000(mini lot) divide by 10:1, used capital is $1000
Calculation:
= Capital Used * Percent(100)
= $1,000/$1000 * Percent(100)
XAUUSD Margin Requirement = 100%
Investor has 80% above the margin required amount
The margin example illustrated below, the set leverage is 100 : 1, the margin which is 1% is $2683.07, therefore the total sum controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money and borrowed the rest of the amount, with this set at 100:1 ratio, the trader is using 1 % of their capital, this 1% equals to $2683.07, if 1% is equal to $2683.07 then 100% is equivalent to $268,307
How to Calculate Margin in Gold - How to Calculate XAUUSD Margin Requirement in XAUUSD
