Margin Call Level
What Happens When Free XAU/USD Margin is Negative?
A margin call is when a trader's account free margin falls below the required margin level that is set by gold broker. This means that because free margin in trader's account has gone below the required margin level then the trader receives a margin call and some of the open trade positions in the trader's are closed by broker til this margin level requirement goes back up to above the required margin level.
Some of the open trades may be closed or all of the open trade positions may be liquidated if this margin call is automatically executed by gold broker.
What is Margin Requirement Level?
Now if Your Leverage is 100:1
When trading if you as a trader have $1,000 and use leverage ratio of 100:1 and buy 1 standard lot for $100,000 your margin on this trade is $1000 dollars in your account, this is money which you'll lose out if your open trade position moves against you - the other $99,000 that's borrowed, the broker will closeout the open position transactions mechanically/automatically by using a Margin Call once your $1,000 dollars has been taken out by market.
But this is if your broker has set 0 % Margin Requirement before stopping out your gold trade positions automatically/mechanically by using the Margin Call.
What's 20 % Margin Requirement Level?
For 20 % margin requirement before liquidating your gold trade positions mechanically/automatically by using what is known as a Margin Call, then your positions will be stopped out once your account balance gets to $200 - at $200 you will get a margin call.
What's 50% Margin Requirement Level?
For 50 percent requirement for this level before liquidating your gold trade positions mechanically/automatically by using what is known as a margin call, then your trade transactions will be liquidated once your trading account balance reaches $500 - at $500 you'll get a margin call.
What is 100% Margin Requirement Level?
If the broker sets 100% margin requirement for this level before stopping out your open position transactions automatically/mechanically by using a Margin Call - at $1,000 you'll get a margin call, then your trade transactions will be liquidated once your account balance reaches $1,000: Meaning trade transactions will closeout as soon as you execute a 1 standard lot on this account because even if you pay $10 spreads your trading account balance will get to $990 and the needed margin requirement % is 100% that is $1,000, therefore your open trade positions will immediately get stopped out using a Margin Call once your account margin requirement drops below 100 percent.
Most brokers don't set 100 % margin requirement, but there are those online brokers who set 100% margin requirement level aren't suitable for you at all, even those that set 50 % margin requirement level are still not good enough. Choose & Select those brokers set the account margin level requirement a 20 % margin requirement, in fact, those brokers who set their trading margin requirement at 20 % Margin Requirement are the best since due to the likely-hood they liquidate your trade using a Margin Call is minimized just as is illustrated and shown in the above example.
To Learn and Know More about Leverage & Margin - Study the Learn Courses Illustrated Below:
Gold Leverage & Margin Explained
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