Margin Call Level
What Happens When Free XAUUSD Margin is Negative?
A margin call is when a trader's account free margin goes below the required margin level that's 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 transactions 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 trades may be liquidated if this margin call is automatically executed by gold broker.
What's Margin Requirement Level?
Now if Your Leverage is 100:1
When trading if you have $1,000 & use leverage of 100:1 and buy 1 standard lot for $100,000 your margin on this trade is $1000 in your account, this is money which you'll lose is your open trade transaction goes against you the other $99,000 that's borrowed, the broker will close out the open trades transactions automatically using a Margin Call once your $1,000 has been taken out by market.
But this is if your broker has set 0 % Margin Requirement before stopping out your gold trade transactions automatically using the Margin Call.
What's 20 % Margin Requirement Level?
For 20 % margin requirement before liquidating your gold trade transactions automatically using what is known as a Margin Call, then your trades will be stopped out once your account balance gets to $200 - at $200 you'll get a margin call.
What's 50% Margin Requirement Level?
For 50 percent requirement of this level before liquidating your gold trades automatically 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 will get a margin call.
What's 100% Margin Requirement Level?
If the broker sets 100% margin requirement of this level before stopping out your open trade positions automatically using a Margin Call - at $1,000 you'll get a margin call, then your trade transactions will be liquidated once your trading account balance reaches $1,000: Meaning trades will close-out 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 percentage is 100% that is $1,000, hence your orders will immediately get closed using a Margin Call once your margin requirement falls below 100 percent.
Most brokers do not set 100 % margin requirement, but there are those brokers that set 100 % margin requirement level aren't suitable for you at all, even those that set 50 % margin requirement level are still not suitable. Select those brokers set their margin level requirement a 20% margin requirement, in fact, those brokers that set their margin requirement at 20 % Margin Requirement are the best since due to the likely-hood they liquidate your trade using a Margin Call is reduced as shown in the above example.
To Learn and Know More about Leverage and Margin - Study the Learn Trading Courses Explained Below:
Gold Leverage and Margin Described
