Trade Forex Trading

What Does 100% Margin Requirement Mean in XAUUSD?

Margin requirement means the share of trade value that a trader must keep to continue holding trades opened with borrowed funds, known as leverage, from their broker.

Explanation of How Does 100% Margin Requirements Work?

Now if Your Leverage is 100:1

In a trading scenario where you possess $1,000 and employ a 100:1 leverage ratio to purchase one standard lot valued at $100,000, your XAUUSD margin for this specific trade is the entirety of your $1,000 account balance: this is the capital amount at risk should the open position move unfavorably. The remaining $99,000 is borrowed from the broker: if your initial $1,000 is fully depleted by market movements against you, the online broker will initiate an automated closure of the open trades.

But this is only if your xauusd broker has set XAUUSD Gold Margin Requirements to 0 percent before automatically stopping your trades.

With 20% margin requirements, close positions if balance hits $200. Trades shut automatically then.

If your account requires 50% of the money to remain before stopping your trades, your positions will close when your balance hits $500.

If the online broker decides to put a 100% margin requirement at this level before closing the open trade positions automatically, then your trade will be terminated as soon as your balance reaches $1,000. That means the trade will be automatically closed when it is opened because even if there is a 1 pip spread, the trading account balance will be $990 and the required margin will be 100%, i.e., $1,000, so your trade orders will be closed immediately.

Most brokers for XAUUSD do not need a full deposit. However, if a broker needs a full deposit, or even half, it might not work for you. Instead, find brokers that want only a 20% deposit. It's usually better to use brokers that ask for less deposit, because your XAUUSD trade is less likely to be stopped early, like we talked about before.

Learn about Leverage & Margin by following the tutorials below:

XAUUSD: A Look at Leverage and Margin

Study More Subjects and Tutorials

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