What Does 100% Margin Requirement Mean in XAUUSD?
Margin requirement is the percentage of the trade value that a trader must maintain so as to continue holding the open trades which have been opened using leverage.
Example of How Does 100% Margin Requirements Work?
Now if Your Leverage is 100:1
When trading if you have $1,000 & use leverage option 100:1 & buy 1 standard lot for $100,000 your xauusd margin on this trade is the $1000 in your xauusd account, this is the money that you will lose if your open trade goes against you the other $99,000 that is borrowed from the broker, the online broker will close the open trades automatically once your $1,000 has been taken by market.
But this is if your xauusd broker has set 0 percent XAUUSD Margin Requirements before liquidating your trades automatically.
For 20% Margin Requirements before liquidating your positions automatically, then your trades will be closed once your account balance gets to $200
For 50% Margin Requirements of this level before stopping out your transactions automatically, then your trades will be stopped out once your trading account balance reaches $500
If the online broker sets 100 % Margin Requirement of this level before closing out your open positions automatically, then your trade transaction will be closed out once your balance gets to $1,000: Meaning the trade will close out as soon as you open it because even if you pay 1 pips spread your trading account balance will get to $990 and the needed percentage is 100 percent i.e. $1,000, hence your orders will immediately be closed.
Most xauusd brokers don't set 100% requirement, but there are those xauusd brokers that set 100% Margin Requirement or 50% Margin Requirement aren't suitable for you at all, select those set 20 % margin requirements, in fact, those brokers which set their margin requirement at 20 % are some of the best since due to the likely hood they stop out-out your xauusd trade is reduced as shown in examples above.
To Learn & Know More about Leverage & Margin - Read the Topics Below:
XAUUSD Leverage & Margin Discussed
