Example of How Does 20 % Margin Requirements Work?
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 20 % Margin Requirements Work?
Now if Your Leverage is 100:1
When trading if you have $1,000 and use leverage option 100:1 & buy 1 standard lot for $100,000 your xauusd margin on this trade is the $1000 in your account, this is the money that you'll lose if your open trade transaction goes against you the other $99,000 that is borrowed from the broker, the broker will close the open trades automatically once your $1,000 has been taken by market.
But this is if your online broker has set 0% Margin Requirements before liquidating your trades automatically.
For 20% Margin Requirements before liquidating your transactions automatically, then your trades will be stopped out once your trading account balance reaches $200
Xauusd brokers will set this level for a trader's account, choose those brokers that set 20 percent margin requirements, in fact, those brokers that set at 20% margin requirement are the best because the likelihood they close out your trade is reduced as shown in examples above.
Some brokers will set these zones at for 50% Margin Requirements before liquidating your trade transactions automatically, meaning that your transactions will be closed once your balance gets to $500.
To Learn and Know More about Leverage and Margin - Read the Topics Below:
Leverage and Margin Discussed
