Trade Forex Trading

Example of How Does 20 % Margin Requirements Work?

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 20 % Margin Requirements Work?

Now if Your Leverage is 100:1

When you trade with $1,000 and 100:1 leverage, one standard lot of XAUUSD costs $100,000. Your $1,000 acts as margin. This cash is at risk if things go bad. The broker provides the rest, $99,000. They close the trade if the market wipes out your $1,000.

This is contingent upon your broker having established 0% Margin Requirements prior to the mechanical closure of your trade positions.

For 20% margin needs before auto-close, trades stop when your account hits $200.

Xauusd brokers will set this level for a trader's account, choose those online 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 and minimized just as is shown in illustrations above.

Certain brokers may establish a 50% margin requirement. If your balance falls to $500 during trading, your positions could be closed automatically to prevent further losses.

Learn more about leverage and margin. Check the tutorials below.

Discussing Leverage and Margin

Additional tutorials and topics available:

XAUUSD Broker