Trade Forex Trading

What Happens if You Get a Margin Call?

A margin call hits when a XAUUSD trader's free margin dips under the broker's required level. The broker sets this margin threshold. Free margin drops too low, so the trader gets the call. The broker closes some open trades or all of them. This keeps going until the account's margin rises above the needed percent.

Some open trades may hit stops, or all close if the broker triggers a margin call.

What's Margin Requirement Level?

Now if Your Leverage is 100:1

When trading if you have $1,000 & use leverage ratio of 100:1 & open buy for 1 standard lot worth $100,000 dollars your margin on this trade is $1000 in your account, this is money which you will lose if your open trade position goes against you : the other $99,000 dollars that's borrowed, the online broker will close out the open trade positions mechanically/automatically using a Gold Margin Call once your $1,000 has been taken out by market.

However, this is only if your broker has established a 0% Margin Requirement prior to automatically halting your xauusd trade operations using this Margin Call.

What's 20 percent Margin Requirement Level?

If you have a 20% margin requirement prior to mechanically closing your gold trading positions utilizing what is known as Margin Call, then your trades will be stopped out once your account balance reaches $200, at which point you will get a margin call.

What's 50 % Margin Requirement Level?

For 50 % requisite of this level before closing out your gold trade positions mechanically using what is known & referred to as margin call, then your transactions will be closed once your account balance gets to $500 - at $500 you'll receive a margin call.

What's 100 % Margin Requirement Level?

If the online broker implements a 100% margin level requirement prior to automatically shutting down your open positions through a mechanism known as a margin call, you will get a margin call when your account balance hits $1,000. This means that your trades will be terminated as soon as you place a standard lot on this trading account. Even if you incur a one pip spread, your account balance may drop to $990, while the necessary margin requirement remains at 100%, equaling $1,000. Thus, your open trade positions will be swiftly closed through a margin call once your account's margin requirement decreases below 100%.

Most brokers do not set 100 % margin requirement, but there are those brokers that set 100 percent margin % level requirement are not suitable for you at all, even those that set 50 % margin requirement level still are not suitable and good enough. Select online brokers that enforce a 20% account margin level requirement. Brokers with this margin policy are preferable as they reduce the chances of executing trades via a Gold Margin Call, offering a higher level of security for traders' positions as shown in examples above.

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

Discussing Leverage and Margin

More Tutorials and Topics:

XAUUSD Broker