What Happens When Free Margin Hits Zero?
What Happens When Free Margin is Negative?
A xauusd margin call is when a trader's account free margin drops below the required margin level which is set by broker. This means that because free margin in trader's account has gone below required margin level then trader receives a margin call & some of the open trade transactions in trader's are closed by broker til this margin level goes back up to above required margin level.
Some of the open trades might be closed or all of the open trades might be closed if this margin call is automatically executed by broker.
What's Margin Requirements Level?
Now if Your Leverage is 100:1
When trading if you have $1,000 dollars & use leverage of 100:1 and buy 1 standard lot for $100,000 dollars your margin on this trade transaction is the $1000 in your account, this is money which you'll lose is your open trade transaction goes against you the other $99,000 that's borrowed, the broker will close out the open trades transactions automatically using a Margin Call once your $1,000 dollars has been taken out by market.
But this is if your broker has set 0 % Trading Margin Requirements before liquidating your trade transactions automatically using this Margin Call.
What's 20 % Trading Margin Requirements Level?
For 20% xauusd margin requirement before liquidating your trade transactions automatically using what's known as a Margin Call, then your trades will be stopped out once your account balance reaches $200 - at $200 you will get a margin call.
What's 50 % Trading Margin Requirements Level?
For 50 percent requirement of this level before liquidating your trade transactions automatically using what's known as a margin call, then your trade transactions will be liquidated once your balance gets to $500 - at $500 you'll get a margin call.
What's 100% Trading Margin Requirements Level?
If the broker sets 100% gold margin requirement of this level before stopping out your open trade positions automatically using a Margin Call - at $1,000 you will get a margin call, then your trades will be stopped out once your trading account balance reaches $1,000: Meaning trade transactions will close-out as soon as you executes a one standard lot on this trading account because even if you pay one pips spread your account balance will get to $990 & the needed xauusd trading margin requirement % is 100% i.e. $1,000 dollars, therefore your orders will immediately get liquidated using a Margin Call once your margin requirement falls below 100 percent.
Most brokers do not set 100 % xauusd margin requirement, but there are those brokers that set 100 % gold margin aren't good-enough for you as a trader at all, even those that set 50 % xauusd margin requirement are still not good-enough. Select those set 20 percent margin requirements, in fact, those brokers that set their margin requirement at 20% Margin Requirement are the best because the likely-hood they close your trade using a Margin Call is reduced as shown in the examples above.
To Learn and Know More about Trading Leverage and XAUUSD Margin - Read the Learn Courses Explained Below:
XAUUSD Leverage & XAUUSD Margin Explained
