Trade Forex Trading

Gold Margin Call Explanation

Consequences of a Negative Free Margin in Your Trading Account

A XAUUSD margin call occurs when the available free margin in a trader's account drops beneath the required minimum margin level stipulated by the online broker. Consequently, due to this reduction in free margin below the required threshold, the trader receives a margin call, prompting the online broker to automatically liquidate some open trade positions until the account's margin level recovers to a percentage above the mandated requirement.

Some of the open trade positions might and may be closed or all of the open trades might and might be closed if this margin call is executed automatically by broker.

What is Margin Requirements Level?

Now if Your Leverage is 100:1

Think about this when trading: With $1,000 and a 100:1 leverage, you can buy a standard lot worth $100,000, making your margin $1,000, the most you can lose if the trade goes wrong. The broker lends you the other $99,000 and will close your position if your account runs out of money through a Margin Call.

However, this is assuming that your broker has set Gold Margin Requirements to 0% before it stops your trades automatically using the Margin Call.

What is 20 % Margin Requirements Level?

If you use what is known as Margin Call to mechanically/automatically liquidate your trade positions with a 20% gold margin requirement, then your positions will be stopped out once your account balance reaches $200 dollars - at which point you will receive a margin call.

What's 50 % Gold Margin Requirements Level?

Your account needs 50% equity before a margin call closes trades on its own. Positions shut down when your balance drops to $500, triggering that call right there.

What's 100% Gold Margin Requirements Level?

If your online company makes you have 100% of the needed money for XAUUSD, your open trades will be closed automatically by a Margin Call when your account balance goes down to $1,000. For example, if you start a big trade on an account with $1,000 and lose money on the difference between buying and selling prices, your balance will go down to $990, which will start the Margin Call because you can't keep the needed money level of 100%. If your account balance drops below $1,000, your open trades will be closed right away by a Margin Call once you don't have enough money in your account.

Most brokers do not set a 100% margin requirement for XAUUSD. Brokers that set this requirement might not be the best choice for you. Even those with a 50% margin requirement may not be ideal. It's better to select brokers with a 20% margin requirement. These brokers are likely to minimize the chance of liquidating your trade through a margin call.

To Learn More About Trade Leverage and Margin - Refer to the guides outlined below:

Leverage and Margin Explained with Example

Get More Courses and Topics:

XAUUSD Broker