Gold Margin Call Explanation
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 the online broker. This means that because free margin in trader's account has dropped below required margin level then trader gets a margin call & some of the open trades in trader's are closed by the online broker until this margin level moves back up to above the required margin percent region.
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 your margin on this trade is $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 has been taken by market.
But this is if your online broker has set 0% XAUUSD Margin Requirements before liquidating your trades automatically using the Margin Call.
What's 20 % Margin Requirements Level?
For 20% xauusd margin requirement before liquidating your trades automatically using what's known as Margin Call, then your trades will be stopped out once your account balance gets to $200 - at $200 you'll get a margin call.
What's 50 % XAUUSD Margin Requirements Level?
For 50 % requirement of this level before liquidating your trades automatically using what's known as margin call, then your open transactions will be closed out once your balance reaches $500 - at $500 you will get a margin call.
What's 100% Gold Margin Requirements Level?
If the online broker sets 100% xauusd margin requirement of this level before closing out your open trade positions automatically using a Margin Call - at $1,000 you will get a margin call, then your trades will be closed once your trading account balance gets to $1,000: Meaning trade transactions will liquidate as soon as you executes a 1 standard contract on this account because even if you pay one pips spread your account balance will get to $990 & the needed margin requirement % is 100% i.e. $1,000, therefore your orders will immediately get liquidated using a Margin Call once your margin requirement falls below 100 percent.
Most online brokers do not set 100% xauusd margin requirement, but there are those brokers that set 100% xauusd margin are not good-enough for you at all, even those that set 50% xauusd margin requirement are still not good-enough. Select those set 20 % margin requirements, in fact, those brokers that set their margin requirement at 20% XAUUSD Margin Requirement are the best because the likely-hood they liquidate your trade using a Margin Call is reduced as shown in the examples above.
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Trading Leverage & Margin Explained
