Gold Margin Call Explanation
What Happens When the Trading Account Free Margin is Negative?
A gold margin call is when a trader's account free margin falls 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 trade positions 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 trade positions might and may be closed or all of the open trades might and may be closed if this margin call is executed automatically by broker.
What is Margin Requirements Level?
Now if Your Leverage is 100:1
When trading if you as a trader have $1,000 dollars and use leverage ratio of 100:1 and buy 1 standard lot for $100,000 your margin on this trade is $1000 dollars in your account, this is money which you'll lose out if your open trade position moves against you - the other $99,000 that's borrowed, the broker will closeout the open position transactions automatically/mechanically by using a Margin Call once your $1,000 has been taken out by the market.
But this is if your broker has set 0% Gold Margin Requirements before stopping out your positions mechanically/automatically using the Margin Call.
What is 20 % Margin Requirements Level?
For 20% gold margin requirement before liquidating your trade positions mechanically/automatically by using what's known as Margin Call, then your positions will be stopped out once your account balance gets to $200 - at $200 you'll get a margin call.
What's 50 % Gold Margin Requirements Level?
For 50 % requirement for this level before liquidating your trade positions mechanically/automatically by using what is known as margin call, then your open trade positions 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 for this level before closing out your open trade positions automatically/mechanically by using a Margin Call - at $1,000 you'll get a margin call, then your positions will be closed once your trading account balance gets to $1,000: Meaning trade positions will liquidate as soon as you executes a 1 standard lot on this account because even if you pay one pips spread your account balance will get to $990 and the needed margin requirement % is 100% i.e. $1,000, therefore your open trade positions will immediately get liquidated using a Margin Call once your account margin requirement drops below 100 percent.
Most brokers do not set 100% xauusd margin requirement, but there are those brokers who set 100% xauusd margin are not good-enough for you at all, even those that set 50% xauusd margin requirement still are not good enough. Choose & Select those set 20 percent margin requirements, in fact, those brokers who set their trading margin requirement at 20% Gold Margin Requirement are the best because the likely-hood they liquidate your trade using a Margin Call is minimized just as is shown on the examples revealed above.
To Learn & Know More about Trade Leverage and Margin - Study the Learn Guides Explained and Described Below:
Leverage and Margin Explained with Example
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