What's a Margin Account?
A XAUUSD Margin trading account is an account that allows traders to control a large amount of trade transaction using little of their own capital while borrowing the rest from their broker.
What is Margin Account?
Obtaining this margin account will enable you as a trader to borrow money from your broker to trade with.
The amount of borrowing power your trading account gives you what is called " leverage", and is usually expressed as a ratio - a ratio of 100:1 means you can control resources worth 100 times your deposit - leverage 100:1 means you can borrow 100 dollars from your broker for every $1 dollar in your account.
What this means in Gold terms is that with 1% margin in your trading account you can control 1standard lot or 1 contract worth $100,000 with a $1,000 deposit.
However, Trading this trading account increases both potential for profits as well as losses. In you can never lose more than you invest, losses are limited to your deposits and usually brokers will close a trade which extends beyond your deposit amount by executing a margin call. Traders must therefore try and keep their margin requirement level which is above that which is required. By using equity management rules and keeping your used leverage below 5:1.
To Learn and Know More about Leverage & Margin - Read the Topics Below:
Gold Leverage & Margin Explained
