What Happens if You Get a Oil Trading Margin Call?
A margin call occurs when a oil trader's account free margin goes below the required margin level that is set by the broker. This means that because the free margin in the trader's account has gone below the required margin level then the trader gets a margin call & some of the open trades or all of the open trades in the trader's are closed by the broker until this trading margin level requirement goes back up to above the required margin level.
Some of the open trades may be closed or all of the open trades may be closed if this margin call is automatically executed by the broker.
What is Oil Margin Requirement Level?
Now if Your Crude Oil Trading Leverage is 100:1
When trading if you have $1,000 and use oil leverage option of 100:1 and buy 1 standard lot for $100,000 your margin on this trade is the $1000 dollars in your crude oil account, this is the money that you will lose if your open trade goes against you the other $99,000 that's borrowed, the broker will close the open oil trade transactions automatically using a Oil Margin Call once your $1,000 has been taken by oil market.
But this is if your oil broker has set 0% Crude Oil Trading Margin Requirement before closing your crude oil trades automatically using this Margin Call.
What is 20% Crude Oil Trading Margin Requirement Level?
For 20% margin requirement before closing your crude oil trades automatically using a Margin Call, then your trades will be closed once your account trading balance gets to $200 - at $200 you'll get a margin call.
What is 50% Crude Oil Trading Margin Requirement Level?
For 50% requirement of this level before closing your crude oil trades automatically using a margin call, then your trades will be closed once your account trading balance gets to $500 - at $500 you'll get a margin call.
What is 100% Crude Oil Trading Margin Requirement Level?
If the broker sets 100% margin requirement of this level before closing out your open trade positions automatically using a Margin Call - at $1,000 you'll get a margin call, then your crude oil trades will be closed once your account trading balance gets to $1,000: Meaning crude oil trades will close-out as soon as you execute a 1 standard lot on this crude oil trading account because even if you were to pay 1 point spread your oil account balance will get to below $1,000 & needed margin requirement percentage is 100% i.e. 1,000 dollars, therefore your oil orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most oil brokers don't set 100% margin requirement, but there are those crude oil brokers that set 100% trading margin requirement level aren't suitable for you at all, even those oil brokers that set 50% margin requirement level are still not suitable. Choose those brokers set their margin requirement at 20% margin requirement level, in fact, those brokers that set it at 20% Crude Oil Margin Requirement are the best because the likely hood they close-out your trade using a Oil Trading Margin Call is reduced as shown in the example above.
To Know More about Oil Leverage & Margin - How to Read the Topics Below:
Crude Oil Leverage and Margin Explained
