How Do I Calculate the Margin Required in Indices Trading?
Three examples of how to calculate the margin requirement in stock indices trading.
Now if Your Indices Trading Leverage is 100:1
When trading if you have $1,000 and use stock indices leverage option of 100:1 and buy 1 standard lot for $100,000 your margin on this trade transaction is the $1000 dollars in your stock indices trading account, this is the money that you will lose is your open transaction goes against you the other $99,000 that is borrowed, the stock indices broker will close the open indices trading transactions automatically using a Indices Trading Margin Call once your $1,000 has been taken by the stock indices trading market.
But this is if your indices broker has set 0% Indices Trading Margin Requirement before closing your stock indices trades automatically using this Margin Call.
Example 1: How to Calculate What is 20% Indices Trading Margin Requirement Level?
For 20% margin requirement before closing your stock indices trades automatically using a Margin Call, then your transactions will be closed once your balance gets to $200 - at $200 you will get a margin call.
Example 2: How to Calculate What is 50% Indices Trading Margin Requirement Level?
For 50% requirement of this level before closing your stock indices trades automatically using a margin call, then your transactions will be closed once your balance gets to $500 - at $500 you will get a margin call.
Example 3: How to Calculate What is 100% Indices Trading Margin Requirement Level?
If the indices broker sets 100% margin requirement of this level before closing your open positions automatically using a Margin Call - at $1,000 you will get a margin call, then your stock indices trades will be closed once your balance gets to $1,000: Meaning the stock indices trades will close out as soon as you execute a 1 standard lot on this indices trading account because even if you pay 1 point spread your indices trading account balance will get to below $1,000 and the needed margin requirement percentage is 100% i.e. 1,000 dollars, therefore your stock indices orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most indices brokers do not set 100% margin requirement, but there are those indices brokers that set 100% margin are not suitable for you at all, even those that set 50% margin requirement are still not suitable. choose those set 20% margin requirements, in fact, those that set at 20% Indices Trading Margin Requirement are some of the best because the likely hood they close out your trade using a Indices Trading Margin Call is reduced as shown in the examples above.
To Learn and Know More about Indices Trading Leverage and Margin - How to Read the Topics Below:
Indices Trading Leverage and Margin Explained
Regulated Indices Broker Information: Read About Regulated Indices Broker Review
Takes 5 Minutes to Open an Account, Open an Account Early: Open Indices Account
