Example of How Does 100% Indices Trading Margin Requirement Work?
Margin requirement is the percent of the trade transaction value that a indices trader must maintain in order to continue holding the open trade positions that have been opened using stock indices trading leverage.
Example of How Does 100% Indices Trading Margin Requirement Work
Now if Your Indices Trading Leverage is 100:1
When trading if you have $1,000 and use option 100:1 and buy 1 standard lot for $100,000 your indices trading margin on this trade transaction is the $1000 dollars in your stock indices trading account, this is the money that you will lose if your open trade transaction goes against you the other $99,000 that is borrowed from the stock indices trading broker, the stock indices broker will close the open indices trading transactions automatically 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.
For 20% Indices Trading Margin Requirement before closing your stock indices trades automatically, then your transactions will be closed once your balance gets to $200
For 50% Indices Trading Margin Requirement of this level before closing your stock indices trades automatically, then your transactions will be closed once your balance gets to $500
If the indices broker sets 100% Indices Trading Margin Requirement of this level before closing your open positions automatically, then your trade will be closed once your balance gets to $1,000: Meaning the indices trade will close out as soon as you execute it because even if you pay 1 pips spread your account balance will get to $990 and the needed percentage is 100% i.e. 1,000 dollars, therefore your orders will immediately get closed.
Most indices brokers do not set 100% requirement, but there are those indices brokers that set 100% Indices Trading Margin Requirement or 50% Indices Trading Margin Requirement are not suitable for you at all, choose those set 20% margin requirements, in fact, those that set at 20% are some of the best because the likely hood they close out your indices trade 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
