Example of How Does 50 % Margin Requirements Work?

Margin requirement is percent of the trade transaction value that a trader must maintain in order to continue holding the open trade positions that have been opened using stock trading leverage.

Example of How Does 50 % Margin Requirements Work?

Now if Your Leverage is 100:1

When trading if you have $1,000 & use leverage 100:1 and buy 1 standard contract for $100,000 your indices margin on this trade transaction is $1000 dollars in your stock trading account, this is the money that you will lose if your open trade position goes against you the other $99,000 dollars that's borrowed from the online broker, the broker will close the open trade positions automatically once your $1,000 dollars has been taken by market.

But this is if your indices broker has set 0 percent Indices Margin Requirements before stopping outliquidating your stock trade transactions automatically.

For 20% Margin Requirements before closing outliquidating your stock trade transactions automatically, then your trade transactions will be stopped out once your account balance gets to $200

For 50% Margin Requirements of this level before stopping out your stock trade transactions automatically, then your trades will be stopped out once your account balance gets to $500

Most indices brokers do not set 50% requirement, but there are those brokers that set 50% Margin Requirement are not suitable for you, choose those online brokers that set 20 percent% margin requirements, in fact, those online brokers that set at 20 percentage% are some of the best since due to the likely-hood they liquidate your indices trade is reduced as displayed in the example above.

To Learn & Know More about Leverage & Margin - How to Read the Topics Below:

• What's Leverage

• Leverage and Margin Example

• Leverage Margin Guide

• What is Funds Management

• Indices Equity Management Guide-lines

Leverage and Margin Explained

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