What is the Minimum Indices Margin Requirement in Indices Trading?
The minimum margin requirement in indices will depend on the broker that you open a trading account with. Some brokers will set this level at 100 %, others at 50% and others at 20% as the minimum required level.
What's Indices Trading Margin Requirement Level & How Indices Trading Margin Requirement Level is Calculated?
Now if Your Leverage is 100:1
When trading if you have $1,000 and use leverage option of 100:1 and buy 1 standard lot for $100,000 your margin on this trade is the $1000 in your trading account, this is the money which you will lose if your open trade transaction moves against you, the other amount $99,000 that's borrowed, broker will close the open trades automatically using a Indices Margin Call once your $1,000 has been taken by the market.
But this is if your broker has set 0 % Margin Requirement before closing out your stock trades automatically using this Margin Call.
What's 20 percent Indices Margin Requirement Level?
For 20 percent margin requirement before closing out your stock trades automatically using a Margin Call, then your transactions will be closed once your trade account balance gets to $200 - at $200 you'll get a margin call.
What's 50 % Margin Requirement Level?
For 50 % requirement of this level before closing out your stock trades automatically using a margin call, then your transactions will be closed once your trade account balance gets to $500 - at $500 you'll get a margin call.
What's 100 % Margin Requirement Level?
If the online broker sets 100 % margin percentage level requirement of this level before automatically closing your open trade positions automatically using what is known as a margin Call - at $1,000 you'll get a margin call, then your stock trades will be closed once your trade account balance gets to $1,000: Meaning stock trades will close-out as soon as you execute a 1 standard lot on this account because even if you pay 1 point spread your trading account balance will go to below $1,000 and needed margin requirement percentage is 100% i.e. 1,000 dollars, therefore your orders will immediately get closed using a Margin Call once your margin requirement falls below 100%.
Most brokers don't set 100 % margin requirement, but there are those brokers that set 100 % margin percent level requirement are not suitable for you at all, even those that set their requirement at 50% trading margin percentage level requirement are still not suitable. Choose the ones that set 20% trading margin percentage level requirement, in fact, those brokers that set at 20% Margin Requirement are some of the best because the likely-hood they close-out your trade using a Indices Margin Call is reduced as shown in the example above.
To Learn and Know More about Leverage & Margin - How to Read the Topics Below:
Leverage & Margin Explained
What's a Trade Plan? - Written Plan Example Template
Alternatives: Automated EA Trading or Copy and Paste Signals
