Margin in gold trading

Margin is the amount of your account set aside as collateral while a leveraged position is open. It is not a fee and it is returned when the position closes; it is simply unavailable for other trades. Required margin equals notional value divided by leverage. Platforms show the total locked up as “used margin” or “margin”.

How it applies to gold trading

At a gold price of $4,000 and 100:1 leverage, one standard lot (notional $400,000) requires $4,000 of margin; a micro lot requires $40. At 20:1 the same lot needs $20,000. Margin rises with the gold price, so a position that needed $4,000 at $4,000 needs $4,500 if gold trades at $4,500 and you open it then.

Margin also changes around events. Many platforms raise margin requirements before major data releases, over weekends or when volatility spikes, which can reduce free margin on existing positions without any price change. Futures exchanges adjust initial and maintenance margin for the same reasons.

Hedged positions on the same symbol may use reduced or zero margin on some platforms, while others charge margin on both sides; the contract specification and account terms say which applies.

A common mistake

Treating margin as the maximum you can lose. Losses are calculated on the full notional and can exceed the margin posted, which is exactly when margin calls and stop-outs happen.

See also: Free margin, Margin level, Margin call, Leverage.

Frequently asked questions