Can anyone please explain the following:
Suppose I have a starter account and I have USD300 in my account. I change my leverage to 1:10. Now if I buy/sell 0.01 (on MT4) lot of XAU/USD, how much margin will be used? When will a margin call occur?
If for example the gold price is $1,350.00 then the position value at open will be 0.01 lots * 100 oz * $1,350.00 = $1,350.00. With a leverage of 1:10 the initial margin will be $1,350.00 / 10 = $135.00.
Assuming that a margin call is triggered at a margin level of 20% (depends on the broker) you can sustain a price movement of $273. (20% of $135.00 = $27.00 - meaning when your equity drops below that amount the broker will close the trade.)