Gold Forex Trading Examples

Let’s say the trader opens a forex account by depositing $50,000 into their account.

Let’s assume that the current price is $1,650 ounce in the gold spot market, and the position direction of the investor who is waiting for the downward movement of gold will be SHORT. In this case, the investor;

1 LOT= 100 ounces = $165,000 will take a position.

10% of the position size to be taken for this transaction will be used as collateral from the balance in our account. In this case;

Initial Margin = $165,000 / 10 = $16,500 ($16,500 margin will be allocated for position opening from the account)

Balance	$50.000
Margin	$16.500
Free Margin	$33.500

In summary, the investor;

1 LOT= 100 Ounces = $ 165,000. A downside position has been opened with a position size.

If Gold prices fall to $1,640, what will be the P/Los situation on the investor’s account?

Since 1 LOT = 100 Ounces = $164,000 will reach a Position Size,

The Position Size difference of $165,000 – $164,000 = a profit of $1,000 will be reflected in the investor’s account.

So, for every 1 lot of Gold, the movement of $1 will correspond to $100

If the investor had made the same transaction with 0.10 LOT, the following situation would have occurred:

0,10 LOT= 10 ons = $16.500 ( 10 * $1.650 )  

10% of the position size to be taken for this transaction will be used as collateral from the balance in our account. In this case

Initial Margin = $16,500 / 10 = $1,650 (A margin of $1,650 will be allocated from the account for position opening)

Balance	$50.000
Margin	$1.650
Free Margin	$48.350

If Gold prices fall to $1,640, what will be the P/Los situation on the investor’s account?

0.10 LOT = 10 Ounces * $1.640 = $16,400 because there will be a position size,

A profit of $16,500 – $16,400 = $100 will be reflected in the trader’s account.

So, for every 0.1 lot of Gold, the movement of $1 will correspond to $10.