### Educational Articles

###### Typography

Gold - Specifications

Initial Margin: The initial margin is the amount of collateral required to hold a position in Gold. At Orbex, the initial margin for gold is \$1000 for a trade size of 1 lot (100,000). So if you are trading 0.50 lots, your initial margin would be \$500, or \$100 margin requirement to trade 0.10 lots of Gold.

Why is margin important?

Understanding the initial margin can be beneficial for you to plan your trade size. For example, if you had a trading equity of \$1000, then it makes sense to trade with 0.10 lots in Gold, where the requirement margin of \$100 is locked in. This leaves you with a free margin of \$900.

Minimum contract size: The minimum contract size to trade Gold is 0.10 lots. A 1 standard lot in gold is equal to 100 ounces. Therefore, when you trade, 0.10 lots is trading 10 ounces of Gold.

Understanding the minimum contract size can help you in your position management. Because the contract size or lots are directly related to the required margin, by knowing these details, you would be able to position your trade sizes better based on the trading capital that you have.

Tick Size and value: The minimum tick size is 0.01. At Orbex, gold is priced in two decimals, such as 1200.12 and so on. Each tick or 0.01 is \$1 for a standard lot or \$0.10 if you are trading the minimum trading size of 0.10 lots.

The value of the tick size in gold is perhaps the most important. Because each tick is equal to \$10 for a standard lot size, you can quickly do the math in terms of knowing how much loss or profit you can make off your trades.

Swaps: When you keep your positions in gold open overnight, then your trades attract overnight rollover swaps. For long positions, the swap on your gold trade is a -0.347 points and for short positions that are kept open overnight, the swaps are -0.236. So when you are trading 1 lot position in Gold, long positions held overnight have -\$0.347 (rounded to -\$0.35) swap and short positions have -\$0.236 (rounded to -\$0.24) swap.

We purchased 1 lot in Gold at \$1250.98. Therefore, the required margin was \$1000 and each tick (0.01) is worth \$10. So if gold had risen from 1250.98 to 2151, a 0.02 tick move, which would give a profit of \$2. Likewise, if gold prices fell from 1250.98 to 1250.68, that is a 0.30 tick move, which is \$30 (0.30 x \$100).

Why is it important to understand gold specification?

Understanding the margin requirements, swaps and tick size can help traders to remove any ambiguity from their trades. By knowing exactly how much you can make or lose on a trade that you hold, including the additional swaps that are applied, traders will be able to use this information to better manage their gold trading positions.

At Orbex, we are dedicated to serving our clients responsibly with the latest innovations in forex tools and resources to assist you in trading.
More from the author