Precious Metals are tradable commodities that are considered to be rare and hence possess high economic value. These metals are often recognised as safe investments during times of turmoil and uncertainty, providing traders an avenue to diversify and invest in other financial instruments.
Precious Metals Contract Specifications Details
The typical spread for gold and silver are as listed:
|Gold and Silver||Spreads|
* The above spreads are applicable under normal trading conditions
The Precious Metals market is open 23 hours a day on weekdays and is closed over the weekend. You will not be able to place any trades, stops or limits when the market is closed.
|Server Time (GMT+2):||Open from Monday 00:00 | Close on Saturday 00:00|
*Our Server Time is currently set to GMT+2 due to Europe Daylight Savings changes.
Lot Size Specification
- One lot of Gold: 100 ounces
- One lot of Silver: 5,000 ounces
- Minimum required lot is 1 Micro lot, 0.01 lot.
- Transactions above the minimum size can be in fractions of a contract.
Transactions above the minimum size can be in fractions of a contract.
- The minimum size: 0.01 of one contract, the equivalent of 1 ounce of gold, 50 ounce of silver.
- The maximum size: 50 lots depending on market availability but this may be subjected to slippage.
Precious Metals Pricing
Prices for gold and silver are quoted in USD. If you are trading 1 lot of gold, one cent movement is equivalent to USD 1. Please see examples:
- Gold: Opening price is 1700.10 and the price moves up to 1700.11. The profit value is USD 1.
- Silver: Opening price is 34.70 and the price moves up to 34.71. The profit value is USD 50.
Leverage allows traders to hold a larger positions than their initial cash deposit. In other words, this means that their initial outlay is supplemented to increase the value of their underlying investments. The higher the leverage, the larger the position the trader can execute for the same amount of initial deposit.
For example, a client using 100:1 leverage can hold a position in the forex market of $100,000 with a margin of $1,000. For a 200:1 leverage, the client will need a $500 margin to hold the same position.
Leverage increases the potential of high return when the market moves in a trader’s favour. However, traders are to note that leverage will similarly act against them when the market moves against their predictions.
Different leverage levels apply to different account types.
Prior to opening a position in the market, an initial deposit is required when an trader opens an account with a broker. This cash deposit will act as a deposit to cover any credit risks that the trader might undertake. Depending on the agreement, the investor could be able to leverage up to a certain limit as set by the broker.
The margin requirement for a metal trade is calculated by using the following formula:
Margin = (Lot Size * Contract Size * Opening Price) / Leverage
Examples below based on a Standard /Classic account 1:100.
|Forex||Margin requirement for one standard contract position in EUR/USD at 1.2500 is calculated as follows:
Margin = (1 * 100,000 * $1.2500) / (100) = $1250.00
|Spot Gold||Margin requirement of one standard contract position in Gold at 1579.01 is calculated as follows:
Margin = (1 * 100 * $1579.01) / (100) = $1579.01
|Spot Silver||Margin requirement for one standard contract position in Silver at 28.70 is calculated as follows:
Margin = (1 * 5000 * $28.70) / (100) = $1435.00
Note: Interest is not required to be paid on the borrowed amount, but if the investor decides to hold his position overnight, interest will be charged as the rolled over rates on the total positions held.
A Margin Call is a level nominated by a brokerage that sets out the minimum amount of money required to trade in the market. If your account falls below the margin call level, you will need to make a further deposit in order to maintain your open positions. Or should you prefer you can close some of your outstanding positions to reduce your margin requirement. At Blackwell Global, the Margin Call level is set at 120%.
Stop Out Level
In the event that you are unable to maintain sufficient funds in your account after reaching the Margin Call level, and if the value of your account subsequently depreciates to the Stop Out level, your positions will be closed automatically, in order to prevent further losses to your capital. At Blackwell Global, Stop Out level is set at 80%.
Also referred to as Rollover Interest, swaps are charged when holding onto a position overnight due to the difference in interest rates between the base metal and the quote currency.
Blackwell Global deals metal trading on a “spot” basis. Trades are all settled two business days from inception as per market convention. Swaps are automatically calculated and settled at 21:59 GMT (Server Time 22:59) on a daily basis. Blackwell Global does not arrange for physical delivery.
Open positions on a trade date basis that are held from Wednesday to Thursday will be charged three times the value. The extra payment is to cover the interest that would normally have been charged on Saturday and Sunday when the market is closed.
|Pair||Long Rate (Pips)||Short Rate (Pips)|