About Trading Spot Metals
Most trading software encompass a full back office function that make it easy for the trader to realize the value of open positions as well as the profit and loss of closed trades. However, it is important that traders understand how a trade works and how to calculate profits and losses manually.
Mostly Traded with Highest Liquidity
| XAU/USD | (Spot Gold vs. US Dollar) |
| XAG/USD | (Spot Silver vs. US Dollar) |
Primary (base) vs. Secondary Instruments
Similar to FOREX, the base instrument is the reference that defines the contract size. The profit and loss calculation however is always on the secondary instrument, which in the following cases is the US Dollar:
| Instrument Pair | Contract Size | Value of 1 pip |
|---|---|---|
| XAU/USD | 100 oz. | US$ 10.00 |
| XAG/USD | 5,000 oz. | US$ 50.00 |
Margin Requirements
In order to buy or sell 1 contract (lot) of Spot Gold or Silver with ICM Brokers, the investor must have a minimum of $1,000 in the account. Though an initial margin of $1,000 is required, ICM Brokers has no maintenance margin on standard accounts. In order to guarantee that clients’ accounts do not extend into negative equity, the trading platform automatically closes all positions at the 5% Equity/Margin ratio.
Profit and Loss Calculation Examples
• Buy 5 GOLD at 821.20 | Sell 5 GOLD at 828.30
821.20 (open price) x 5 (lots traded) x 100 oz. (contract size) = 410.600
828.30 (close price) x 5 (lots traded) x 100 oz. (contract size) = 414,150
$ 3,550 (Profit)
• Sell 3 SILVER at 11.05 | Buy 3 SILVER at 10.85
11.05 (open price) x 3 (lots traded) x 5,000 oz. (contract size) = 165,750
10.85 (close price) x 3 (lots traded) x 5,000 oz. (contract size) = 162,750
$ 3,000 (Profit)