When trading commodities it is imperative to understand what it is we are buying or selling.
Each commodity will be measured in its own unit. Below we see the unit for each of the most popularly traded commodities:
|Coffee C||lbs (100)|
|Sugar no.11||lbs (100)|
|Coffee No.2||lbs (100)|
A short sell on gold of 10 ounces at the current market rate of $1,326.60 our margin requirement would be $66.33 (0.5% of $13,266). This is all we would need in our account to open this position.
|Trade Type||Short Sell|
|Trade Size||10 Troy Ounces|
|Current Market Price||$1,326.60|
|Cost of Trade without Leverage||$13,266.00|
|Margin Requirement (Leverage)||0.5% (200:1)|
|Used Margin for Trade||$66.33|
If we had a trading account in a different currency denomination then this $66.33 would be converted to our currency at the current exchange rate.