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Leverage Calculator XAUUSD

Types of Leverage in XAUUSD

The meaning of leverage is having ability to control a large amount of money using very little of your own money and borrowing the rest - this is what makes the market to attract many investors - Leverage Synonym - XAUUSD Gearing.

What does leverage option of 1:100 mean?

When XAUUSD using leverage it means that as a trader you as a gold trader can open trades which are larger than if you were using only the amount of money on your account without leverage.

With leverage you as a Gold trader can use your money which's in your account to borrow from your online gold trading broker through what's known as gold leverage. For example, if you as a trader have a account with $100 - you as a Gold trader can use your $100 & borrow using the leverage option of 1:100, which means that you'll borrow $100 from your broker for each $1 dollars in your account & after leverage you will have $100*(1:100 Leverage Ratio) = $10,000.

XAUUSD leverage is represented in the form of ratio:

For examples leverage ratio of 1:100 or 1:50 or 1:10

Sometimes the leverage ratio can also be written as 100:1 or 50:1 or 10:1 depending on the broker you're trading with.

This leverage option just explains the amount of leverage whether it's written 100:1 or 1:100.

XAUUSD leverage option of 1:100 means you have borrowed using 1:100 & increased your trade capital 100 times.

Leverage of 1:50 means you have borrowed using 1:50 and increased your trade capital 50 times.

Leverage of 1:10 means you have borrowed using 1:10 and increased your trade capital 10 times.

Leverage Examples:

We shall use this illustration to explain what trading leverage is? If your broker gives you leverage ratio of 100:1 (this the best option to choose as the maximum leverage for any account)

This means you borrow $100 for each 1 dollar you have on your account.

To put in another way your broker gives you $100 dollars for each one dollar in your trading account. This is what's referred to as xauusd leverage.

This means if you open a account with $2,000 and your leverage option is 100:1, then you get $100 for every $1 you which you have on your trading account, the total amount of capital you'll control is:

If for dollar the online broker gives you 100

Then if you have 2,000 you'll get a total of:

$2,000 * 100 = $200,000 dollars

Now you control 200,000 dollars of capital on your account which you as a gold trader can open trade positions with

Most new traders ask what leverage ratio is best for 1000 dollars, or $5000 dollars, or $10,000 trading account? - The best option to choose when opening a live account is 100:1 and not 500:1.

About Leverage

The more leverage you use the greater the profit/loss

The less gold leverage you use lesser the profit/loss

It's thence better to use less leverage so that to cap the risks involved. The greater the leverage ratio used the greater the risks. This is one of leverage rules and money management rules not to trade with more than 5:1 leverage.

In leverage money management rules: It is always advisable to use leverage ratio below 10:1 which is still high, most professional fund managers use leverage ratio of 2:1 meaning that they trade only 2% of their account.

To Learn about Leverage and Margin:

Leverage Formula and Margin Formula

Get More Courses and Topics:

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Forex Market Traders Seminar

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