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 & borrowing the rest - this is what makes the market to attract many investors - Trading Leverage Synonym - XAUUSD Gearing.
What does leverage ratio of 1:100 mean?
When XAUUSD using leverage it means that as a trader you can open trades which are larger than if you were using only the amount of money in your account without leverage.
With leverage you can use your money which's in your trading account to borrow from your online broker through what's known as gold leverage. For example, if you as a trader have a account with $100 - you can use your $100 & borrow using the leverage option of 1:100, which means that you will borrow $100 from your broker for each $1 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 ratio just explains the amount of leverage whether it is written 100:1 or 1:100.
XAUUSD leverage ratio of 1:100 means you have borrowed using 1:100 & increased your capital 100 times.
Leverage of 1:50 means you have borrowed using 1:50 and increased your capital 50 times.
Leverage of 1:10 means you have borrowed using 1:10 and increased your capital 10 times.
Leverage Examples:
We shall use this example to explain what trading leverage is? If your online 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 in your account.
To put in another way your broker gives you $100 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 in 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 will get a total of:
$2,000 * 100 = $200,000 dollars
Now you control 200,000 dollars of capital in your account that you as a trader can open trade transactions with
Most new traders ask what leverage ratio is best for 1000 dollars, or $5000 dollars, or $10,000 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 hence better to use less leverage so that to minimize the risks involved. The higher the leverage 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 money managers use leverage ratio of 2:1 meaning they trade only 2% of their account.
To Learn about Leverage and Margin:
Trading Leverage Formula and Margin Formula
