XAUUSD Leverage Definition
Gold Leverage Calculator
The definition of xauusd leverage is having the means to control a large amount of money using very little of your own money and borrowing the rest - this is what makes the xauusd market to attract many investors.
What does a XAUUSD leverage of 1 100 mean?
When Trading XAUUSD using xauusd leverage it means that as a trader you can open trade positions which are larger than if you were using only the amount of money in your xauusd account without leverage.
With xauusd leverage you can use your money that is in your xauusd account to borrow from your xauusd broker through what is known as gold leverage. For example if you have a xauusd account with $100 dollars - you can use your $100 and borrow using the xauusd leverage of 1:100, which means that you will borrow $100 from your xauusd broker for every $1 in your xauusd account & after xauusd leverage you'll have $100*(1:100 Leverage) = $10,000.
xauusd leverage is written in the form of a ratio:
For example xauusd leverage 1:100 or 1:50 or 1:10
Sometimes the xauusd leverage ratio can also be written as 100:1 or 50:1 or 10:1 depending on your xauusd broker.
This ratio just explains the amount of xauusd leverage whether it's written 100:1 or 1:100.
Leverage of 1:100 means you have borrowed using 1:100 & increased your trading capital 100 times.
Leverage of 1:50 means you have borrowed using 1:50 and increased your trading capital 50 times.
Leverage of 1:10 means you've borrowed using 1:10 & increased your trading capital 10 times.
Example:
We shall us this xauusd example to explain what xauusd leverage is? If your xauusd broker gives you xauusd leverage of 100:1 (this is the best option to choose as the maximum xauusd leverage for any xauusd trading account)
This means you borrow 100 dollars for every dollar you have in your XAUUSD account.
To put in another way your broker gives you 100 dollars for every 1 dollar in your gold account. This is what is known as leverage.
This means if you open a xauusd account with $1,000 and your xauusd leverage is 100:1, then you get $100 for every $1 you that you have in your trading account, total amount that you'll control is:
If for 1 dollar the broker gives you 100
Then if you have 1,000 you will get a total of:
$1,000 * 100 = 100,000 dollars
Now you control 100,000 dollars of capital in your xauusd account that you can open trades with
Most new xauusd traders ask what xauusd leverage is best for 100 dollars, or 500 dollars, or 1,000 dollars xauusd account? - The best option to select when opening a live XAUUSD account is always 100:1 & not 400:1.
Trading XAUUSD with Leverage
The more xauusd leverage you use the more the profit or loss
The less gold leverage you use the lesser the profits or losses
It is therefore better to use less xauusd leverage so as to minimize the risks involved. The higher the xauusd leverage used the higher the risk. This is one of the xauusd leverage rules not to trade with more than 5:1 leverage.
In xauusd leverage rules: It is always advisable to stay below 10:1 which is still high, most professional money managers use 2:1 in their XAUUSD account.
To Learn & Know More about Gold Leverage & Margin - Read the Topics Below:
Gold Leverage and Margin Explained
