How Do I Calculate Leverage in XAUUSD
The leverage applied to XAUUSD is determined by a ratio, which could be set at 100:1, 50:1, or 10:1.
A 100:1 leverage ratio, also expressed as a 1:100 leverage option, allows a trader to obtain a loan of $100 from their broker for every dollar present in their trading account. Consequently, an individual starting with a $1,000 deposit could secure up to $100,000 in borrowing power from the broker - calculated as $1,000 multiplied by the 1:100 leverage, equating to $100,000. This borrowed capital is then available for opening trade positions.
For a 50:1 leverage ratio, this means that for every $1 a trader has, they can borrow $50 from their broker: so, a trader with $1,000 can borrow as much as $50,000 from their broker ($1,000 1:50 = $50,000). The trader can then use this borrowed money to make trades.
For 10:1 leverage ratio it means 1:10 leverage option means a trader can borrow $10 from their broker for every $1 dollar in their trading account, therefore a trader with a deposit of $1,000 can borrow upto $10,000 from their broker - ($1,000*1:10 which's equal to $10,000). A trader can then use this borrowed capital to open trades with.
To Learn & Know More about Leverage & Margin - Learn the Topics Listed Below:
Leverage and Margin Explained
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