What's 1:200 Leverage for $100 Mean?
Leverage in xauusd is the ratio of a xauusd trader's money to that of the borrowed capital which has been borrowed from the online broker.
For example 1:200 leverage means that for each one dollar a trader has in their xauusd account they have borrowed 200 from their xauusd broker. Hence if a trader has $100 in their xauusd account they will have borrowed using 1:200 leverage & hence after xauusd leverage of 1:200 they will have $100*1:200 leverage & this will be equal to $20,000 dollars capital.
Leverage is the use of borrowed funds in xauusd to transact much larger volumes so as to maximize profit potential of trades.
1:200 leverage basically means that as a trader you get $200 for every $1 in your trading account.
1:200 Leverage for $100 Account
In XAUUSD, a small deposit can control a much larger position this is known as Leverage, which gives investors ability to earn more profits on opened gold trades, & at same time keep risk capital to a minimum.
One will transact on borrowed capital, having $100 trader can borrow the rest using a xauusd leverage option such as 1:200 - meaning that one borrows $200 dollars for every 1 dollar they have in their xauusd account, therefore in total they will control a total of $20,000 without having to deposit all of it - this is how leverage works in xauusd.
Leverage is expressed in the form of a ratio, for Example 1:200, means the broker with give a trader $200 for every 1 dollar which the trader has.
XAUUSD Margin is the sum of money required by your xauusd broker so as to allow you to continue to trade with xauusd leveraged amount. XAUUSD Margin is the amount you deposit so as to open a trading account with. If you deposit $100 then that is your gold margin.
With xauusd leverage it's possible for retail investors to trade the market. Leverage of 1:200 means that for every $1 that you deposit, the broker will give you $200 dollars. This also means that in converse the broker requires you to maintain a margin of $1 Dollar for every $200 that they give you so as to let you continue controlling the borrowed amount of capital that they have given you for trading.
XAUUSD Margin Example:
If you as a trader deposit $100, & the broker gives you leverage of 1:200 then it means that now you have $100*(1:200) = $20,000 Dollars which you can trade with.
Gold Money Management Guidelines for Trading with 1:200 Leverage
When trading xauusd with 1:200 leverage you should create your xauusd money management rules that you will use to manage your xauusd account capital. This set of xauusd equity management guidelines should be written in your gold plan. If you are a beginner wanting to open a $100 dollar xauusd account & you don't know what xauusd money management guidelines are, you can use the learn xauusd tutorials below to learn about what is xauusd money management?
How to create xauusd money management rules for trading a 1:200 Leverage Account.
Trading with Gold Leverage
The more xauusd leverage you as a trader use the greater the profit/loss
The less leverage that you use the lesser the profit or loss
It's hence better to use less xauusd leverage so as to minimize risk involved. The higher the leverage used the greater the risks. This is one of leverage guidelines not to trade with more than 5:1 gold leverage.
In xauusd leverage guidelines: It is always advisable to stay below 10:1 which is still high, most professional money managers use 2:1 leverage in their xauusd account.
To Learn and Know More about Leverage and Margin - Read the Topics Below:
Gold Leverage and Margin Discussed
