Trade Forex Trading

What's the Best Leverage to Use in XAUUSD?

Best Leverage for Micro Account

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 online traders.

What does a leverage of 1 100 mean?

When Trading using leverage it means that as a trader you as a gold trader can open position positions which are bigger 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 broker through what's known as leverage. For example, if you 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 will borrow $100 dollars from your broker for every $1 in your account and after leverage you'll have $100*(1:100 Leverage) = $10,000.

leverage is represented in the format of a ratio:

For example leverage 1:100 or 1:50 or 1:10

Sometimes the leverage ratio also can be written as 100:1 or 50:1 or 10:1 depending on your broker.

This ratio just illustrates and shows the amount of leverage whether it's written 100:1 or 1:100.

Leverage of 1:100 means you have borrowed using 1:100 and 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.

Example:

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

This means you borrow $100 for every $1 you've in your gold account.

To put in another way your broker gives you $100 dollars for every one dollar in your account. This is what is known as leverage.

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

If for 1 dollar the broker gives you 100

Then if you have 1,000 you'll get a total of:

$1,000 * 100 = $100,000 dollars

Now you control 100,000 of capital on your trading account which you as a gold trader can open trades with

Many beginner traders ask which leverage is best for $100, or $500, or $1,000 dollars account? - The best option to select when registering a real account is 100:1 & not 400:1.

Trading with Leverage

The more leverage you as a trader use the greater the profit/loss

The less leverage you as a gold trader use lesser the profit/loss

It's hence better to use less leverage so as to minimize risk involved. The greater the leverage ratio used the greater the risks. This is one of leverage rules not to trade with more than 5:1 leverage ratio.

In leverage rules: It is recommended to keep below 10:1 leverage which is also still high, most professional fund managers use 2:1 leverage in their account.

To Learn and Know More about Leverage and Margin - Learn the Tutorials Below:

What's the Best Leverage for $100 dollars?

More Tutorials:

Forex Market Traders Seminar Gala

Forex Market Traders Seminar

XAUUSD Broker