Leverage Definition in Trading XAUUSD
Leverage Meaning in XAUUSD
The best xauusd leverage to use is 100:1 leverage ratio. This is the leverage ratio in gold that's also used by professional traders.
For $100 Account Equity
With 1:100 leverage ratio when you open an account with $100 you will have capital of $10,000 to open trade transactions with - with 1:100 leverage it means your broker gives you $100 for every one dollar which you have in your account. Hence, if you have $100 - 100*1:100 Leverage is equal to 10,000 that you can trade with.
In XAUUSD with $100 you can control $10,000 capital to trade with after leverage ratio of 1:100
For $500 Account Equity
With 1:100 leverage ratio when you open a trading account with $500 you'll have capital of $50,000 to open trade transactions with - with 1:100 leverage it means your broker gives you $100 for every one dollar which you have in your account. Hence, if you have 500 - 500*1:100 Leverage is equivalent to 50,000 that you can trade with.
In XAUUSD with $500 you can control $50,000 capital to trade with after leverage ratio of 1:100
For $1,000 Account Equity
With 1:100 leverage when you open a trading account with $1,000 you'll have capital of $100,000 to open trade transactions with - with 1:100 leverage ratio option it means your broker gives you $100 for every one dollar which you have in your account. Hence, if you have $1,000 - 1,000*1:100 Leverage is equivalent to 100,000 that you can trade with.
In XAUUSD with $500 you can control $100,000 capital to trade with after leverage ratio of 1:100
What is the Best Leverage to use when xauusd trading? - 100:1 Leverage ratio
For $2000 Account Equity
With 1:100 leverage when you open an account with $2000 you will have capital of $200,000 to open trade transactions with - with 1:100 leverage ratio option it means your broker gives you $100 for every one dollar which you have in your account. Therefore, if you've 2000 dollars - 2000*1:100 Leverage is equivalent to 200,000 that you can trade with.
In XAUUSD with $2000 you can control $200,000 capital to trade with after leverage ratio of 1:100
Limitations of Leverage - Trading Leverage Ratio - Leverage Meaning in XAUUSD
The more leverage you use greater the trading profit or loss
The less leverage you as a trader use, the lesser the profit/loss
It's therefore better to use less leverage so that to minimize the risks involved. The higher the leverage ratio used higher the risk. This is one of leverage guidelines not to trade with more than 5:1 leverage ratio.
In XAUUSD money management guide-lines: It's always advisable to stay below 10:1 leverage ratio option which is still high, most professional traders use 2:1 leverage ratio meaning they trade only 2 percent of their Account.
To Learn and Know More about Leverage and Margin - Study the Learn XAUUSD Below:
Gold Leverage & Gold Margin Explained
