What's The Difference Between Maximum Leverage and Used Commodities Trading Leverage?

You should note that there is a difference between maximum trading leverage ( leverage given by your broker which is the highest leverage you can trade with if you select to) & used commodities trading leverage ( leverage depending on the lots you have opened/open trade positions). One is the broker's (Maximum) & the other is trader's (Used). To explain this concept we shall use example above:

If your broker has given you 100:1 Max leverage, but you only open trading lots of $100,000 then Used leverage is:

100,000 : $10,000 (your money)

10:1 Used Trading Leverage

You have used 10:1 leverage, but your maximum leverage is still 100:1. This means that even if you are given 100:1 Maximum trading leverage or 200:1 Max leverage, you do not have to use all of it. It's best to keep your used leverage to a maximum of 10:1 but you'll still select 100:1 maximum leverage option for your account. The extra leverage will give you what we call Free Commodities Margin, As long as you have some Free margin on your trading account then your commodities trades won't get closed by your commodities trading broker because this margin requirement will remain above required level.

When it comes to commodity trading one of your commodity rules: commodity money management rules on your commodity plan should be to use below 5:1.

Trading Leverage Example

The examples illustrated and explained below, the set leverage is 100 : 1, the margin which is 1 percent is $2683.07, therefore the total sum controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest of the money, with this set at 100:1, the trader is using 1 % of their commodity capital, this 1 percent equals to $2683.07, if 1 percent is equal to $2683.07 then 100 Percent is equal to $268,307

MT4 Commodity Software - What is The Difference Between Maximum Leverage and Used Trading Leverage?

In the above image example, the trader is using $2683.07, the total controlled amount is $268,307, but account equity is 16,116.55, therefore used trading leverage is ( $268,307 divide by 16,116.55 ) = 16.64 : 1

16.64 : 1

In the trading account above even though the maximum leverage set leverage is 100:1, Used leverage is 16.64 : 1