Trade Gold Trading

Leverage in Gold Trading

Types of Leverage in Gold Trading

Leverage Definition - Leverage Meaning - 100:1 leverage ratio. This is the leverage ratio in xau/usd trading that is also used by experienced traders.

For $1000 Trade Account Equity

If you use a 1:100 leverage ratio when you open an account with $1000, you can trade with $100,000 - with 1:100 leverage, your online broker gives you $100 for every $1 you have in your account. So, if you have $1000, 1000 1:100 Leverage equals $100,000 that you can use to trade.

With $100 used in Gold trading, you gain control over $10,000 in trading capital after applying a leverage ratio of 1:100.

For $500 Trade Account Equity

Utilizing a 1:100 leverage ratio means that an account funded with $500 will grant you trading power equivalent to $50,000 for opening positions. A 1:100 leverage ratio signifies that your online broker extends $100 in trading capital for every single dollar present in your account. Therefore, for an account balance of $1000, the calculation $1000 * 1:100 Leverage results in $100,000 available for transactions.

With $1000 in gold, 1:100 leverage lets you handle $100,000 in trades.

For $1,000 Dollars Account Equity

With 1:100 leverage when you open a account with $1,000 you will have capital of $100,000 to open trades with - with 1:100 leverage ratio it means that your online broker provides you $100 dollars for each dollar that you have on your trading account. Hence, if you as a trader have $1,000 - 1,000*1:100 Leverage is equivalent to 100,000 which you can transact with.

With $500 available in Gold trading, leveraging a 1:100 ratio allows you to control a capital amount of $100,000 for trading purposes.

Leverage Definition - Leverage Meaning - 100:1 Leverage ratio

For $2000 Dollars Account Equity

With 1:100 leverage on a $2000 account, you control $200,000. The broker gives $100 for each of your dollars. So, 2000 times 100 equals 200,000 for trading.

With $2000 in gold trading, leveraging at 1:100 allows control of $200,000 in trading capital.

Types of Leverage in Trade - Types of Leverage Lesson Guide

The more leverage you use greater the profits or losses

less leverage you use lesser the trading profit or loss

As a trader, you should therefore utilize less leverage in order to lower the risks involved. The risk increases with the leverage ratio utilized. This is one interpretation of leverage restrictions, which advises against using a leverage ratio greater than 5:1 in your trading.

Within the guidelines for money management, it is strongly recommended to maintain leverage below the 10:1 threshold, which is still quite high. Most seasoned traders opt for a 2:1 leverage ratio, controlling only 2 percent of their total Trade Account capital in any single trade.

To Read More about Leverage Strategies - Read the Leverage Meaning Below:

Gold Leverage Strategies - Types of Leverage in Trade - Types of Leverage Lesson Guide

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