How Do I Calculate XAUUSD Trading Margin

What's XAUUSD Margin Account?

The meaning of Leverage is having the 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 traders.

We shall explain leverage first and then explain margin in this learning how to calculate leverage & gold margin tutorial.

Example:

We shall use this trading example to illustrate what trading leverage is? If your online broker gives you leverage option of 100:1 (this is the best option to choose as the maximum for any account)

This means you borrow $100 dollars for each 1 dollar you have in your account.

In other terms your broker gives you $100 dollars for each $1 dollar in your account. This is what is known as leverage.

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

If for 1 dollar the online broker gives you 100

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

$1,000 * 100 = $100,000

Now you control 100,000 of Investment

Most new traders ask what leverage is best leverage for $1,000 dollars, or $2,000 dollars, or $5,000 dollars account? - Best leverage option to select when opening a real account is always 100:1 and not 400:1.

What's XAUUSD Margin?

This is the amount of money required by your broker to allow you as a trader to continue trading with borrowed amount.

In other words the question what's gold margin in Gold Trading? can be described as money required to cover open trades and is expressed in percentage. For 100:1, the amount you'll control is $100,000 dollars as explained in the above example.

Now can you compare someone investing $1,000 with another one that is investing $100,000? Obviously Not. This is how it works, it takes you from that retail investor investing $1,000 to the one investing $100,000. Where does this extra money originate from? : You borrow itfrom your broker in what is simply referred to as Leverage. This funds that you borrow, you as a trader borrow it against the $1,000 of your own funds that you deposit with your broker. If you were to explain what this gold leverage means - then it's the ability to control a large amount of money using very little of your own money and borrowing the rest. Otherwise, if you were trade without this gold leverage it would not be as profitable as it is, in fact you can still select not to use leverage, using 1:1 trading leverage option but you wouldn't make money & it would take too long to make any profit.

Example of how to calculate leverage & gold margin:

Gold Margin required in this case is $1,000 dollars (your money) if it's expressed as a percentage% of $100,000 dollars which you now control it is:

If leverage = 100:1

1,000 / 100,000 * 100= 1 %

XAUUSD Margin required = 1%

(1/100 *100= 1 %)

"Trade FX Trading - Please simplify because I am a Beginner"

(Simplify - your funds is $1,000 after deploying leverage you now control $100,000 - $1,000 is what percentage% of $100,000 - it is 1%) that's your margin requirement for your trading account.

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What's XAUUSD Margin?