MT4 Margin Level : Example of How to Calculate Leverage in MetaTrader 4

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

If leverage = 100:1

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

Margin required = 1%

(1/100 *100= 1 %)

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

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

The trading margin example shown and described below, the set leverage is 100 : 1, the margin which is 1 % is $2683.07, henceforth the total amount 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 amount, with this set at 100:1, the trader is using 1 % of their capital, this 1 % equals to $2683.07, if 1 percentage% is equivalent to $2683.07 then 100% is equivalent to $268,307

MT4 Margin Level : Explanation of How to Calculate Leverage in MT4

MetaTrader 4 Margin Level : Explanation of How to Calculate Leverage in MT4

If = 50:1 Leverage - Used Leverage

Then xauusd margin requirement = 1/50 *100= 2 percentage

If you as a gold trader have $1,000,

1,000* 50 = $50,000.

1,000 / 50,000 * 100= 2 percentage

(Simplify - your funds is $1,000 after leverage you now control $50,000 - $1,000 is what percentage of $50,000 - it is 2 %) that's your trading margin requirement

If = 20:1 Leverage - Used Leverage

Then the gold trading margin requirement = 1/20 *100= 5 %

If you as a xauusd trader have $1,000 dollars,

1,000* 20 = $20,000.

1,000 / 20,000 * 100= 5 %

(Simplify - your funds is $1,000 after leverage you now control $20,000 - $1,000 is what percentage of $20,000 - it's 5 %) that is your trading margin requirement

If = 10:1 Gold Leverage - Used Leverage

Then the gold margin requirement is = 1/10 *100= 10%

If you as a xauusd trader have $1,000 dollars,

1,000* 10 = $10,000.

1,000 / 10,000 * 100= 10 %

(Simplify - your funds is $1,000 after leverage you now control $10,000 - $1,000 is what percentage of $10,000 - it's 10 %) that is your trading margin requirement

What's Difference Between the Maximum Leverage & the Leverage Used?

However, you should note that there is a difference between maximum trading leverage ( gold trading leverage given by your trading broker which is the highest leverage you can trade with if you choose to) & used xauusd trading leverage ( gold leverage based on the lots you have opened/open trade transactions). One is the online broker's (Maximum Leverage) and the other is gold trader's (Used Leverage). To explain this trading used leverage & maximum trading leverage concept we will use the trading example above:

If your online broker has given you 100:1 Max Leverage, but you only open a trade position of $10,000 dollars then Used Leverage is:

$10,000: $1,000 (your money)

10:1

You've used 10:1 Leverage, but your max gold leverage option is still 100:1 Leverage. This means that even if you're given 100:1 Maximum Leverage or 400:1 Max Leverage, you do not have to use all of it. It is best to keep your used xauusd trading leverage to a maximum of 10:1 but you'll still select 100:1 maximum leverage ratio for your account. The extra leverage will give you what we call Free Margin, As long as you have Free margin on your account then your open trades will not get closed by your trading online broker because this margin requirement will remain above required level.

When it comes to trading one of your rules: equity management principles on your gold trade plan should be to use leverage below 5:1.

In the above MT4 trading screenshot example, the trader is using $2683.07, total controlled sum is $268,307 dollars, but account equity is $16,116.55, therefore used leverage is ( $268,307 divide by 16,116.55 ) = 16.64 : 1

16.64 : 1 Used Leverage

Gold Margin accounts allows traders to control a big amounts of trading units using leverage using little of their own capital while borrowing the rest

Obtaining this trading account will enable you to borrow money from the broker to trade lots with.

Amount of borrowing power your account gives you what is known as " gold leverage", & is usually expressed as a ratio - a ratio of 100:1 leverage means you can control resources worth 100 times your deposit amount.

What it means in XAUUSD terms is that with 1% margin in your account you as a trader can control a trade transaction worth $100,000 dollars with $1,000 dollars deposit.

However, Trading this margin trading account increases both potential for profits as well as losses. In you can never lose more than you deposit, losses are limited to your deposits & usually online brokers will close-out a trade position which extends beyond your deposit amount by executing a margin call. Traders must therefore try and keep their margin requirement level that is above that which is required. By using equity management rules & keeping your used leverage below 5:1.

More Lessons and Tutorials:

Trade Gold Trading

MT4 Margin Level : Example of How to Calculate Leverage in MetaTrader 4

What's Difference Between the Maximum Leverage & the Leverage Used?