MT4 Margin Level : Example of How to Calculate Leverage on MT4 Software Platform

Margin required in this case is $1,000 (your money) if it's denoted 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 a little bit because I am a Beginner Trader"

(Simplify - your funds is $1,000 after leverage option you now control $100,000 - $1,000 is what percentage of $100,000? - it is 1%) that's your 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 Gold trader is: $268,307 dollars - this is because with the leverage option the trader has used little of his own money & borrowed the rest of the amount, with this set at 100:1, the Gold trader is using 1 % of their capital, this 1 % equals to $2683.07, if 1 % is equivalent to $2683.07 then 100% is equivalent to $268,307

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

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

If = 50:1 Leverage - Used Leverage Option

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 Option - Used Leverage Option

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

If you as a xauusd gold 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 % of $20,000 - it is 5 %) that's your margin requirement

If = 10:1 Gold Leverage - Used Leverage Option

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

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

1,000* 10 = $10,000.

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

(Simplify - your funds is $1,000 after leverage option 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 broker which is the highest leverage you as a trader can trade with if you choose to) & used xauusd trading leverage ( gold leverage based on the lots you have opened/open trade positions). One is the online broker's (Maximum Leverage) and the other is gold trader's (Used Leverage). To explain this trading used leverage & maximum leverage concept we will use the trading example above:

If your online broker has assigned you 100:1 Maximum Leverage Option, but you only open a trade position of $10,000 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 are given 100:1 Maximum Leverage Option or 400:1 Maximum Leverage Option, you don't have to use all of it. It's best to keep your used xauusd leverage to a maximum of 10:1 but you will still select 100:1 maximum leverage ratio for your trading account. The extra leverage gives you what we call Free Margin, As long as you have Free margin on your account then your open trade transactions will not get closed by your trading online broker because this margin requirement will remain above the requirement level.

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

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

16.64 : 1 Used Leverage Option

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 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 generally denoted as a ratio - a ratio of 100:1 leverage means you as a trader can control resources worth 100 times your deposited 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 the potential for profits and also losses. In you as a trader can never lose more than you deposit, losses are limited to your deposits & usually and generally online brokers will closeout a trade position which extends beyond your deposited 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 Tutorials and Courses:

Trade Gold Trading

MT4 Margin Level : Example of How to Calculate Leverage on MT4 Software Platform

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