Trade Gold Trading

What's 1:500 Leverage for $100 Dollars Mean?

Trading Leverage in xauusd gold trading is the ratio of a gold trader's money to that of the borrowed trading capital which has been borrowed from the broker.

For example 1:500 gold leverage means, for every one dollar a trader has in their account they have borrowed 500 from their broker. Hence if a trader has $100 in their account they will have borrowed using 1:500 leverage and hence after leverage of 1:500 they will have $100*1:500 leverage and this will be equal to $50000 dollars gold capital.

Leverage is the use of borrowed funds in gold trading so as to trade much bigger volumes so as to increase profit potential of trades.

1:500 gold leverage basically means that as a trader you get $500 for every $1 in your account.

1:500 Leverage for $100 dollars Trading Account

In XAUUSD, a small deposit balance can control a much bigger and larger trade transaction & this is called and known as Leverage, which gives and provides the online traders the ability to earn more profits on opened trades, at the same time keep the risk capital to a minimum.

One will transact and trade on borrowed capital, having $100 trader can borrow the rest of the amount using a leverage ratio such as 1:500 - meaning that one borrows $500 dollars for every 1 dollar they have in their trading account, henceforth in total they will control a total of $50000 dollars without having to deposit all of it - this is how trading leverage works in xauusd.

Leverage is denoted in form of a ratio, for Examples 1:500, means the broker with give a trader $500 Dollars for every 1 dollar which the Gold trader has.

Gold Margin is the sum of money required by your broker to allow you to continue trading with the leveraged amount. Gold Margin is the amount you deposit so as to sign up a trading account with. If you deposit $100 then that's your margin.

With leverage it's possible for retail traders to trade the trading market. Leverage of 1:500 means that for every dollar you deposit, the broker will give you $500 dollars. This also means that in converse the broker requires you to maintain a margin of $1 Dollar for every $500 that they give you so as to let you continue using the borrowed amount that they have given you for trading.

XAU/USD Margin Example:

If you deposit $100, and the online broker provides you leverage option of 1:500 then it means you now have $100*(1:500) = $50000 Dollars which you can transact with.

Equity Management Rules for Transacting with 1:500 Leverage Option

When gold trading with 1:500 gold leverage you should create your trading equity management guidelines that you will use to manage your account capital. This set of money management rules should be written on your trade plan. If you're a beginner who wants to open a $100 account and you do not know what gold equity management guidelines are, you can use the learn gold courses below to learn about what's trading equity management?

How Do I develop trading money management guidelines/rules for trading a 1:500 Leverage Trade Account.

Gold with Leverage

The more leverage you use, the more the profit and loss

The less leverage you use the lesser the profit/loss

It is thenceforth better for you as a trader to use less leverage so as to cap trading risks involved. The higher the leverage option used the higher the risk. This is one concept of leverage guidelines not to use more than 5:1 trading leverage.

In money management leverage guidelines: It is advisable to stay below 10:1 which is still high, most professional money managers use 2:1 ratio in their trading account.

To Learn More about Leverage & Margin - Learn the Lessons Below:

Leverage & Margin Lesson

Get More Courses & Guides:

Forex Traders Seminar Gala

Forex Traders Seminar

Gold Broker