What's The Difference Between Maximum Commodity Leverage and Used Commodities Trading Leverage?

You should note that there is a difference between maximum commodities trading leverage ( commodity leverage given by your broker which is the highest commodity leverage you can trade with if you choose to) and used commodities trading leverage ( commodity leverage depending on the lots you have opened/open trade positions). One is the broker's (Maximum) and the other is trader's (Used). To explain this concept we shall use commodity example above:

If your commodity broker has given you 100:1 Maximum commodity leverage, but you only open trading lots of 100,000 dollars then Used commodity leverage is:

100,000 dollars : 10,000 dollars (your money)

10:1 Used Commodity Trading Leverage

You have used 10:1 commodity leverage, but your maximum commodity leverage is still 100:1. This means that even if you are given 100:1 Maximum commodities trading leverage or 200:1 Maximum commodity leverage , you do not have to use all of it. It is best to keep your used commodity leverage to a maximum of 10:1 but you will still choose 100:1 maximum leverage option for your commodity account. The extra commodity leverage will give you what we call Free Commodities Margin, As long as you have some Free margin on your trading account then your commodities trades will not get closed by your commodities trading broker because this margin requirement will remain above required level.

When it comes to commodity trading one of your commodity rules: commodity money management guidelines on your commodity plan should be to use below 5:1.

Commodity Trading Leverage Example

The examples illustrated and explained below, the set commodity leverage is 100 : 1, the margin which is 1% is $2683.07, therefore 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, with this set at 100:1, the trader is using 1 % of their commodity capital, this 1% equals to $2683.07, if 1% is equivalent to $2683.07 then 100% is equivalent to $268,307

MT4 Commodity Software - What is The Difference Between Maximum Commodities Leverage and Used Commodity Trading Leverage?

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

16.64 : 1

In the commodities trading account above even though the maximum commodity leverage set commodity leverage is 100:1, Used commodity leverage is 16.64 : 1