What is Difference Between Maximum Gold Leverage & Used XAUUSD Trading Leverage?
You should note that there is a difference between maximum gold trading leverage ( gold trading leverage given by your broker which is the highest gold leverage you can trade with if you choose to) & used gold trading leverage ( gold leverage depending on the lots you have opened/open trades). One is the broker's (Maximum) and the other is trader's (Used). To explain this concept we shall use the xauusd trading example above:
If your gold broker has given you 100:1 Maximum xauusd trading leverage, but you only open trading lots of 100,000 dollars then Used gold trading leverage is:
100,000 dollars : 10,000 dollars (your money)
10:1 Used Gold Trading Leverage
You have used 10:1 xauusd leverage, but your maximum gold leverage is still 100:1. This means that even if you're given 100:1 Maximum gold trading leverage or 200:1 Maximum gold trading leverage , you do not have to use all of it. It is best to keep your used gold trading leverage to a maximum of 10:1 but you'll still choose 100:1 maximum leverage option for your gold trading account. The extra gold trading leverage will give you what we call Free Gold Trading Margin, As long as you have some Free margin on your trading account then your xauusd trades will not get closed by your xauusd trading broker because this margin requirement will remain above the required level.
When it comes to trading xauusd trading one of your gold trading rules: gold money management guidelines on your gold trading plan should be to use below 5:1.
Gold Trading Leverage Example
The examples illustrated & described below, the set gold 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 capital, this 1% equals to $2683.07, if 1% is equivalent to $2683.07 then 100% is equivalent to $268,307
MetaTrader 4 XAUUSD Trading Software
In the above image example, the trader is using $2683.07, total controlled amount is $268,307, but trading account equity is 16,116.55, therefore used gold leverage is ( $268,307 divide by 16,116.55 ) = 16.64 : 1
16.64 : 1
In the gold trading account above even though the maximum gold trading leverage set xauusd trade leverage is 100:1, Used gold leverage is 16.64 : 1
