Gold Trading Leverage Examples & Margin Examples & Examples

Margin required : It's the amount of money your gold broker requires from you to open a position. It is expressed in percents.

Equity : It's total amount of capital you have in your account.

Used margin : amount of money in your trading account that has already been used up when buying a gold trading contract, this contract is the one that is displayed in the open trades. As a trader you cannot use this amount of money after opening a trade because you've already used it & it is not available to you.

In other words, because your gold broker has opened up a position for you using the capital you've borrowed, you must maintain this usable margin for your account as a security to allow you to continue using this gold Trading Leverage Examples he has given you.

Free margin : amount in your trading account that you can use to open new trades. This is the amount of money in your account that hasn't yet been gold Trading Leverage Exampled because you have not yet opened a trade with this money - this is also very important for you as a trader because it enables you to continue holding your open trades as it will be described below.

However, if you over use gold Trading Leverage Example, this free margin will drop below a certain percent at which your xauusd broker will have to close all your positions automatically, leaving you with a big loss. Gold broker at this point closes all your position because if your positions are left open they would lose the money you've borrowed from them.

This is why you should always make sure you have a lot of free margin. To do this never trade more than 5 percent of your xauusd trading account, in fact 2 percent is recommended.

Difference Between XAUUSD Trading Leverage Examples Set by the Broker & Used XAUUSD Trading Leverage Example

If the set gold Trading Leverage Example is 100: 1, what it means is that you can borrow up to 100 dollars for every dollar you have in your account, but you do not have to borrow all the 100 dollars for every dollar you have you can decide you want to borrow 50:1 or 20:1. In this case though the leverage option is set at 100:1 your used gold Trading Leverage Examples will be the 50:1 or 20:1 that you've borrowed to make a trade.

Example:

You have 1000 dollars (Equity)

Set 100:1

Gold Trading Leverage Examples Used = Amount used /Equity

If you buy gold lots equal to 100,000 dollars you will have used

= 100,000/1000

= 100:1

If you buy xauusd lots equal to 50,000 dollars you will have used

= 50,000/1000

= 50:1

If you buy xauusd lots equal to 20,000 dollars you will have used

= 20,000/1000

= 20:1

In these 3 cases you can see that even though the set is 100:1

The used is 100:1, 50:1, 20:1 depending on size of gold lots traded.

So Why not Just Select 10:1 option as the Maximum Gold Leverage Examples? Because to keep within the proper risk management rules it's even recommended that investors use less than this?

This question might seem straight forward but it is not, because when you trade you use borrowed money known A.K.A. Gold Trading Leverage Example. When you borrow capital from anyone or a bank you must maintain a security or collateral to acquire a loan, even if the security is based on monthly deduction from your salary, the same thing with Gold Trading.

In gold trading the security is referred to as margin. This is the capital you deposit with your trading broker.

This is calculated in realtime as you trade. To keep your borrowed money you must maintain what is known as the required capital (your deposit).

Now if Your Gold Trading Leverage Example is 100:1

When trading if you have $1,000 & use option 100:1 & buy 1 standard lot for $100,000 your margin on this transaction is the $1000 dollars in your account, this is the money that you will lose if your open trade goes against you the other $99,000 that is borrowed, they will close the open gold trades automatically once your $1,000 has been taken by the xauusd trading market.

But this is if your gold broker has set 0% Gold Trading Margin Requirement before closing your xauusd trades automatically.

For 20% requirement before closing your xauusd trades automatically, then your trade transactions will be closed once your trading account balance gets to $200

For 50% requirement of this level before closing your xauusd trades automatically, then your trade transactions will be closed once your trading balance gets to $500

If they set 100% requirement of this level before closing out your open positions automatically, then your trade will be closed once your account balance gets to $1,000: Explanation the trade will closeout as soon as you execute it because even if you pay 1 pips spread your account balance will get to $990 & the needed percent is 100% i.e. 1,000 dollars, therefore your orders will immediately get closedout.

Most brokers do not set 100% requirement, but there are those that set 100% aren't suitable for you at all, choose those set 50% or 20% margin requirements, in fact, those xauusd brokers which set their margin requirement at 20% are some of the best because the likely hood they closeout your trade is reduced as shown in the example above.

To know about this level which is calculated by your trading platform automatically - the MetaTrader 4 Gold Trading Platform will display this as "Gold Trading Margin Requirement", This will be displayed as a percentage higher the percent the less likely your trades are to get closed.

For Example if

Using 100:1

If gold Trading Leverage Example is 100:1 and you transact gold lots equal to $10,000

$10,000 dollars divide by 100:1, your used capital is $100

Calculation:

= Capital Used * Percentage(100)

= $1,000/$100 * Percentage(100)

Gold Margin Requirement = 1,000 %

Investor has 980% above required amount

Using 10:1

If gold Trading Leverage Example is 10:1 and you transact gold lots equal to $10,000

$10,000 dollars divide by 10:1, your used capital is $1000

Calculation:

= Capital Used * Percentage(100)

= $1,000/$1000 * Percentage(100)

Gold Trading Margin Requirement = 100%

Investor has 80% above required amount

Because when a trader has a higher gold Trading Leverage Example means that they have more percentage above what's required(A.K.A. More "Free Gold Trading Margin") their open gold trading transactions are less likely to get closed. This is the reason why traders will choose option 100:1 for their trading account but according to their risk management trading rules, they will not trade above 5:1.

These Zones are Shown on the Software Image Below as an Examples:

MetaTrader 4 Gold Software