Trading Leverage Examples & Margin Examples & Examples

Margin required : It is the sum of money your broker requires from you to open a trade transaction. It is expressed in percents.

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

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

In other terms, because your broker has opened up a trade transaction for you using the trading capital you have borrowed, you must keep this usable trading margin for your account as a collateral to allow you to continue using this Trading Leverage Examples he has given you.

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

However, if you over use Trading Leverage Example, this free trading margin will go below a certain % at which your xauusd broker will have to close all of your trades automatically, leaving you with a large loss. broker at this point closes all your position because if your trades are left open they would lose the money you've borrowed from them.

This is why as a trader should always make sure that you have a lot of free margin. ToIn-order-to do this never trade more than 5 percent of your xauusd account, in fact 2 percent is adviced.

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

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

Example:

You have $1000 dollars (Equity)

Set 100:1

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'll have used

= 20,000/1000

= 20:1

In these 3 cases you can see that allthough 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 guidelines it's even recommended that investors use less than this?

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

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

This is calculated in real-time as you trade. To keep your borrowed money you must keep what is known-asreferred-to-as the required trading capital (your deposit).

Now if Your Gold Trading Leverage Example is 100:1

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

But this is if your broker has set 0 percent Gold Trading Margin Requirement before closing out your trades automatically.

For 20 percent requirement before closing your trades automatically, then your trade transactions will be liquidated once your account balance gets to $200

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

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

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

To know about this level which is calculated by your trading software automatically - the MetaTrader 4 Trading Platform will display this as "Gold Trading Margin Requirement", This will be shown 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 & you trade gold lots equal to $10,000

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

Calculation:

= Capital Used * Percent(100)

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

Gold Margin Requirement = 1,000 %

InvestorTrader has 980% above the required sum

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 * Percent(100)

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

Gold Trading Margin Requirement = 100%

Investor has 80% above requirement amount

Because when one has a higher Trading Leverage Example means that they have more percent above what is required (A.K.A. Known As More "Free Gold Trading Margin") their open gold trading trades are less likely to get closed. This is the reason why traders will choose option 100:1 for their account but according to their money management trading rules, they won't trade above 5:1 leverage option.

These Zones are Displayed on the Trading Software Image Below as an Example:

MT4 Gold Software