What is The Difference Between Maximum Oil Trading Leverage & Used Crude Oil Trading Leverage?
You should note that there is a difference between maximum crude oil trading leverage ( oil leverage given by your broker which is the highest oil leverage you can trade with if you select to) & used crude oil trading leverage ( oil leverage depending on the lots you've opened/open positions). One is broker's (Maximum) & other is trader's (Used). To explain this concept we shall use the oil example above:
If your oil broker has given you 100:1 Maximum oil leverage, but you only open trading lots of 100,000 dollars then Used oil leverage is:
100,000 dollars : 10,000 dollars (your money)
10:1 Used Oil Trading Leverage
You have used 10:1 oil leverage, but your maximum oil leverage is still 100:1. This means that even if you're given 100:1 Maximum crude oil leverage or 200:1 Maximum oil leverage , you do not have to use all of it. It is best to keep your used oil leverage to a maximum of 10:1 but you'll still choose 100:1 maximum leverage option for your crude oil account. The extra oil leverage will give you what we call Free Oil Margin, As long as you've some Free margin on your trading account then your crude oil trades will not get closed by your oil broker because this margin requirement will remain above the required level.
When it comes to oil trading one of your oil rules: crude oil money management trading rules on your oil plan should be to use below 5:1.
Oil Trading Leverage Example
The example shown below, the set oil trading leverage is 100 : 1, the margin which is 1% is $2683.07, therefore the total amount controlled by the oil trader is: $268,307 - this is because with this oil leverage the oil trader has used little of his money & borrowed the rest, with this set at 100:1, the oil trader is using 1% of their capital, this 1% is equal to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307
MT4 Oil Software - What is The Difference Between Maximum Crude Oil Trading Leverage & Used Oil Trading Leverage?
In the above image example, the oil trader is using $2683.07, the total controlled amount is $268,307, but account equity is 16,116.55, therefore used oil leverage is ($268,307 divide by 16,116.55) = 16.64 : 1
16.64 : 1
In the oil account above even though the maximum oil leverage set oil leverage is 100:1, Used oil leverage is 16.64 : 1
