How to Calculate Margin Level

What's Margin Trade Account? - XAUUSD Gold Margin Level Percentage Calculator - XAUUSD Gold Margin Calculator

The meaning of XAUUSD Leverage is having the ability to control a large amount of money using very little of your own money and borrowing the rest - this is what makes the market to attract a lot traders.

We shall explain leverage first & then explain margin in this studying how to calculate leverage & xauusd margin tutorial.

Example:

We shall use this illustration to explain what trading leverage is? If your broker gives you leverage ratio of 100:1 (this the best option to choose as the maximum for any trading account)

This means you borrow $100 for each 1 dollar you have on your account.

To put in another way your broker gives you $100 for each one dollar in your trading account. This is what is known as leverage.

This means if you open an account with $1,000 and your leverage option is 100:1, then you get $100 for every $1 you that you have on your account, the total amount that you will control is:

If for 1 dollar the broker gives you 100

Then if you have 1,000 you'll get a total of:

$1,000 * 100 = $100,000 dollars

Now you control $100,000 of Investment

Most new traders ask what leverage is best leverage for $1,000, or $2,000 dollars, or $5,000 dollars trading account? - The best leverage option to select when opening a real account is 100:1 and not 400:1.

What's Margin?

This is the sum of money required by your broker so that to allow you the trader to continue to transact with borrowed amount.

In other words the question what's margin in XAUUSD? can be elaborated as money required to cover open trades and is denoted in percentage. For 100:1, the amount you will control is $100,000 as expounded in the above exemplification.

Now can you compare a investing $1,000 with another one that is investing $100,000? Obviously Not. This is how it works: it takes you as a gold trader from that retail trader investing $1,000 to the investing $100,000. Where does this extra money come from? - You borrow it from your online broker in what is simply known as Gold Leverage. This equity which you borrow, you borrow it against the $1,000 of your equity which you deposit with your online broker. If you were to explain what this leverage means - then it is the ability to control a large amount of money using very little of your own money and borrowing the rest. Otherwise, if you were trade without this leverage it would not be as profitable as it is, in fact you as a gold trader can still select not to use leverage, using 1:1 trading leverage option but you would not make money and it would take too long to make any trading profit.

Example of how to calculate leverage & gold margin:

Margin required in this case is $1,000 dollars (your money) if it's denoted as a % of $100,000 dollars which you control it is:

If leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1 %

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am a Beginner Trader Trader'

(Simplify - your equity is $1,000 after leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1 %) that's your trading account margin requirement for your trading account.

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