What is The Difference Between Maximum Oil Leverage and Used Crude Oil Trading Leverage?

You should note that there is a difference between maximum oil trading leverage ( oil trading leverage given by your broker which is the highest oil leverage you can trade with if you select to) and used oil trading leverage ( oil trading leverage depending on the lots you have opened/open trade positions). One is the broker's (Maximum) & other is trader's (Used). To explain this concept we shall use the crude oil trading example above:

If your oil broker has given you 100:1 Maximum crude oil leverage, but you only open trading lots of 100,000 dollars then Used oil trading leverage is:

100,000 dollars : 10,000 dollars (your money)

10:1 Used Oil Trading Leverage

You have used 10:1 crude oil trading leverage, but your maximum oil leverage is still 100:1. This means that even if you are given 100:1 Maximum oil leverage or 200:1 Maximum oil trading leverage , you don't have to use all of it. It is best to keep your used oil leverage to a maximum of 10:1 but you will still select 100:1 maximum leverage option for your oil trading account. The extra oil leverage will give you what we call Free Crude 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 required level.

When it comes to trading oil one of your oil trading rules: oil trading money management guidelines on your oil trading plan should be to use below 5:1.

Oil Trading Leverage Example

The example explained below, the set crude oil 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% is equivalent to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307

What is The Difference Between Maximum Crude Oil Leverage and Used Oil Trading Leverage?

In the above image example, the 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 trading leverage set oil trading leverage is 100:1, Used oil trading leverage is 16.64 : 1