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A fixed of 100:1 leverage |
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Trading with leverage 100:1, means you aren't required to put up the full value of the open position, you just need to deposit around 1% as margin.
1 Standard contract ( 1 lot ) needs $1000 margin.
0.1 Standard contract ( 0.1 lot ) needs $100 margin.
0.01 standard contract ( 0.01 lot ) needs $10 margin.
For example:
Let's say that the current sell/buy for GOLD is 1120.33/1120.83, it means you can buy 1 ounce GOLD for $1120.83 or sell 1 ounce GOLD for $1120.33.
Suppose you expect GOLD will rise in price, you would buy GOLD, and then wait for the quotes to rise.
To make the trade you buy 100 ounces GOLD, paying $112,083 dollars (1120.83×100 ounce, 1 standard gold contract). According to GFG’s margin requirement, your initial margin deposit would be $1,000 for this trade (1 standard contract needs $1,000 margin).
If as you expected, the price of GOLD rise to 1125.43/1125.95, you would sell 100 ounces GOLD at the current rate of 1125.43, and receive $112,543.
To calculate your profit:
You bought 100 ounces GOLD at 1120.83, paying $112,083.
You sold 100 ounces GOLD at 1125.43, receiving $112,543.
Total profit = 112543-112083 = US $460.
It means that you spent $1000 and make $460 profit. The profit rate is 46%, if you didn’t Trading with leverage 100:1, you spent $112,083 to buy 100 ounces GOLD, the profit rate would be less than 1%.
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