Leverage and margin when trading gold

Leverage lets you control a large position with a small deposit, called margin. At 1:100 leverage, a $41,250 position (0.10 lots of gold at $4,125) needs $412.50 of margin.

Margin formula

Margin = lots × 100 oz × gold price ÷ leverage. Try it in the margin calculator.

Leverage doesn’t change your risk per pip

A 0.10-lot position moves $1 per pip whether your leverage is 1:20 or 1:500. Leverage only changes how much margin is locked up, and therefore how large a position you’re allowed to open. High leverage makes it easy to over-size.

Margin calls and stop-outs

If losses eat into your account until your free margin runs out, the broker issues a margin call and then closes positions automatically (a stop-out), often at the worst moment. A stop loss at a planned level is always better than a stop-out at the broker’s level.

Regulatory limits

• UK (FCA) and EU (ESMA) retail clients: gold leverage capped at 1:20, with negative balance protection.
• Other jurisdictions: often much higher, sometimes without negative balance protection.

Using leverage sensibly

Size every trade from your stop loss and risk percentage first. If the resulting position needs more margin than you have, the trade is too big for your account, not a reason to raise leverage.