Gold Contracts Leverage & Margin, Spread, Bid & Ask Price

1. GOLD CONTRACTS
Leverage and Margin ,Spread, Bid and Ask Price

2. POINTS TO BE COVERED TODAY:
• Lots and Contracts
• Why Trade Units of Gold of 100 Ounces
• Gold Contract
• Leverage & Margin
• Spreads
• Mini Lots and Micro Lots
• Gold News & Analysis
• Gold Price & Chart

3. LOTS AND CONTRACTS
• Gold Metal is traded using standard contracts also known as lots. One
standard contract or standard lot of Gold is made of 100 ounces of Gold -
100 units of Gold.
• The Gold contract is the size of the amount of Gold Ounces that are to be
bought or sold in the online Gold trading market by a Gold Trader.
• The standard Gold lot which is equal to 100 ounces multiplied by the current
price of gold is not traded physically, but these one hundred ounces
are represented by a contract.
• These two terms, 1 standard lot and 1 standard contract can be used
interchangeably because both refer to the same thing.

4. WHY TRADE UNITS OF GOLD OF 100 OUNCES
• The reason why such large contracts are used to trade Gold or XAUUSD
metal is so as to increase the value of a pip (profit).
• The Gold price moves are measured in points also known as pips.
• 1 point of an ounce of gold represents 1 Cents only, therefore the price
moves are calculated using very small price moves Gold, XAUUSD Metal will
be quoted as 1247.01
• The last digit is the pip - the second decimal point.

5. GOLD TRADE EXAMPLE WITH 1
CONTRACT
• To answer why Gold is traded in lots of 100 ounces, we shall
use the example below to explain:
• The XAUUSD metal will only move an average of just about $5
dollars per day, this is equal to 500 points or 500 pips, if one
point is equal to 1 cents, then trading a single ounce of gold will
only give profit of 500 points multiplied by 1 cent which is equal
to only $5 dollars profit.

6. WHY GOLD IS TRADED IN CONTRACTS OF
100 OUNCES
• In online Gold Trading, a trader will not trade a single ounce of Gold - Gold is
traded in contracts of 100 ounces therefore in online trading a trader would
be trading one contract which is 100 times the value of the ounce of Gold
that has been used in the example above.
• Therefore, in the example using on contract of gold to trade if gold moves
$5 or 500 pips instead of a trader making only $5 dollars profit, the trader
will multiply their profit by 100 because they will now be trading a contract
worth 100 ounces of Gold, meaning the total profit would now get multiplied
100 times, and instead of making $5 dollars a trader would now make $500
dollars profit from this trade.

7. GOLD CONTRACT
• 100 ounces of Gold - where each ounce is equal to $1247.00 according to the current Gold
chart price at the time of writing, means 1 contract of Gold is equal to 100*1247 =
$124,700.
• This means to buy 1 contract of Gold at the current price a trader needs to have $124,700
dollars in their trading account. But how does a retail trader who does not have a lot of
money to invest get this amount of money?
• But How Can any Trader afford $124,700 to Invest With?
• That is a very good question; the answer is LEVERAGE and MARGIN
• In Online Gold trading, you do not need $124,700 Dollars to trade XAUUSD, with leverage
and margin you only need $1,300 dollars to transact a contract of Gold, but how?

8. LEVERAGE AND MARGIN
• In Gold Trading a small deposit can control a much larger transaction and this is what
is known as leveraging, an option which gives XAUUSD traders the ability to make
nice profits and at the same time keep their risks to a minimum because they will
only be using little of their money, A gold trader will trade Gold contracts on borrowed
capital, therefore a trader having a deposit of $1,300 dollars only can borrow the rest
using a leverage option such as the 100:1 leverage option - which means that the
trader can borrow $100 dollars for every $1 dollar in their account, to put it in
simpler terms, the trader can borrow 100 times what they have deposited.
• Therefore a trader who only has $1,300 in their account can borrow up to 100 times
their capital, therefore after borrowing, which is after using leverage the trader will
now have $1,300 multiplied by 100 which is equal to $130,000 dollars.
• Now with the trader controlling $130,000 dollars they can then be able to trade the 1
contract of Gold.

9. LEVERAGE
• Leverage is represented in the form of a ratio, for example
100:1 means that an online Gold trading broker will give a
trader $100 dollars for every $1 that the trader has - that is the
broker will give the trader the option to borrow 100 times the
amount that they deposit.
• Leverage option of 200:1 also means the broker will give the
trader an option to borrow 200 times the amount that they
deposit in their trading account.

10. MARGIN
• Margin is the amount of money required by your Gold broker so as to allow
you to continue trading with the leveraged amount.
• Margin is also the amount that you deposit when opening your trading
account. For example when you deposit $2,000 then your margin is $2,000.
• With leverage it is possible for retail Gold traders or retail Gold investors to
trade the online Gold market.
• Leverage option of 100:1 means that for every $1 dollar in your account you
can borrow $100, this borrowed $100 dollars will be given to you by your
online Gold trading broker.
• What this also means is that the broker also requires you to maintain $1
dollar in your account for every $100 that they have provided you with.

11. GOLD CONTRACT TRADING EXAMPLE
• If you deposit $1,300 in you trading account and your Gold trading broker gives you
leverage of 100:1 then it means you now have $1,300*100 = $130,000 dollars that you
can trade with and even buy up to 1 Gold contract.
• Because the total amount that you now control is $130,000 and your money is $1,300
which is equal to 1% of the total, it means your margin requirement is 1%.
• A Gold broker can tell you that their margin requirement is 1% which means that their
leverage is 100:1, if your broker tells you their margin requirement is 2% it means their
leverage is 50:1 (calculation $1 for every $50 is equal to 2%)
• Therefore, with leverage and margin as explained above it means that retail Gold traders
are not required to deposit all the cash for the whole contract that they are going to be
trading with.
• The account they open they can trade on leverage and this account is referred to as
a margin trading account - meaning they are trading on margin - the funds in their
account is the margin for the leverage they will be using for trading.

12. SPREADS
• The spread is the difference between the price at
which you buy and the price at which the broker is
offering to sell.
• Spread can also be defined as the difference between
the Bid Price and the Ask Price, the Bid Ask price
shown below can be used to calculate the spreads
for trading Gold, XAUUSD metal.

13. GOLD TRADING SPREADS ON META
TRADER 4 GOLD TRADING PLATFORM

14. EXAMPLE OF HOW TO CALCULATE GOLD SPREADS
• The Bid ASK Price of Gold is 1247.11/1247.63
• The spread is 1247.63 - 1247.11 = 0.52
• Spread is 52 pips
• This spread is the profit that the Gold broker makes.
• Bid/Ask Price
• Bid is the price at which you sell
• Ask is the price at which you buy
• If the quote for EURUSD is 1247.11/1247.63
Bid/Ask= 1247.11/1247.63
• Therefore:
Bid Price =1247.11
Ask Price =1247.63

15. MINI LOTS AND MICRO LOTS
• As a note, there is also the fraction of 1 Lot in Gold trading, these fractions of the
standard lot are provided by Gold brokers so as to make Gold more affordable to
traders with minimum capital required being as little as $100 dollars.
• The Fraction of a standard Gold contract are called Mini Lot which is 1/10 of a
standard Gold contract and Micro Lot which is 1/100 of a Standard Gold contract.
• Mini Lot = 10 Ounces of Gold
Micro Lot = 1 Ounce of Gold
• These mini Gold trading lots were introduced to make the online spot Gold
trading market more accessible to the retail Gold investor as well as attract more
and more retail Gold investors.
• Maybe this is why online Gold trading has become very popular, even with as
little as $100 dollars anyone can enter this market.

16. GOLD NEWS & ANALYSIS
• XAU/USD spikes back closer to multi-month tops, eyeing $1,900 mark.
• Gold remains steady after Fed, boosted by fears of rising inflation.
• Eyes turn to EZ and US PMI for the last trading day of the week.
• Technically, the price is supported by the hourly structure.
• XAU/USD looks north towards $1900 if the key $1871 support holds
Source:
Gold Forecast, News and Analysis - FXStreet

17. GOLD NEWS & ANALYSIS-I
• Gold Soars Towards Resistance at Multi-month High.
• Gold price updated technical trade levels - Weekly Chart.
• XAU/USD breakout surges to multi-month highs- constructive above 1840, key resistance 1909/23.
• Gold aimed higher as Treasury yields and the US Dollar fell.
• Falling commodity prices may be lowering inflation estimates.
• XAU/USD eyes Symmetrical Triangle for next potential move.
Source:
Gold (XAU/USD) News and Analysis (dailyfx.com)

18. GOLD PRICE

19. GOLD CHART

20. GOLD CONTRACTS
Leverage and Margin ,Spread, Bid and Ask Price

21. THANKS FOR LISTENING
Leverage Gold Contracts
and Margin ,Spread, Bid and Ask Price