Leverage · Gold CFDs

How leverage actually works.

Leverage decides how much of your money the broker sets aside to open a trade. It does not change how much a trade makes or loses. Here's what that means, with simple numbers.

The short version

Leverage is a deposit rule. Higher leverage means a smaller deposit per trade, called margin.
The profit or loss on a trade comes from its size and how far gold moves, not from the leverage setting.
Higher leverage leaves more of your balance free, which gives each trade more room before the broker steps in.
Leverage does not put you in debt. With a broker that offers negative balance protection, the most you can lose is what's in the account.

Step 1

What you're actually trading

A gold CFD (contract for difference) lets you trade the price of gold without buying bars or coins. You and the broker settle the difference between where the trade opened and where it closed.

Trades are measured in lots. At most brokers, 1 lot is 100 ounces, so 0.01 lot is 1 ounce. To keep the math simple, this page uses gold at $4,000 an ounce.

Trade size0.10 lot = 10 oz

Value of that gold10 × $4,000 = $40,000

Each $1 gold moves= $10 gain or loss

Step 2

Leverage sets the deposit

You don't need $40,000 to hold $40,000 of gold. The broker asks for a deposit and holds the rest of the position for you. Leverage is the ratio that sets that deposit.

Deposit (margin) for the same 0.10-lot trade

1:1

$40,000 set aside: the full value

1:20

$2,000 set aside

1:200

$200 set aside

Bars are drawn to scale. The trade is identical in all three rows; only the deposit changes.

Step 3

Same trade, same result

This is the part most people get wrong. If gold rises $10, a 0.10-lot trade gains $100 whether the account runs at 1:20 or 1:200. A $10 drop loses $100 either way.

At 1:20 · deposit $2,000Gold moves +$10+$100

At 1:200 · deposit $200Gold moves +$10+$100

Risk comes from trade size. The algorithm sets trade size based on your account balance, so higher leverage does not mean bigger trades.

Step 4

Why Thanos needs 1:200

Thanos can hold more than one position at a time. Every open position needs its own deposit, and the deposits come out of your balance. Low leverage uses up the balance fast. Take a $2,000 account opening two 0.10-lot trades:

At 1:20Second trade rejected: not enough free money

Trade 1 · $2,000

At 1:200Both trades open, $1,600 still free

$400

$1,600 free

Set aside as depositFree money

The money in the account is the same in both rows. At 1:200 less of it is locked up, so the algorithm can place its trades as designed.

Step 5

More room before the broker steps in

Every broker has a stop-out level. When the money left in your account falls to a set share of the deposits in use (often 50%), the broker closes trades automatically. A bigger deposit hits that line sooner.

How far gold can fall against one 0.10-lot trade before stop-out

At 1:20$100 drop

At 1:200$190 drop

$0$100$200

$2,000 account, 50% stop-out. At 1:20 the trade is closed when $1,000 is left. At 1:200 it stays open until about $100 is left. Lower leverage gets trades closed earlier, often at a loss on a move that would have turned around.

Common worry

Can leverage put my account below zero?

Leverage is not a loan you pay back. You never owe the broker the $38,000 it holds in the example above. Two things keep the account from going below zero:

Stop-out

The broker closes positions automatically while there is still money in the account, as shown in Step 5.

Negative balance protection

If the market jumps past the stop-out level, for example over a weekend, the broker resets a negative balance to zero. Check that your broker lists this feature before you fund the account.

With both in place, the most you can lose is the money in your account, at 1:20 or 1:200 alike. That money is still at risk, which is why trade size matters far more than the leverage number.

Context

How gold CFDs compare

Most markets use some form of leverage. What differs is who sets it and how much is allowed.

Market	Who sets the deposit	Typical leverage
Stocks (margin account)	Broker, within regulator rules	up to 2:1
Futures, like NQ	The exchange, per contract	Built in; set by the contract's margin
Gold CFDs	Broker, within its regulator's limits	1:20 to 1:500+

Limits depend on where you live and which regulator oversees the broker. For example, UK and EU rules cap gold at 1:20 for retail accounts. Availability and leverage are set by your broker, not by Freedom Algos.

Plain-language glossary

Terms you'll see in MT5

Leverage: The ratio that sets how much deposit a trade needs. 1:200 means a $200 deposit per $40,000 of gold.
Margin: The deposit set aside while a trade is open. You get it back when the trade closes.
Free margin: Money in the account that isn't set aside, available for new trades and to absorb moves.
Margin level: Your account value divided by the deposits in use, shown as a percentage. Higher is safer.
Stop-out: The margin level where the broker closes trades automatically.
Lot: The unit for trade size. For gold, 1 lot is usually 100 ounces.

Open the setup guide Back to Thanos

Examples are illustrative and use round numbers: gold at $4,000 an ounce, 100 ounces per lot and a 50% stop-out level. Your broker's contract size, stop-out level and protections may differ; check them in your account details.