If you are new to Trading it is advisable to stay away from Gold & Oil initially, because of their Volatility and wider “spreads”. Until recently, Investors generally bought gold as a hedge or safe haven against any economic, political, social, or fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). In reality there are NO SAFE HAVENS in investing anymore.
Assuming you were using leverage of 50:1 for spot gold. If you can trade spot gold on a margin of 50:1, this means for every $1 you have in your account you have $50 in buying and selling power for spot-gold trading. In other words, a $5,000 account can trade up to $250,000. If using 100:1 it would be $500,000
Margin is the amount of money you must have in your trading account to make any leveraged trade. At 50:1 leverage, your margin requirement would be 0.02, or 2%. This means you must have a minimum cash balance of 2% of the total value of your spot gold positions. If you fall below 2%, your trade may be closed automatically, or liquidated on “margin call”.
Let’s say you would like to trade one lot of spot gold (10 troy ounces) at $820.50. So, your total trade size would be 10 X $820.50, or $8,205. Since your margin requirement is 2% of your trade size, the amount of cash you would need in your account would be $8,205 x 0.02, or $164.10. If your account balance falls below this level, your trade will be automatically closed. Prior to this you should receive a “Margin call” notification.
Leverage is what makes online spot-gold trading an excellent opportunity for beginning gold traders, who may not have large cash balances. Leverage increases your buying and selling power and lets you participate in a market that may otherwise be cost-prohibitive. In the example above, for example, 50:1 leverage gives you the ability to trade 10 ounces of spot gold at $820.50—a value of $8,205—with just $164.10 required in your trading account.
Of course, it is important to keep in mind that increasing leverage also increases risk. You could make greater profits with a leveraged account, but you could also experience quicker losses.
If you take a look in the “instruments panel” (ACT Platform) you can see the number of lots (5min) and the pip value 0.05c, for the pip value.
So 5 lot (5min) PIP=0.05
So 10 lots PIP= 0.10
So 100 lots PIP=1.00