Comments on Forex Trading Account Sizes, Lots and Margin Calls.
Forex trading is one of the best business opportunities you can
think of joining these days. No other market in the world allows
the "Leverage" that the profitable world of currency-trading
does. Leverage is all about margin trading. In the Forex market,
it is essentially the ratio of the amount used in a trade to the
required security deposit needed, by the particular broker you
chose to use, for that trade.
Normally, for most brokerages, a margin deposit of just $1,000
allows you to control a $100,000 position in the Forex market.
That's 100:1 leverage, or 1%. Or, said in a different way, a
"regular full-sized account", sometimes referred to as a 100k
account, allows you to trade with lot sizes equal to $100,000.
Each lot is worth $100,000 in currency. So It would only require
$1,000 to trade one lot.
This great feature in Forex trading is what makes this market
the hottest market to trade in right now. The Forex broker has
given you a loan of $99,000 dollars secured only by your $1,000!
This is a huge loan and, as you may know by now, this is what
allows traders to make extraordinary incomes in this market.
And, as you also are probably used to hearing , "leverage is a
two-edged sword" , it is what can cause you to lose a lot of
money if you trade without rules or Stop-loss orders.
But just as an example, let's say you were a person that likes
to trade with reckless abandon, i.e., with no strategy, no
common sense, no money- management principles, etc. That's never
recommended for anyone, but being a Forex trader has such
great
advantages, that even someone with a trading mind like the one
described before, will never lose more than what he has placed
into a trade.
Unlike Futures (Commodity Trading), the market that most people
associate with High leverage, you can never have a debit balance
when trading Forex.
So, despite the greater leverage associated with FX trading, it
is still arguably less risky than futures trading. Futures
markets are often prone to sudden and dramatic moves, against
which you can't protect yourself, even by trading with
protective stops. Your position may be liquidated at a loss, and
you'll be liable for any resulting deficit in the account. But
because of the Forex markets great liquidity and 24-hour,
continuous trading, dangerous trading gaps and limit moves are
very unprobable. Orders are executed quickly, without slippage
or partial fills, which is just great.
And as it was not enough, there are no margin calls, for your
protection, the forex broker's trading platform will
automatically close out some or all of your open positions if
your account equity, meaning the total floating value of the
account, falls below the level required to hold the positions.
Think of this as a final, automatic stop, always working on your
behalf to prevent a debit balance.
Choosing the Right Forex Broker
If you've already made the decision to go ahead and start
trading forex, the first step you need to take is to choose the
right forex broker. Currency brokers vary more than the U.S.
Investment houses, so you really need to do your homework...
DXOut E-Currency Exchange Program and Free Training
Copyright 2005 East Tech LLC
I’m sure you’ve heard about DXInOne and the E-Currency Exchange business by now. There are dozens of online marketers taking full advantage of this opportunity by promoting their very expensive courses that can cost...
Forex Trading: Create Fantastic Wealth From Forex Trading
What is currency trading?
How can you get rich and powerful from currency trading?
Who can do currency trading?
Can you do currency trading from any country of the world?
Until six years ago, when the United States Congress passed a law and...
Forex Versus Stocks
Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company. When the company does well and makes a...
The 6 Advantages Forex Trading Has Over Other Investments
There are many different advantages to trading forex instead of
futures or stocks, such as:
1. Lower Margin Just like futures and stock speculation, a forex
trader has the ability to control a large amount of the currency
basically by...
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest / trade in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.
** The Views and opinions represented in the provided website links and resources are not controlled by the Referring Broker or the FCM. Further, the Referring Broker and the FCM are not responsible for their availability, content, or delivery of services.
