Trading on Margin
Posted on 25. Jun, 2010 by admin in Uncategorized
Trading on margin is the same as leverage trading and means that you are not required to put op the full value of the position. For this reason, forex trading often offers more leverage than future’s or stocks do – and this translates to up to one hundred times the value of your account. But do not forget that increased leverage will bring you increased risk.
If you have a forex account with fund on deposit, and your account falls below required levels, there are no margin calls in forex trading and all your positions will be closed. This is done for your protection. In this way it is impossible for you to loose more money than what you have in your account. Even though more leverage means more opportunity, it also means more risk. So a very important piece of information to remember is that increasing leverage increases risk. As a way to limit downside risk, be sure you monitor your account on a regular basis and also use stop-loss order on all of your open positions.
But know that placing a contingent order will not always limit your losses. Cross currencies are the name given to the currency pairs that do not involve the US dollar. As with other markets, a forex quote will have two sides: the ask and the bid.
