This article is about online currency trading. It reveals the meaning and essence of margin trading in the Forex currency market.
Hello !
My name is Artem Postnikov. I am the owner of the news resource www.forexgun.ru dedicated to news reviews about the forex market.
Working on the Forex market these days has become one of the most affordable types of earnings both in the USA and in the CIS countries. The Forex market is the most liquid, and these are not just words, about 5 trillion US dollars are scrolled here every day, which is not can leave even a skeptic without attention and indifference.
Each of us has the full right and opportunity to become members of this system and start trading, but in order to do it profitably, you need to have the appropriate knowledge and experience of working as a financial analyst.
Today we will talk with you about what is margin trading and what's the point.
Trading in the financial market is carried out by amounts that do not change over time - lots. You can buy 200,000 euros (this will be 2 lots), 300,000 euros (3 lots), but not 50,000 or 150,000 euros. At the moment, there are 2 types of lots: minimum and standard. The minimum lot, as a rule, is an order of magnitude less than the standard one.
The condition for margin trading is the placement by a foreign exchange trader on a bank account of a certain collateral, or margin, which is considered as the basis of his arbitrage operations, and precisely because of this, the trader cannot lose more money than the value of his margin.
The second feature of margin trading is the provision of a certain leverage - a certain ratio, which is the ratio between the maximum possible amount of the currency used and the amount of margin.
Margin trading and its meaning is to arbitrate currencies and extract their exchange rate differences .
Let's say your account is USD 10,000,000. The leverage is 100, or 1%. The leverage expressed in% is called the minimum margin. The maximum amount of currency used for this margin is: USD 10,000,000 * 100 = USD 1,000,000. In other words, the foreign exchange trader must own one percent of the amount used. Working with leverage can increase a trader's potential profit many times over.
The size of the client's margin and the resulting profit (or loss) constitute the variation margin. At the same time, the ratio of the minimum margin to the variation margin cannot be higher than 100%, or one.
Respectfully yours, Postnikov Artem !
