Know When to Buy Or Sell a Currency Pair
Forex trading involves trying to predict which currency will rise or fall versus another currency.
Tranding in Lots
hen you go to the grocery store and want to buy an egg, you can’t just buy a single egg, they come in dozens or “lots” of 12.
hen you go to the grocery store and want to buy an egg, you can’t just buy a single egg, they come in dozens or “lots” of 12.
Margin Trading
hen you trade with leverage, you wouldn’t need to pay the 10,000 euros upfront. Instead, you’d put down a small “deposit”, known as margin.
Leverage is the ratio of the transaction size (“position size”) to the actual cash (“trading capital”) used for margin.
For example, 50:1 leverage, also known as a 2% margin requirement, means $2,000 of margin is required to open a position size worth $100,000.
Margin trading lets you open large position sizes using only a fraction of the capital you’d normally need.
This is how you’re able to open $1,250 or $50,000 positions with as little as $25 or $1,000.
You can conduct relatively large transactions with a small amount of initial capital
A small margin deposit can lead to large losses as well as gains.
It also means that a relatively small movement can lead to a proportionately much larger movement in the size of any loss or profit which can work against you as well as for you.
You could’ve easily LOST $500 in twenty minutes as well.
You wouldn’t have woken up from a nightmare. You would’ve woken up into a nightmare!
High leverage sounds awesome, but it can be deadly.
RollOver
For positions open at your broker’s “cut-off time” (usually 5:00 pm ET), there is a daily “rollover fee“, also known as a “swap fee” that a trader either pays or earns, depending on the positions you have open.
