Thursday, May 28, 2009

The Margin Advantages of Trading FOREX.

There is one aspect that is considered as one of the best advantages of FOREX Trading. This is related to the amount of money you need to place a trade, this is known as "margin", and in short, this is all that can be lost in a the case you had a bad trade.

I state it like this because, even though I know with
proper self-taught education you're NOT going to lose as
much as you win anyway, I want you to know that despite the
super-high leverage associated with FOREX trading (200:1 is
possible; meaning that if you put up $1 the trading vendor will
allow you to trade like you really have $200), it's still
arguably less risky than futures (commodities) trading. And, forget stocks, you'll never get this type of LEVERAGE
in the equities market.

Futures markets are often prone to sudden and dramatic
moves, against which you can not 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 FX markets deep
liquidity and 24-hour, continuous trading, dangerous trading
gaps and limit moves are eliminated. Orders are executed
quickly, without slippage or partial fills. And finally,
there are no margin calls -- for your protection, ALL our
recommended brokers will automatically close out some or
all of your open positions if your account equity 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. In fact, if you pick from
our list of recommended brokers, we guarantee that you will
never lose more than you have in your FOREX account.

Omar Vargas; Forex trader and freelance writer.

No comments:

Post a Comment