Margin and Leverage

Margin and Leverage:

Margin is defined as good faith deposit that your service has on hand in your account to cover losses. Standard margin in a regular account is 100:1 ($ 1,000.00 dollars controls 100.000 units of currency). You can set your leverage with your dealer as low as 50:1 ($ 2,000.00 controls 100.000 units of currency) or as high as 400:1 ($ 250.00 controls 100.000 units of currency). Depending on which currency is the base currency, your minimum margin requirement can be higher or lower based on exchange rates (see your calculator in the margin account for details.) A Mini account would reduce the amount of margin separated by dealers, while also reducing the amount of units to control. Since you have less control units in the mines (eg, 100:1; $ 100.00 controls 10,000 units of currency) your pip value is reduced to 1/10th of the standard account (see pip calculator account for details). Margin call is forced liquidation of your positions if the account equity falls below the amount of margin is set aside by the dealer. No more support!

This sounds risky to some people, but really risky means different things to different people. Most people feel that trading Forex is risky, because they do not understand the true size of the exchange rate moves. Also, most new traders do not understand how to control their risk, and in turn are afraid to trade. When it comes to making money people let their minds run wild and not thinking about risk, discipline is key.

The average movement in the most liquid pair (EUR / USD) is less than 1% move for the day, so lets think about this. If you do a lot in mini account controls 10,000 units of currency, seen most 1% move, which is approximately $ 100.00 dollars either way. This means you need to buy high end of the day and sell the ultimate low, and if you think that's pretty hard to do.