Forex trading is very popular because it is easy to get started even with small accounts and there is also a huge potential for making profits. Forex traders trade on international currencies with the exchange rates being traded. Forex market overshadows all other capital markets in the world with a daily turnover of more than $5 trillion. If you are a new Forex trader and in need of Forex Trading Guide to know about the actual mechanism of forex trading, then the following points would be useful for you.
What is Margin trading?
Forex Trade is also known as margin trading. This is because in forex market the trader just needs a margin deposit of the amount traded in the market. This is at variance from other financial markets where full deposits are required. In forex market, the brokers provide the rest of the amount. For example, if a broker is providing a leverage of 100:1, the trader is required to have a balance of just 1% in order to open a position.
What is Margin Call?
First, it is important to know about maintenance margin. Maintenance margin is the capital required by the trader to open one position. If the leverage is 100:1, the maintenance margin is 1%. A margin call occurs when the balance in the trading account goes below the maintenance margin. In such a case, the broker sells all the trades of the trader. Thus, the trader has only the maintenance margin.
What is the trading mechanism?
Each and every currency is converted into a different currency using an exchange rate. In a currency pair, one currency is the base currency while the other is the quote currency. Currency used to purchase another currency is known as base currency while the currency which is purchased is known as quote currency. Every currency has an interest rate decided by the central bank of that country. When the trader sells a currency, he/she is required to pay the interest while in case of purchase of a currency, the trader earns the interest on that currency.
Jun 01, 2020 Comments Off on What Is Forex Trading? A Quick Overview
May 30, 2020 Comments Off on Buy An Engagement Ring On A Budget and make profits
May 21, 2020 Comments Off on How Pawn My Diamond Ring Sydney Can Help You
May 21, 2020 Comments Off on How Pawn My Diamond Ring Melbourne Can Guarantee Some Instant Cash
May 15, 2019 Comments Off on Invest in Bitcoin: 8 Tips to Hit
Apr 08, 2019 Comments Off on What happens to your unsecured business loan if your business loses
Apr 02, 2019 Comments Off on What Are Various Ways to Sell Your Jewelry Online In 2019
Feb 24, 2019 Comments Off on What are The Basics of Binary Options Signals that you Should Remember?