What is a Commodity Trading Margin Trading Account?
A Commodity Trading Margin trading account is an account that allows commodities traders to control a large amount of commodity trade transaction using little of their own capital while borrowing the rest from their commodities trading broker.
What is a Commodity Trading Margin Trading Account?
Obtaining this margin trading account will enable you as a trader to borrow money from your commodity broker to trade commodity with.
The amount of borrowing power your commodity trading account gives you what is called " commodity trading leverage", and is usually expressed as a ratio - a ratio of 100:1 means you can control resources worth 100 times your deposit - commodity trading leverage 100:1 means you can borrow 100 dollars from your commodity broker for every $1 dollar in your commodities trading account.
What this means in Commodity Trading terms is that with 1% margin in your commodity account you can control one standard lot or 1 contract worth $100,000 with a $1,000 deposit.
However, Trading this commodities account increases both potential for trading profits as well as losses. In Commodity Trading you can never lose more than you deposit, losses are limited to your deposits and usually brokers will close a transaction that extends beyond your deposit amount by executing what is known as a margin call. Commodity traders must therefore try to keep their margin requirement level above that required. By using commodity trading money management rules & keeping your used commodity trading leverage below 5:1.
To Learn More about Commodity Leverage and Margin - How Do You Read the Topics Below:
Commodities Leverage & Margin Tutorial
