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