In 2016, Nial won the Million Dollar Trader Competition. This post was written to expose some truths forex margin meaning in english some myths surrounding the topic of managing your trading capital. I will warn you that what you are forex margin meaning in business to read is likely to be contradictory to what you may have already learned about forex money management and risk control in other places.
I can only tell you that what am I about to divulge to you is the way I trade and it is the way many professional forex traders manage capital. Everyone knows that money management is a crucial aspect of successful forex trading. You may have heard that you should concentrate on pips gained or lost instead of dollars gained or lost. The rationale behind this money management myth is that if you concentrate on pips instead of dollar you will somehow not become emotional about your trading because you will not be thinking about your trading account in monetary terms but rather as game of points. If this doesn’t sound ridiculous to you, it should. Currency Trading Leverage and the Margin Leverage is when your invested cash is used to buy or sell foreign currencies that are worth far more that the investment. Simply put, leverage gets you more currency than you pay for.
The margin is used by your broker as a deposit for the currency you buy or sell. Foreign currency trading companies have various criterions for opening a margin trading account, and there are different margin accounts available for you. With leverage you not only win big, but lose big – It’s very important to remember that a margin account can enlarge your profits as well as your losses. So while you are upscaling your currency trading profits, any losses will also become greater for leveraged foreign currency. The initial margin requirement is the minimum investment you need to make in a foreign currency trading action. Your margin account is very much like your regular bank, where you can deposit and withdraw your capital.