|
|
|
FOREX 101
The Foreign Exchange Market, or FOREX market is a worldwide market where buying and selling of currencies takes place. These transactions take place 5 days a week, 24 hours a day and daily are worth approximately 1.5 trillion dollars (US). The FOREX...
Forex Trading Online - 7 Reasons Why You Should!
Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways preferable to other markets such as...
How Bollinger Bands Can Tell You What The FOREX Market Will Do Next.
In Forex trading as in all other speculative activities in the
capital markets there is a major problem that all, new and
experienced traders, will face every time they open their forex
trading stations. This is, how to predict the behavior of...
Learn Currency Trade - Intro to The FOREX Market
The Foreign Exchange Market – better known as FOREX - is a world wide market for buying and selling currencies.
It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US...
What's the Difference of Trading Mini Lots Vs. Full-sized Lots in Forex.
In Forex trading there is something called, a Mini Account, and
it uses a different leverage calculation than a regular (100k)
account. This is, instead of trading full-size currency lots
(100,000 units), you'll trade in lots that are just 1/10...
|
|
| |
|
|
|
|
|
|
Forex Trading: Margin Usage and Introduction to Hedging
A good rule of thumb for either a mini-account or standard forex
account, is to limit your margin usage for each trade to 5% -
10% of your usable margin.
As an example, if your usable margin is $5000, to trade safely,
limit your margin usage for each trade to a maximum of $250.
This means trading only 1 full lot for each trade. This is
assuming that you are trading in a CMS Universal account with
400:1 margin. Your use of margin is increased with a smaller
ratio, as most other brokerages only offer a smaller ratio,
normally 200:1 or even 100:1.
As your account grows and your usable margin grows, you can
increase your margin usage and trade bigger mini or full lot
sizes. If you lose money and your account shrinks, drop your
margin usage back down to smaller sizes. You need to learn to
keep your eye on your usable margin, especially if you've
suffered some losses.
Protect your usable Margin by not having more than 2 open hedged
or unhedged position at any one time. Your usable margin &
equity will get eaten up by un-hedged open positions that go bad
in the wrong direction...this is a really good reason why you
want to use stops, and if you hedge, hedge tightly.
IMPORTANT: Don't just keep putting on positions because you
think it's a good opportunity. First sell a position and book
some usable margin before you put on another position.
NOTE: Hedging does not use up more margin! Use it to protect
your equity & usable margin, esp. in an emergency situation!
If you break the hedging rules, and your positions go
Associated Websites
against
you and you aren't properly hedged with stop losses, you'll
quickly see your usable margin degrade. If it degrades enough so
that your usable margin goes into the negative, you'll get a
margin call. This means that the operators will automatically
start selling some of your lots in your oldest losing positions
in order to beef up your usable margin. This makes your
unrealized loss become a realized loss...and the money is gone
from your account.
If you lose too much useable margin, they won't even let you
trade in your account, the message they'll give you when you try
to put on a new trade is, 'Account in Untradeable Condition'.
If this happens, you might have an open position that needs to
be hedged immediately or you might need to sell an old position.
Or you might need to deposit more money into your account. Then
you can start trading smaller lots to win back some usable
margin.
You can lose your entire account balance if you're not careful.
One other good thing about forex trading is that you will never
lose more money than is in your account, you won't have to sell
your house if you get a margin call! Stick to the rules above
and this won't happen to you. You'll make more money than you
thought possible and without the stress of loss.
About the author:
Cynthia Macy is co-author of 'The Day Trade Forex System: The
Ultimate Step-By-Step Guide To Online Currency Trading'.
http://www.daytrade-forex.com http://www.successtrading2000.com
http://www.professionalforextradingonline.info
http://www.shorterminvestingsite.com
|
|
|
|
|
|