Commerce on the Internet does not always involve the purchase or sale of real goods.The relative frequency, it concerns trading on the currency markets, where buying or selling foreign exchange contracts, traders earn on exchange.To carry out speculative transactions in the Forex market is no need of large investments.
Any currency transaction is subject to conditions short of credit.The pledge, which in this case provides a trader called margin.Margin loan is different from a simple in its size, which exceeds the margin several times.
Margin trading - is carrying out the purchase and sale of foreign currency (asset) using a virtual credit, which provides traders bail pre-specified amount (margin), placed on deposit with a brokerage firm.
ratio between the means that the trader receives a loan of dealing center, and called his own shoulder.Margin transaction is due to the effect of the financial "leverage" (shoulder) allows you to earn income, significantly higher than that which would be obtained using only their own funds.
Margin trading allows the presence of increasing its profits and increasing and decreasing in the market.The operation is considered complete if implemented two mutually completion of the transaction, for example, when was bought by a certain amount of a currency (the opening position), then after some time the trader should sell it completely (closing) or vice versa.The net result of closing the position is the difference between bid and ask prices.At the same time the release of the collateral margin is added result of the closing of the transaction: the amount of its positive balance in the account of the trader exceeds the pledge, otherwise the deposit will be deducted from the loss on the transaction.
Naturally, the transaction may not always be successful, but in practice most than the risk of a trader - is his deposit.Broker controls not only the conclusion of the transaction, but also accompanies it.If the loss of her approaching critical, the trader receives a notification of the need to increase the size of the collateral, the so-called margin call (in translation - the margin requirement).
Margin trading, so not only gives traders the ability to manage earnings by increasing the deposit made, but it also limits the risk of loss.
main difference from operations margin transaction using a conventional loan - in the absence of any assets that need to be made for the use of the loan broker.Moreover, the risk is limited by means of the trader brought them to the accounts of the broker.This means that if a broker with sharp price hikes in the market does not have time to close the deal on the margin call and his loss is greater than the margin, ie,size of the mortgage, the losses borne by the broker.
Margin trading involves only the right of a trader to manage specific assets, that is to buy or sell.Normally this is enough for speculation, because the trader is only interested in the difference in price for the goods, and not himself.I must admit that this trade does not require actual delivery of goods, leading to a significant reduction in the overhead of merchants.
The use of leverage increases the trader's commercial capital.Even if the account a trader has only 1% of the size of the contract, all the same, this method will allow it to make money on the difference in exchange rates.
Margin trading contributes to a sharp increase in the volume of transactions on the market.Although the resulting risks are growing, but with an increase in the volume of transactions and nature of market changes, it becomes more liquid.
