A margin account allows a Forex trader to open an account on a small budget, and to control large amounts of money. In effect, opening a margin account with a Forex trading platform allows you to borrow money from the broker to control large currency lots. The beauty of it is that you only risk the money you deposit, not the money you borrow.

How much money you can control with your deposit, is known as leverage and is usually expressed as a ratio. For example, a leverage of 100:1 means that you can control assets worth 100 times your deposit.

Forex currencies are traded in much smaller lots than cash is. If we make an example in Us dollar, a Forex quote will be expressed as 1.3235, in other situations it would have been enough with 1.32

This is because Forex currency day trading are executed in units down to four decimal places, with the smallest unit called a pip. In a standard US $100,000 lot therefore each pip is worth US $10. If our example quote for the American dollar of 1.3235 were to change to 1.3335, that’s 100 pips and a profit or loss of $1000.

Now, if you were holding $1000, it would mean a profit or loss of just US $10. This is unlikely to impress you as an investor. However, if you let your $1,000 work on a 1% margin account to control $100,000, you will be able to gain a $1000 profit, which is far more impressive.

When you work the Forex currency day trading by a margin account, you will also be more sensible when the currency moves the “wrong” way.

Fortunately there are some tools available to help you minimize any potential losses. The most important tool is the stop loss order, which automatically closes your position when the currency reach a level which you preset. The possibility to do Forex currency day trading on a margin account is what makes Forex trading such an attractive proposition to so many people.

This small business idea is well worth an evaluation from your side. It’s a risky business that wont fit all, but if you are willing to learn, and able to keep your feet at the ground, it can pay off extremely well!

DISCLAIMER

Forex trading carries a high level of risk and may not suit all investors. The high degree of leverage can result inmassive profits or losses. Before deciding to invest in foreign exchange consider your investment objectives, level of experience, and risk appetite. The possibility of loss of some or all of your initial investment exists and therefore you should not invest money you can’t afford to lose. You should be aware of all risks associated with Forex trading and seek advice from an independent financial advisor should you have any doubts.

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We will have a look at what Forex is all about and how it all works. The thought about Forex day trading may arise questions like…

• Is it possible to make money as a Forex trader?

Yes, you can make a fortune!

• How does one profit in Forex?

Very simple and obvious: buy cheap and sell for more! The profit is generated from the changes in the currency exchange market.

• Can you loose money at Forex day trading?

Yes, you can loose the money you put at risk!

• Is it volatile?

Yes, it indeed is!

• Is it a risky business?

Yes, it’s a risky business!

The leverage of Forex currency trading

The normal leverage is 100:1. For every dollar you put at risk, you can borrow up $100 to trade. For example, if you have $1000 you can control $100,000. This liquidity and leverage is unique for the Forex trading market.

The money exchange business has existed for thousands of years. In the early day’s people were exchanging one kind of coin for another, gold for silver etc. Now a day’s we use the Forex market to exchange currencies.

The Internet has caused a revolution in the way Forex trading is carried out

Before Forex day trading entered the Internet at the end of the 90′s, the trading was done via phone orders, fax orders or in person. The trading could only be executed during business hours.

The Forex currency trading was also exclusively for major players, for example banks and governments. It was a very time consuming business, still highly lucrative.

Now when the Internet is in use, the Forex market is radically changed

The web has enabled 24 hours trading and credit cards for fund deposits. The Net has also opened the door for average Joe to be able to join this extraordinary business.

In the old day’s you would need thousands of dollars, just to get started. Now you can start with as little as $25.

How to get started?

As an individual Forex trader there is two steps to fulfill before you can make your first trade :

• Register at a trading platform
• Deposit funds for trading

DISCLAIMER

Forex trading carries a high level of risk and may not suit all investors. The high degree of leverage can result inmassive profits or losses. Before deciding to invest in foreign exchange consider your investment objectives, level of experience, and risk appetite. The possibility of loss of some or all of your initial investment exists and therefore you should not invest money you can’t afford to lose. You should be aware of all risks associated with Forex trading and seek advice from an independent financial advisor should you have any doubts.

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