Type Of Forex Margin

Type Of Forex Margin - Forex Margin said to be funds that must be paid by the investor, but the amount of the deposit is different for each type of margin. Here we will discuss one by one of the kinds of margins.

Initial margin / original margin,
In the Indonesian language Initial margin also called initial margin, which is the amount of money paid by the investor at the time of account opening.

The amount corresponding initial agreement made between investors and futures broker, usually expressed as a percentage of the contract value. In the commodity futures typically specified initial margin ranged 5-10% of the contract value. The amount of margin varies according to the value of the contract, time, and price fluctuations that occur. In forex trading set initial margin of 1% of the contract value. So less than initial margin on futures commodity trading. Since the forex market value of the contract there are two, namely large size USD100, 000 and the small size 10.000 then the value of the initial margin to trade forex is USD1, 000 (U.S. $ 10,000,000) or $ 100 ($ 1,000,000), if the exchange rate is set Rp 10,000 per U.S. dollar (U.S.).

Variation margin,
Terms used in the Indonesian language is interrupted margin, which is an additional margin paid because the amount of subsequent margin has been under massive initial margin, as a result of price movements as opposed to the originally estimated.

Maintenaince margin,
In the Indonesian language term used is the minimum margin. Margin is the amount of value that should be kept or maintained by the investor in the transaction. Generally, the minimum margin is set at about 75% -80% of the initial margin.

Margin call,
This type is similar to the margin between, the amount of funds that must be paid back by the investor. Only in margin call deposit fund must be made if funds are already under maintenaince outstanding margin, not initial margin. If the investor gets a margin call means that investors have to add funds to the initial margin level, if not done, the position will be closed by the broker.

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Definition and Understanding Of Margin Trading

Definition and Understanding Of Margin Trading - Forex margin trading is a very important and should be mandatory understood every investor in forex trading. It could be that the margin is the lifeblood (lifeblood). In the stock market, margin is a facility provided by the company or broker Broker shares to investors. However, these loans should not be returned as scheduled, as well as bank loans.

New investors returns when successfully selling shares purchased at prices higher than the purchase price. Or conversely, managed to liquidate a position selling (short selling), purchased at a price lower than the sale price. In return for the facilities provided futures brokerage firm, the investor must pay interest on loans and fees.

In the Forex market, the margin is not a given facility futures brokerage firm. That is, the futures brokerage firm does not need to'' bail out'' investors' funds in excess of the needs of its own funds to invest. Different concepts is due to trade forex or futures market generally does not require the submission (nondelivery) the subject goods, such as stocks.

Margin in Forex trading is a security deposit paid to futures brokerage firm, so that investors can make transactions through the futures brokerage firm. For example, we get the following transactions:

The market price of GBP1 = USD1.8850
Buy USD10, 000 (1 lot)
Value of transaction: USD 18.850 (USD10, 000xGBP1.8850)
Initial margin: 1%
Needed funding: $ 100 (1% xUSD10.000)

When the market price of GBP1 = USD1.89.50
Sell: USD10, 000 (1 lot)
Obtained results: USD18, 950 (USD18 ,950-USD18, 850)
Advantages: USD 100 (USD18 ,950-USD18, 850)
Rate of return: 100% (USD100/USD100x100%)

Here we see investors do open posotion by buying 1 lot GPB (USD10, 000) in which the price of GBP is USD1.8850. Thus, the funds needed are USD18.850, or investor must deposit the funds for it as a capital trasaksi 1 lot GBP.
Therefore, it is done by the system margin and margin in charge is 1% of the contract value, the investor enough capital to deposit U.S. $ 100 (1% xUSD10, 000). Then where did the funds that USD9, 900? Because in future trading there is no transfer would require the fund shortage.

So, to buy GBP worth of USD10, 000, the investor simply provide funds USD100. Currently in stock trading, stock trading to be worth USD100, 000, the investor must deposit margin USD50, 000. Lack ie USD50, 000, will be borrowed from the stock brokerage firm.

Contents of Law Number 32 Year 1997 regarding the Commodity Futures Trading, margin is defined as the amount of money or securities to be placed clients to brokers futures, futures broker for futures clearing member or clearing member to clearing futures futures contract to guarantee the execution of transactions futures. Margin deposited for every client mandate placed the futures broker. It was intended as a performance bond futures contract transactions made under the mandate earlier.

This is Definition and Understanding Of Margin Trading

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Forex Trading System

Forex Trading System - With import and export is no longer a major cause of currency trading, the currency trading 100% determined by the mechanism of supply and demand are met in the market. However, the import and export activity is still used as one of the information to determine the exchange rate. Therefore, the announcement of the value of the balance of payments deficit or surflusnya U.S. still awaited, as this information will be used to take short positions or buying by investors. If so, then how the forex trading system? Principally there are two systems, namely physical and margins.

Physical trading
In principle, this trading system is a cash and carry or spot trading, the currency exchange investors who act as money in the currency that act as articles. Trading is like a trade market, that person buys goods - certain currency - at market price. Examples of this trading system is a money changer or bank money and foreign exchange broker.

For Example:

Market price: USD 1 = Rp 8,000
Buy: USD 1,000
Needed funding: Rp 8,000,000 (Rp 8,000 x EUR 1.000)
When the market price of USD 1 = Rp 9,000
Sell: USD 1,000
Obtained results: Rp 9,000,000 (Rp 9,000 x USD 1,000
Advantages: Rp 1,000,000 (Rp 9,000,000 - Rp 8,000,000)
Return if return: 12.5% ​​($ 1,000,000 / USD 8,000,000 x 100%

Margin Trading
In principle forex trading system or exchange margin trading is a currency with another currency in units of contracts with guarantees for transactions (neccessary margin). That is, it does not involve physical trading of currencies, but only a score. Thus, investors do not have to put up capital amount of the transaction physical action.

For Example:

The market price of GBP 1 = USD 1.8850
Buy: USD 10,000 (1 lot)
The transaction value: USD 18.850 (EUR 10.000 x GBP 1.8850)
Initial margin: 1%
Needed fund: USD 100 (1% x USD 10,000)

When the market price of GBP 1 = USD 1.8950
Sell: USD 10,000 (1 lot)
Obtained results USD 18.950 (EUR 10.000 x GBP 1.8950)
Advantages: USD 100 (USD 18.950 - USD 18.850)
Rate of return: 100% (USD 100 / USD 100 x 100%)

Description: to trade 1 lot simply by funding: $ 100, (not USD 10,000) with a contract value of USD 10,000 or USD 1,000 with a contract value of USD 100,000 as collateral for the transaction. With a trading system that is much greater. In the above cases reached 100%. Meanwhile, if the trading is done with physical systems, the rate of return is only 10% (USD 100 USD 10,000 x 100%).

This forex trading system.

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Advantages of Forex Trading

Advantages of Forex Trading - The forex market is a promising market for high returns is capable of playing cleverly on the market. As it looks now, transactions in the foreign exchange market is growing rapidly. People do not just make the foreign exchange market as a place to exchange currency or facilitate bilateral cooperation but the foreign exchange market with increasingly sophisticated technology, it enables anyone to join the pursuit of profit in foreign exchange markets.

Technology has also provided the opportunity for individuals individuals with kempuan funds / limited capital to be able to enjoy the sweetness of the foreign exchange market. Following advantages provided by the Forex market.

Low transaction costs
Forex brokers usually quote the commission is relatively very small compared to the brokers in the capital market. Even for some of the trading is done online via the Internet is not subject to a transaction fee, but only charge which is quite diverse. In addition, the difference (spread) between the purchase price (bid) and selling price (ask) is also very small.

Liquidity / Liquidity
The forex market is highly liquid (liquid). Liquidity that is the main attraction of the forex market. Because of the nature of the liquid, the transaction can be taken immediately. Liquidity also shows transparency on price movements. The foreign exchange market is very attractive to big players and big players such transactions will also bring a great impact on the forex market (forming a trend). The nature of this transparency will benefit because we can hitchhike or take part following the trend direction (trend trend buy or sell) transactions created by the big players.

Potential gains on rising and falling price
In each open position, meaning traders buy (long) a currency at a time to sell (short) another currency. Short position means the trader sells a currency in anticipation of the currency will be depressed or weakened against other currencies. Two positions are performed simultaneously this means the trader has a good profit potential in a strong currency and the currency weakened.

Leverage
The existence of the system allows the trader to leverage a small margin deposit can make a contract deal with larger quantities. Leverage gives the trader the opportunity to traders in order to obtain multiple benefits and minimize risk of capital loss. For example, brokers offer 100:1 leverage, which means that the $ 100 deposit we can make buying and selling for $ 10,000. however, remember that leverage is a double-edged sword as 2, can be very beneficial and also detrimental.

Easy to adjust / Convenience
The forex market runs 24 x 5, where 24 hours a day, and 5 x week. This gives us the freedom to transact at certain hours according our free time. In particular peer to peer traders who are still working or have other business. It is very suit, and there are also some brokers that make it easier to execute transactions automatically or automated trading systems, ranging from simple shapes such as limit orders to the advanced system and programmed.

Margin trading
Trading on margin is a yag facilities provided to investors to be able to trade more than capital owned. This can happen because investors get loans from a bank or broker, where investors simply provide a bit of money as security (collateral). For investors, the use of margin trading will increase purchasing power due to funds being transacted exceeds jumlahmodal owned. For companies or bank lending, the use of margin trading will increase competitive advantage. Types margin is provided to investors with margin and margin percentage by a certain amount of money.

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Forex and Money Changer

Forex and Money Changer - A prospective trader must not only understand what is forex, but also must be able to know the forex money changer, what relation forex market forex money and what is the difference with the stock market. Forex markets are the two things that seem separate but are actually very related.

Forex is very close to the money changer. Money changer is the exchange of foreign currency. It's just money changer buying and selling foreign currencies physically (having places and things that matter the currency, which traded) while forex transactions carried out by way of transfer funds between their bank account transactions.

It is understandable that forex is a form of progress or money changer money changer can say is a form of traditional or conventional forex trading because it really brings physical money and also had to come to a certain place and forex is a renewal based on technology which exchanges can be made ​​in cyberspace without having to physically hold the money and come directly to the exchange. With forex, foreign exchange becomes much easier and faster.

Forex is the business revolution money changer. The concept of forex business is also not much different. If the value of the dollar goes down, then we will open a buy position or buy, and when the dollar rebounded. We sell it by a margin much higher than the value of the currency at the time we bought it.

So from the above discussion it is clear that the forex and money changer is still common, and the only difference terketak on how to perform the transaction.

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