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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