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How can you trade 10,000 worth of a currency with only $250 in a mini account?Every financial commodity (stocks, currencies, futures, bonds, etc.) offers an investor the possibility to trade using "leverage." Basically, leverage allows you to trade more of a given commodity than you have money in your account to do so. The leverage offered with a mini account is huge: 200 to 1.* This means that you could trade an amount of currency that is up to 200 times the size of the money in your account. Since currencies are traded in lots (or contracts) and each mini contract is 10,000 of the base currency, the margin deposit (or money in your account) needed to trade one mini lot is $50 (10,000 / 200 = 50). This means that with an account of $250, you could trade up to 5 mini contracts. With a 1,000 mini account, you could trade a maximum of 20 contracts (you get the picture). In comparison, stock trading only provides a 4 to 1 leverage for traders that have $25,000 or more in their accounts. This is per US law. Therefore, forex trading offers 50 time more leverage than stock trading does. This is one of the reasons why so many traders are trading currencies with a mini forex account. Even though the use of a high degree of leverage is not always the best thing to do, it does provide mini forex traders a lot more flexibility in the implementation of their trading strategies. This is taught in our mini trading e-book, in our standard forex ebook, and in our live forex training. Leverage magnifies both the profits and losses in trading. Click here to read what you should open your mini FX account with. Click here to open a mini account online.
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