Jayden The forex trading market started out as an upscale clubhouse for bankers and big institutional investors, not a playroom for small retail investors. Up until the 1990s, forex trading was a game that only the “big players” with big money could afford to play. To get into trading, you had to have a minimum of $10-50 million in the capital! However, thanks to the rapid growth of the internet, online forex trading companies can afford to offer trading accounts to ‘retail’ traders now.
Since 1997, with the development of the Internet, online forex trading margin trading has taken the world by storm and become a popular way of forex trading. Not only have inter-bank transactions started to use online methods, but individuals are increasingly participating in forex trading market transactions through the Internet.
Forex online margin trading is essentially a spot trade in forex trading contracts. The main difference between forex online margin trading and spot trading of forex contracts is the difference in the amount of currency agreed in the contract. A standard forex online margin trading contract has an agreed currency quantity of US$100,000 for the Japanese yen, Swiss franc and Canadian dollar, and £100,000 and €100,000 for other currencies. There is also a mini-contract for forex online margin trading, which has an agreed currency quantity of US$10,000 for the Japanese yen, Swiss franc and Canadian dollar, and £10,000 and €10,000 for the other currencies.
The development of online forex trading has broken down geographical limitations, making it easier for individual and small institutional investors who had to rely on local brokers to participate in forex trading to invest in forex.
Forex online margin trading allows you to manipulate $100,000 with just $1,000. This means that the money you put into the forex online margin trading will work harder for you than the money you put into any other market “Work”. Imagine that you get to keep all the profits of your $100,000 account, but all you have to do is offer 1% of this account amount.
To better understand this, let’s take an example. Let’s say you are a real estate investor and you find a house worth $300,000 and think it will go up in value later.
If you could use the same leverage in the real estate market as you do in the forex online margin trading market, you could get the house by paying $3,000 and taking out a potentially interest-free loan. That’s incredible, isn’t it?
Any real estate investor would take that deal, and that’s exactly what you can get in the Forex trading market. The increased leverage is also what well-meaning but misguided people point out about the high risk of the Forex trading market.
Indeed, this multiple of leverage may seem too aggressive. However, the Forex trading market offers the perfect strategy to deal with the risks associated with this high leverage, which is the guaranteed execution of stop-loss orders.
In the forex trading market, you are free to decide at which price to open or close a position, and these prices are guaranteed to be executed. Stop-loss or stop-loss orders that you use to entrust your broker to close your position when the price reaches the price you specify.
A stop-loss order as a stop sign for your trade. Once your trade reaches this stop sign, the price at which you want to close your position, the trade will stop immediately, so this can protect your capital.
A guaranteed stop-loss order allows you to limit exactly how much risk you will take. Even if you are highly leveraged, you can still close your position at any price you wish.
But in the stock market, you can’t do that. Of course, if the stock price starts to fall, you can set a stop loss to close the position, but you can’t guarantee that you’ll be able to close the position at the price you specify. That’s a matter of luck in the stock market.
But the Forex market is different. In general market conditions, the stop-loss orders you set are executable. Only some extreme events, such as the outbreak of war or the release of economic data far beyond expectations, will lead to some trading slippage, but we have never experienced such a thing.
