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The Margin Advantages of Trading FOREX.
from: Adrian PabloThere is one aspect that is considered as one of the best advantages
of FOREX Trading. This is related to the amount of money you need to place a trade, this is known as "margin", and in short, this is all that can be lost in a the case you had a bad trade.
I state it like this because, even though I know with proper self-taught education you're NOT going to lose as much as you win anyway, I want you to know that despite the super-high leverage associated with FOREX trading (200:1 is possible; meaning that if you put up $1 the trading vendor will allow you to trade like you really have $200), it's still arguably less risky than futures (commodities) trading. And, forget stocks, you'll never get this type of LEVERAGE in the equities market.
Futures markets are often prone to sudden and dramatic moves, against which you can not protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in the account. But because of the FX markets deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls -- for your protection, All of our recommended brokers will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you pick the proper broker firms , I guarantee that you will never lose more than you have in your FOREX account.
About the Author
Adrian Pablo; Forex trader and freelance writer.
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