Margin Makes Foreign Exchange Trading Exciting

By John Eather

One of the key factors leading to the popularity of foreign exchange trading is "margin". Without this factor, most forex trading would be well outside the realms of average investors. But what precisely is margin?

Margin is a factor which allows foreign exchange traders to control large sums of currency while making relatively small deposits. This works by establishing a "margin Account". This has to be conducted through a forex broker and it will enable the new trader to control what they call currency lots. A currency lot is generally worth in the region of $100 000.

The leverage the trader gains from the margin account is expressed as a ratio. For instance a leverage ratio of 100:1 means the trader is able to have access to control over 100 x their deposit amount of forex assets. So essentially in a $100 000 standard forex lot with a 1% margin will require a deposit of $1000.

Trading on a margin means that the broker is able to have access to very large profits. But as in all methods of investment there is risk too, so by the same token losses can be made. But reward does after all favor the brave. There are safeguards available that can limit the risk of losses and a broker will terminate a transaction which goes above the deposit margin. However it is still possible to lose more than the original deposit amount even if a small change in foreign exchange is experienced. By the same token, so can large profits be made.

An example of how cash is traded is that it is positioned at 2 decimal places. Forex on the other hand is traded at 4 decimal places. So normal currency may be for example $1.25, and forex would stand at $1.2567. The smallest unit in foreign currency exchange is the "pip" and this on a lot of 100 000 only equals $10. This amount bears no significance to a forex trader, while it may make the average American tourist decide not to take a holiday in Aruba this year. Profits and losses are decided by far larger drops and increases in the value of forex than $10 on $100 000 and this is what makes trading in margins so exciting. - 23204

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Money Management in Forex Trading (Part III)

By Ahmad Hassam

Perhaps the best advice that you will receive from someone is live to trade another day. Currency markets are brutal, volatile and ruthless. In minutes you can lose many pips. You should learn to survive in the markets in the long run. Do not lose all your money in a single day.

The single most common factor that causes many currency traders to blow up their accounts and lose all their money is greed. You start taking unnecessary risks when you get greedy. You will spend many hours trying to find the Holy Grail technical indictor or a forex robot that can make you rich. You will believe that by discovering that secret, you will become rich.

Unfortunately there is no such Holy Grail for anyone. No one has ever found such a secret. You cannot always win. You will win and you will lose. Learn not to risk more than 2% of your account on one single trade. Grow your account incrementally and slowly over time. Never ever get into the temptation to risk big trying to make one single winning trade that can make you rich.

You should know how much you are willing to risk in a single trade. I said 2%. But if you want to be aggressive you can go up to 5% but stay between 2-5%. Dont exceed it. If you are conservative, on the other hand, you should consider risking between 1-2% only.

Once you have decided on the amount of risk you are willing to take, the rest is simple. Suppose you have a $50,000 account. You decide on a risk of 2% only. How much you can risk on a single trade? (50,000)(0.02)=$1,000. This is the maximum amount you should risk on a single trade.

However, if you are going to trade more than one position at the same time, the amount may become higher. Lets assume you are in 3 trades at the same time trading three currency pairs! You should risk only $1,000 per trade. So your total money at risk will be (3) (1000) =$3,000. Once you have calculated your risk, you are can determine the trade size.

Trade size is the number of contracts you purchase in any one single trade. You need to first determine where you want to put your stop loss in order to determine the trade size. Lets use a simple example to make it clear. Suppose you are willing to risk $1000 on trading EUR/USD pair and you decide on a stop loss of 50 pips. Each pip on EUR/USD pair is equal to $10. So the number of contracts that you can trade are 2= (1,000)/ (50) (10).

By calculating your trade size, you have taken the guesswork out of your trading once you have determined your risk level. You can sleep well now. You know how much of your money is at risk. You are going to be able to trade tomorrow. No matter what happens today.

Use these common money management rules and avoid the pitfall of losing almost all the money in your account. Learn to survive the markets and trade another day. This can help your trading take a quantum leap to the next level of profitability. - 23204

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Discover A Revolutionary New Forex Robot. Try Netpicks Forex Signal Service.

Is Doubling Stocks Worth The Money?

By June Timbers

If you are looking for a way to get rich fast, then do penny trading. The internet is virtually full websites recommending people to penny trade. Although this really is a lucrative profession, it can also result with you losing everything you have. To be successful in penny trading, you have to be ahead of the game.

The reason why penny trading is deemed to be an easy way to get filthy rich is quite simple. Stocks that cost more usually have a more stable footing in the stock market. This means that you wouldnt be able to take advantage of the fluctuations.

In penny trading though, you will find that the values of stocks change very rapidly and in short intervals. You can have penny stocks that double or triple its value. You can purchase stocks that you are certain will increase in value in the next few days, buy them when they are still devalued, and then sell them once their value appreciates. Thats the simplest formula to getting rich with penny trading.

But penny trading is not without its risks. You may be able to earn money right off the bat, but you will also be a huge risk to lose all that as well. Penny stocks can lose all their value in snap. And when there is a stock that you want to purchase, sometimes you wont find anyone who is willing to sell to you. If you need to sell stocks, you wont find anyone to sell to.

Penny trading may be very enticing but a number of investors have been intimated by the circumstances and have opted to pass instead. However, those who preferred to stay on have opted to use Doubling Stocks.

A number of people may be hesitant about Doubling Stocks because of the fact that it gives out biased recommendations. However if you look at it, their suggestions still have a degree of accuracy because a large percentage of its users have agreed that it does work.

If you want to try Doubling Stocks out, you may do so by subscribing to the trial version. You will be able to receive the Doubling Stocks newsletter and if by 60 days you are dissatisfied with it, you will be able to receive a full refund. If you are still worried about losing money, paper trade for the first few days or until you are convinced that Doubling Stocks is really effective. - 23204

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The Wonders of Credit Card Processing

By Amy D. Perry

There are many hurdles small business owners must clear when running a small company. Besides dealing with major competitors, being bought out, going bankrupt, and making a profit they somehow must also deal with banks. Many small business owners avoid involving any banks in their transactions. But they are missing out on the various advantages of credit card processing and having a merchant account set up for their small business.

There are many steps a small business owner must complete before they are granted a merchant account. First you must get in contact with your local bank and ask to speak to a representative. They will inform you on whether or not that particular bank offers merchant accounts to small businesses. If you are not accepted by the bank you can easily get a merchant account from a third party provider. These organizations offer similar services at fair prices.

If your bank does offer merchant accounts to small businesses you then have to meet each requirement. Firstly you will need to prove that you are conducting business and give a tour of your workspace to a bank representative. If you work out of home make sure to secure a separate room for your home office.

You may have to submit paperwork to a company considering giving you a merchant account as well. This is to verify that are you are real business making a profit or losing money. The bank will want a copy of your tax return from the previous year as well as complete access to your bank account to deposit or withdraw funds from your account.

The rates of most merchant accounts are anywhere from 2-3% tax on each transaction you make. Many dishonest companies charge 5% and more on transactions. If you keep shopping around you will not be stuck with choosing such a company.

After obtaining a merchant account you will be able to take full advantage of credit card processing. Now you can receive various forms of payment for your service or business. A customer is very likely to pay for an item with a debit card rather than with cash. Online banking has made electronic money storage very simple and has almost made the need for carrying cash obsolete.

Not being able to accept debit cards can severely harm a business. With so many businesses accepting bank cards and the decline of carrying cash people are incline to walk out of a business after finding out they dont accept debit cards. As a business you are reliant on customers you want to welcome them and ensure their continued service, not drive them away.

There is no reason to not start a merchant account with your local bank. Your company will thrive with all the customers you are acquiring with the new technology. Guaranteeing youll stay in business for a long time. - 23204

About the Author:

Amy D. Perry wrote this article to inform the small business owner of the advantages to Credit Card Processing as well as Online Credit Card Processing get both services at the best rates on the internet only at americardpayment.com

Is Maverick Money Makers Worth It?

By Mike Gernay

Hey there and welcome to my article. If you have tried in the past or are interested in making money online then there's no doubt that you would have heard about maverick money makers.

Maverick money makers is the largest membership site at the moment for people wanting to make money and it has many members joining each day.

Today Im going to be talking about a few things I like about it to help you learn more if you are thinking about joining.

It may interest you to know that I've been working from home and making a living online for a about three years now and in that time I've seen thousands of products being released but only the good ones stay around for longer than a few months.

If you have heard about maverick money makers then you may have heard a few people say that it's a scam and it's all about blackhat methods to scam people out of money.

Out of all the information contained in the members area there is only one part Id consider blackhat.

The thing that amazes me about maverick money makers is the amount of new content and methods that they are loading into the members area. From what Ive seen its all good information.

My advise is that because there is new content being added regularly you should try extra hard to focus.

It may surprise you to know that even though they have thousands of members to look after the MMM support is very good. I once had a quick question and had a reply back within the minutes.

In my opinion the only problem you may find about the program is that as there is so much info you may feel overloaded.

The best advise I can give you in regards to this is that you should go through all the content when you first join and see what interests you the most. Then apply what you learn with all your efforts.

In my opinion the maverick money makers club is well worth the money if you can spare a couple of hours each day to put what you learn into action. - 23204

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