Why Forex: MARGIN

Trading on margin means that you can buy or sell assets greater than the value of your account. You may be able to trade on margin in other investment accounts, but nothing like you can do in the FOREX market. Because currency exchange rates generally only fluctuate 1-2% daily, you can leverage your investment dollar for greater returns. The most common margin is 50:1, but you can find some trading accounts that will up to 200:1 margin.

For example, if your risk capital is $10,000, you could control $500,000 to $1,000,000 in currency contracts. This type of leverage gives you the potential to make profits very quickly, but you can also lose your money just as fast. It is recommended to have a disciplined investment plan that does not put all of your capital at risk and is followed by stop losses to protect your returns.

[ForexGen White Labels]

Forex White Label partnership allows the trader a quick access to the online foreign currency exchange market.

[ForexGen] provides two types of trading White Label partnerships, a limited and a full solution. ForexGen different types of forex White Label partners are able to access ForexGen's trading platform entirely branded under each partner's unique company image and name. We provide a customizable online trading platform for the different types of the two White Label solutions.

About Technical Analysis:

I have heard people lament how difficult it was to perform technical analysis and how they can never learn the skills. There were also many critics or fundamental believers that the stock market can never be timed and that we market technicians are wasting our time trying to beat the market using technical analysis. Technical analysis was thought to be a study of past price behaviors and critics were saying the past doesn't reflect what will happen in the future. They are both right and wrong. They are right because technical analysis is not a crystal ball where it is 100% accurate. They are wrong because technical analysis reflects the human emotions happening on the charts. Do human change over the centuries? As far as emotions are concerned, fear and greed are human nature that will never change! Humans will still do insider trading even if it is illegal due to greed. We saw how corporate governance though tightened over the decades was not fool proof to these criminals. Humans will still fear losing paper profits and they will still fear declining stock prices leading to declining capital. All these emotions can be found on the charts as they happen. Ask yourself, how many times have you seen a stock price run up before news is released? Anticipation of shareholders? Well, maybe but how about insider leaking the news? Think about it.

Every night I study in details charts and it is through all these relentless efforts that I became very familiar with technical analysis. If a lawyer wants to win a case, he will study the case carefully and also refer to past cases. We all know lawyers earn big money, but it is really this hard work of preparation that justifies their huge pay. As a trader, we cannot slack too. Hard work and efforts must be put in to learn technical analysis. Long hours of studying these charts will enable us to be very proficient in chart reading and recognize buy or sell signal in a flash as the experience build up. There is no shortcut to success in trading as far as I'm concerned.

I started trading as a loser and often times am only interested to know which the next stock to buy is. This is not why legends made their fortune in the stock market. Every single book that I read, advocate us to study past charts and get familiar with all the chart patterns or price/volume relationship. Hence why shouldn't we follow? After all, they are the ones who have done it and been there.

Hedging on a ForexGen Trading System

You’ve probably used the terminology “hedging your bet” a few times in your life. Perhaps you wanted to “hedge your bet” by purchasing more life insurance when your lifestyle improved or before you entered your 40’s. “Hedging your bet” is a similar concept in both the stock market and Forex market. Basically, it means playing it safe by protecting yourself against any possible losses. Losses might occur anytime you trade on a Forex trading system, but it’s wise to lessen or hedge your bet in certain situations.

How does it work?

Hedging is rather simple to perform - you buy and sell in the same currency pair at the same time. This limits your risk in case of market fluctuations. Let’s say you want to buy one lot (100,000 units) of EUR/USD on a Forex trading system. You’re not sure if the euro will strengthen in the upcoming month so you decide to hedge your bet by placing an order on the Forex trading system to sell one lot of EUR/USD. Now you’ve limited your risk by placing a hedged bet.

Let’s say that you decide to sell one lot (100,000 units) of EUR/USD. The value at the close of trade is 1.5887. You’re a bit worried that the euro might weaken so you decide to hedge your bet or sell one lot of EUR/USD, at the rate of 1.5890. Now, if the euro rises, you earn a profit in the buy position, but a loss in the sell position. On the other hand, if the euro weakens, you lose in the buy position, but win in the sell position. What you’ve just done is limit your overall risk with both buying and selling in the same currency.

Margin requirement

In placing a hedged bet on a Forex trading system, you’re margin requirement is equally divided between the two positions. Suppose you have a margin requirement in a non-hedge trade of two lots (200,000 units). Now, when you decide to hedge your initial bet, your margin requirement is equally divided between the two positions – 100,000 units for each trade.

Hedging seems like a good practice, but risks are involved and overall equity can be reduced by other factors that come into play. For further advice, just ask a customer representative from one of the online Forex

ForexGen.com is an online trading service provider supplying a unique and individualized service to Forex traders worldwide. We are dedicated to absolutely provide the best online trading services in the Forex market.

ForexGen provides a unique online trading experience based on our intelligent online Forex trading package, the ForexGen Trading Station, including the best online trading system.

ForexGen serves both private and institutional clients. We have a strong commitment to maintain a long term relationship with our clients.