For encouraging investors who have less than 1 million dollars to trade on Forex the mechanism of margin trading is used. This mechanism was introduced to world currency trading in 1986.
Margin trading lies in buying/selling currencies, using leverage and ensuring deposit, which allows traders to make trading contracts on huge sums and do not provide the real money for it.
Margin trading became possible as speculative interests on Forex can be satisfied without the provision of real money. This scheme cuts money transfer costs; now the owners of small-dollar deposits can open positions for buying/selling big amounts of other currencies. In other words, margin trading gives chance to make fast transactions, aimed at getting profits on currency fluctuations.
Margin trading contributed immensely to growth on speculative trades on Forex. No wonder: all costs for money transfer became cheaper, and a great number of new traders with small deposits rushed to the market.
Investors with petty and moderate deposit sums run trading on Forex through dealing companies. Usually, the minimum one should have to start trading on the currency market equals to 2,000 US dollars. The dealing company offers its clients a credit line (or "dealing leverage") which profoundly exceeds the deposited sum. For example, credit leverage of 100 times increase allows using an initial deposit of 10,000 dollars for trading 1,000,000 dollars. So, private capitals of investors make up only 1-3 % of the sums traded by them on the market. Even small profits on Forex turn into great revenue when compared to what is deposited by investors to get these profits.
Let's have a look at this example to clarify all details. You have 2,000 US dollars on your account. With the credit leverage of 100:1, you can open the trading position of 200,000 dollars. At 11:00 A. M. US dollar rate to Swiss franc reached 1.4045 - 1.4050. You think that dollar has to grow and give trading order to buy 100,000 dollars at this price. At 3:00 P.M. dollar rate becomes 1.4250 - 1.4255. You decide to close the position and sell your 100,000 dollars at a new price. After calculating the pure income you find out that it is 2,000 Swiss francs (or about 1,400 US dollars).
But this goes as 140% revenue from the deposited sum. When closing the position, this money goes to your trading account automatically.
Margin trading is a very easy business to get started with. Moreover, this business has real potentials to generate great returns on the basis of small deposits, making it an affordable and desirable choice for all types of investors.
Margin trading can be used as a part-time job. The market works 24 hours a day, so you can choose the appropriate trading schedule and combine margin trading with another business.
Successful margin trading opens new windows of opportunity as one can start working independently, using a creative potential for account growth. No bosses, fair play and fair rules. The numbers show how much you made - and you get it, irrespectively of your sex, education, nationality, religion, and citizenship.
Margin trading can help you in becoming a qualified specialist, capable of using clear economic laws and mechanisms to boost any business.