K so, lets say at a 1% margin, I invest 0 into a forex broker. I get ,000 in margin and invest in the USD/JPY at 90.232. I buy 6 lots blah blah blah.
My question is, if the currency I bought goes up, and I end up selling it and making a gross profit of 00 (lifting my total balance to ,000), do I get to keep the 00, or merely 1% of 00 which would be (since I’m trading at a 1% margin).
If you do not understand that, I will try to put it simpler.
Since I started with 0 with 1% margin (So 000), if I were to gain 00 gross profit from trading, do I get to keep this 00 profit I just made? Or do I only get 1% of it since the margin is based at 1% ().
This is a question I have been trying to answer for awhile.
Also, if you know any good brokers with low spreads (from at least 1.0 – 2.0) post their link in your answer. I will greatly appreciate it.
Why is no one answering the question?
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Jack P 16th March 2010
Hi,
Margin and Leverage are different things. Margin is the collateral needed to use Leverage. It’s required by the FTC to trade using leverage.If you trade with leverage you both keep all the profits or carry all the loss, but since you have only deposited a small amount, the broker is essentially responsible. That’s why they have margin. If the position seems to go south, i.e. you look to lose money, then they will do a margin call, which means that you must deposit more money to keep trading or sell of your position.If your trade goes well, you can keep ALL the profits, that’s what rocks in forex trading.
As for your other question. That depends on how much you have to invest? Do you have more than $50,000? If you do, the best brokers are without a doubt SaxoBank and GAIN Capital, and this is unanimous. If you have less than that, then you will get eaten alive by their commission structure.
You will have a hard time finding a retail broker with only 1-2 pips. 3-5 is more normal. My friend who is a pro trader (on some obscure pair) swears by AVA FX (see review http://forextradingwinners.com/forex-broker-reviews/ava-fx-review). I trust that he knows what he’s talking about cause he is very knowledgeable and sceptical.
Another trader worth looking into is Finexo. They are a white label of SaxoBank, which means SaxoBank is carrying out their trades. That’s a vote of confidence as Saxo is a market leader. Check out the review here: http://forextradingwinners.com/forex-broker-reviews/finexo-review
If you could use this answer, please vote for it, so other people won’t see bad answers with recommendations to go for a broker that offers $5 free etc.
Good luck!
Aurthur 16th March 2010
hi
it seems that you are new to trading but it will be good to learn clearly .you can get good answer from etr top 10 lesions for newbies and its very good broker with nice support system if you got any doubts in future
http://forexplatformslist.com
regards!
Doctor Deth 16th March 2010
there is no guarantee you will make money – and if you trading on that much margin – you could wind up owing a fortune if you choose badly and wind up losing money – 1% margin – if you even lose 1% – you will owe 100% to the broker
Jason Rogers 16th March 2010
Forex brokers will charge a spread (and possibly a commission) and that is the cost for placing the trade. Any profits you make after those two costs are account for is your profit.
The margin level is simply indicating the amount of money you have to set aside as a good faith deposit in order to keep the trade open. It does not indicate the percentage of profit you get to keep.
I would suggest taking a look at FXCM Micro (www.forexmicrolot.com) for the spread levels you indicated.
Calvin 16th March 2010
try this site..maybe it could help you..
http://www.currency-trading-tutorial.net/