Many of the financial products are available for trade with margin, meaning you need to put up only a fraction of the cost of the trade and but you could profit as if you had invested the full amount. Most commodities and currency market operate with margins, even some equity markets. It is like buying a house with only 20% deposit, rest financed by bank. If the house price goes up, you will get the full benefit of the increased price. Typically, a trader needs to put up between 0.5% to 20% margin only depending upon the financial market. This is also called leverage, meaning with a small amount of your money you have the ability to control a larger sum of money. REMEMBER: leverage or trading on margin is a double edged sword. More next time.
Posted on: Thu, 31 Oct 2013 11:55:36 +0000
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